Page No: 81-89, ISBN: 978-984-35-2570-3
Md. Mesbah Uddin, PhD2
Small and Medium Enterprises (SMEs) have been regarded as the most important sector of any economy. In this era of globalization, the interna- tionalisation of the SMEs has become critical. At present, the studies on the internationalisation of the SMEs have attracted growing interests of the researchers. Several studies focused on SME internationalisation and its drivers in the last few decades. Among them, effectuation has emerged as an important theory for the creation of new ventures and it also plays a pivotal role in the internationalisation of the SMEs. In 2001, Sarasvathy introduced effectuation theory and it is now at the intermediate stage of development (Matalamäki, 2017). Primarily, effectuation theory explains two opposite logics (causation and effectuation) used by the expert entre- preneurs in decision making. Effectuation explains working on the means given to the effectuator and trying to explore possible effects from those means. The effectuator always tries to identify and exploit new opportuni- ties in the entrepreneurial process. This section addresses hitherto under- explored area of internationalisation where effectuation is used in explain- ing the trajectory of the SME internationalisation.
There are five principles in the effectuation theory: the bird-in-hand princi- ple, the affordable loss principle, the patchwork quilt principle, the lemon- ade principle, and the pilot-in-the plane principle (Sarasvathy, 2001). The bird-in-hand principle focuses on the means (identity, knowledge and net- work) and the inputs from the stakeholders who are actually committed. Here, the effectuator needs to decide what he/she can do with the available means those are under his / her control. The affordable principle depicts how much an effectuator can lose to start a new venture. In addition, he/ she needs to focus on his/ her financial and psychological condition, when the effectuator thinks about affordable loss. Moreover, the affordable loss……….