Exploring the affordable loss principle: a systematic literature review

Abstract

Objective: This article investigates how academic research in business and management approaches the Affordable Loss Principle (ALP) concept. We identify what researchers observed from the ALP lens, what they found, and which conclusions they reached to develop a future research agenda. Method: This study analyzes 51 recent research articles through a systematic literature review to evaluate the current state and developments in the domain of ALP. Main Results: Using the VOSviewer software, the articles are clustered into three groups of primary subjects. The Performance cluster examines how ALP and effectuation influence company performance. The Motivation cluster delves into the motivational aspects behind decision-making processes in businesses. The Assessment cluster focuses on validating measurement scales for effectuation logic, particularly in the context of ALP. Relevance / Originality: The study underscores the critical role of ALP in fostering resilient and adaptive entrepreneurial strategies in uncertain business environments. It highlights the distinctive approach of ALP in encouraging entrepreneurs to engage in risk management strategies that focus on potential losses rather than maximum possible gains. Theoretical / Methodological Contributions: This article contributes significantly to the scholarly understanding of effectuation logic by providing a comprehensive framework of the current research landscape around ALP. It aids emerging researchers by mapping the existing literature and suggesting future research directions. In addition, it offers practical insights into implementing effectuation principles, particularly ALP, in entrepreneurial practices, thereby enhancing decision-making in dynamic and unpredictable markets.