Wikipedia

Draft:Effectuation

  • Comment: This draft reads too much like a promotion. Please rewrite it in a more neutral manner. The phrases in parenthesis in the "Principle" section needs some context. Tutwakhamoe (talk) 14:25, 30 July 2023 (UTC)
  • Comment: Borderline accept, but see history - this is a straight translation from German page. Willing to leave to another reviewer. Mattdaviesfsic (talk) 15:48, 8 January 2023 (UTC)


Effectuation

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Effectuation is a theory of entrepreneurial decision making and action that emphasizes control-based, non-predictive strategies in the face of uncertainty. The theory was developed in the late 1990s by Saras D. Sarasvathy based on her study of expert entrepreneurs, conducted under the supervision of Nobel laureate Herbert A. Simon at Carnegie Mellon University.[1][2] Effectuation proposes that expert entrepreneurs rely on a logic of control rather than prediction when creating new ventures, starting with available means and allowing goals to emerge through partnerships and leveraging contingencies.[3][4]

Five Principles

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Sarasvathy identified five core principles employed by expert entrepreneurs using effectual reasoning:[5][4]

  1. Bird-in-hand (means-driven action): Starting with one's readily available means (who I am, what I know, and whom I know) to determine possible actions and outcomes, rather than predefined goals.
  2. Affordable loss: Making decisions based on what one can afford to lose rather than expected returns, to limit downside risk.
  3. Crazy quilt (strategic partnerships): Building partnerships with self-selected stakeholders who commit resources to the venture, expanding means and mitigating uncertainty.
  4. Lemonade (leveraging contingencies): Embracing and adapting to unexpected events, treating surprises as opportunities to create new possibilities and markets.
  5. Pilot-in-the-plane: Focusing on activities within one's control to influence the future, rather than trying to predict an uncertain future.

Research and Development

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Since its introduction, effectuation has become an influential framework in entrepreneurship research, drawing both support and criticism.[6] Over 500 peer-reviewed journal articles have been published on effectuation, reflecting substantial scholarly interest.[7] Empirical studies have tested and extended the theory, while critical analyses have questioned its theoretical contribution and practical value.[6][8]

Sarasvathy and colleagues have continued to refine and elaborate effectuation theory.[9] Survey instruments for measuring effectual orientation have been developed and validated.[10][11] Ongoing research examines effectuation's implications for marketing, internationalization, corporate entrepreneurship, and entrepreneurship education, among other domains.[12][13]

Criticism

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Despite its influence, effectuation theory has drawn criticism on theoretical and empirical grounds. Arend, Sarooghi, and Burkemper (2015) argued that effectuation lacks a clear definition of its context, constructs, and logic; suffers from tautological reasoning; and has limited empirical testing of its claims.[14] They contend that effectuation does not meet the criteria for a solid theory and call for further critical scrutiny.

Other scholars have questioned the novelty and scope of effectuation, suggesting that it overlaps with or repackages existing concepts such as bricolage, improvisation, and experimentation.[15][16] The purported distinction between effectual and causal logic has also been challenged, with arguments that most entrepreneurs use a combination of both approaches.[17]

Empirical research on effectuation has yielded mixed results. While some studies support its positive impact on venture performance, others find limited or contingent effects.[8][18] The theory's boundary conditions and generalizability across different contexts remain open questions. Ongoing research aims to address these critiques and advance understanding of effectuation's merits and limitations.

Recognition and Impact

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In 2022, Sarasvathy received the Global Award for Entrepreneurship Research for her work on effectuation.[2] The theory has been featured in practitioner-oriented publications including Inc. Magazine[19] and Entrepreneur.[20] Effectuation has informed entrepreneurship education and training initiatives by the U.S. Agency for International Development (USAID), the Danish Foundation for Entrepreneurship, and Youth Business International.[21][22][23]

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References

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  1. ^ Sarasvathy, Saras D. (April 2004). "Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency". Academy of Management Review. 26 (2): 243–263. doi:10.5465/amr.2001.4378020. ISSN 0363-7425.
  2. ^ a b Foss, Nicolai J.; Andersson, Martin; Henrekson, Magnus; Jack, Sarah; Stenkula, Mikael; Thorburn, Karin; Zander, Ivo (2023-03-28). "Saras Sarasvathy: recipient of the 2022 Global Award for Entrepreneurship Research". Small Business Economics. 61 (1): 1–10. doi:10.1007/s11187-023-00746-6. ISSN 0921-898X.
  3. ^ Sarasvathy, Saras D. (2008-02-29), "Effectuation: Elements of Entrepreneurial Expertise", Effectuation, Edward Elgar Publishing, doi:10.4337/9781848440197.00024, ISBN 978-1-84844-019-7, retrieved 2024-12-18
  4. ^ a b Read, Stuart; Wiltbank, Robert; Sarasvathy, Saras; Dew, Nicolas (September 2016). Effectual Entrepreneurship (2nd ed.). New York: Routledge. ISBN 978-1138923782.{{cite book}}: CS1 maint: date and year (link)
  5. ^ Dew, Nicholas; Read, Stuart; Sarasvathy, Saras D.; Wiltbank, Robert (July 2009). "Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices". Journal of Business Venturing. 24 (4): 287–309. doi:10.1016/j.jbusvent.2008.02.002. hdl:10945/41245. ISSN 0883-9026.
  6. ^ a b Grégoire, Denis A.; Cherchem, Naïma (2019-03-19). "A structured literature review and suggestions for future effectuation research". Small Business Economics. 54 (3): 621–639. doi:10.1007/s11187-019-00158-5. ISSN 0921-898X.
  7. ^ Matalamäki, Marko Juhani (2017-07-31). "Effectuation, an emerging theory of entrepreneurship – towards a mature stage of the development". Journal of Small Business and Enterprise Development. 24 (4): 928–949. doi:10.1108/jsbed-02-2017-0030. ISSN 1462-6004.
  8. ^ a b Read, Stuart; Song, Michael; Smit, Willem (November 2009). "A meta-analytic review of effectuation and venture performance". Journal of Business Venturing. 24 (6): 573–587. doi:10.1016/j.jbusvent.2008.02.005. ISSN 0883-9026.
  9. ^ Sarasvathy, Saras; Kumar, K.; York, Jeffrey G.; Bhagavatula, Suresh (January 2014). "An Effectual Approach to International Entrepreneurship: Overlaps, Challenges, and Provocative Possibilities". Entrepreneurship Theory and Practice. 38 (1): 71–93. doi:10.1111/etap.12088. ISSN 1042-2587.
  10. ^ Chandler, Gaylen N.; DeTienne, Dawn R.; McKelvie, Alexander; Mumford, Troy V. (May 2011). "Causation and effectuation processes: A validation study". Journal of Business Venturing. 26 (3): 375–390. doi:10.1016/j.jbusvent.2009.10.006. ISSN 0883-9026.
  11. ^ Brettel, Malte; Mauer, René; Engelen, Andreas; Küpper, Daniel (March 2012). "Corporate effectuation: Entrepreneurial action and its impact on R&D project performance". Journal of Business Venturing. 27 (2): 167–184. doi:10.1016/j.jbusvent.2011.01.001. ISSN 0883-9026.
  12. ^ Cai, Li; Guo, Runping; Fei, Yupeng; Liu, Zhao (2016-05-17). "Effectuation, Exploratory Learning and New Venture Performance: Evidence from China". Journal of Small Business Management. 55 (3): 388–403. doi:10.1111/jsbm.12247. ISSN 0047-2778.
  13. ^ Lingelbach, David; Sriram, Ven; Mersha, Tigineh; Saffu, Kojo (February 2015). "The Innovation Process in Emerging Economies". The International Journal of Entrepreneurship and Innovation. 16 (1): 5–17. doi:10.5367/ijei.2015.0172. hdl:11603/4102. ISSN 1465-7503.
  14. ^ Arend, Richard J.; Sarooghi, Hessamoddin; Burkemper, Andrew (October 2015). "Effectuation As Ineffectual? Applying the 3E Theory-Assessment Framework to a Proposed New Theory of Entrepreneurship". Academy of Management Review. 40 (4): 630–651. doi:10.5465/amr.2014.0455. ISSN 0363-7425.
  15. ^ Welter, Chris; Mauer, René; Wuebker, Robert J. (March 2016). "Bridging Behavioral Models and Theoretical Concepts: Effectuation and Bricolage in the Opportunity Creation Framework". Strategic Entrepreneurship Journal. 10 (1): 5–20. doi:10.1002/sej.1215. ISSN 1932-4391.
  16. ^ Fisher, Greg (September 2012). "Effectuation, Causation, and Bricolage: A Behavioral Comparison of Emerging Theories in Entrepreneurship Research". Entrepreneurship Theory and Practice. 36 (5): 1019–1051. doi:10.1111/j.1540-6520.2012.00537.x. ISSN 1042-2587.
  17. ^ Kitching, John; Rouse, Julia (2016-06-17). "Opportunity or dead end? Rethinking the study of entrepreneurial action without a concept of opportunity". International Small Business Journal: Researching Entrepreneurship. 35 (5): 558–577. doi:10.1177/0266242616652211. ISSN 0266-2426.
  18. ^ McKelvie, Alexander; Chandler, Gaylen N.; DeTienne, Dawn R.; Johansson, Anette (2019-02-28). "The measurement of effectuation: highlighting research tensions and opportunities for the future". Small Business Economics. 54 (3): 689–720. doi:10.1007/s11187-019-00149-6. ISSN 0921-898X.
  19. ^ Buchanan, Leigh (February 1, 2011). "How Great Entrepreneurs Think". Inc. Magazine: 54–61.
  20. ^ Bylund, Per (2020-06-12). "Forget the Moat and Make Your Startup a Tropical Island". Entrepreneur. Retrieved 2024-12-18.
  21. ^ "Africa Bureau Effectuation Study | YouthPower". www.youthpower.org. Retrieved 2024-12-18.
  22. ^ "Taxonomy". eng.ffe-ye.dk. Archived from the original on 2018-11-09. Retrieved 2024-12-18.
  23. ^ "Effectuation and its application in youth entrepreneurship training". Youth Business International. Retrieved 2024-12-18.
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