Effectuation, causation and CEO tenure: navigating SME performance in dynamic environments

Purpose Amidst global economic uncertainties, small and medium-sized enterprises (SMEs) are confronted with the pressing need to adapt to complex and ambiguous external landscapes. This study aims to investigate how the decision-making strategies of causation and effectuation are related to the performance of Russian SMEs and whether and how this relationship is moderated by CEO tenure. Design/methodology/approach Using a sample of 602 Russian SMEs, hierarchical linear modeling and its estimation using ordinary least squares is conducted. Robustness checks and post hoc analysis are performed. Findings The findings provide insights into effectuation theory by looking at and testing its basic tenets in an underexplored context and investigating the direct and moderated effects of causation and effectuation on SME performance. Moreover, the study builds upon upper-echelons theory (UET) by considering CEO tenure – an individual-level characteristic – as a moderator in the effectuation/causation and SME performance relationship. A framework for understanding how executives’ attributes shape organizational strategies and outcomes is provided. Originality/value The findings contribute to effectuation theory by testing its core principles in emerging market context, examining both direct and moderated effects of causation and effectuation on SME performance. Moreover, the study builds upon upper-echelons theory (UET) by considering CEO tenure – an individual-level characteristic – as a moderator in the effectuation/causation and SME performance relationship. This study offers a framework for understanding how executive characteristics shape organizational strategies and outcomes in emerging markets.