This list was last updated in November 2016. Our intent is to be as inclusive and comprehensive as possible, but we recognize that because of the volume of work out there we have likely missed some. If your paper is not included on this list and you would like it included, please email it to info@effectuation.org

Research Paper Title Authors Content Outlet Publish Status Publish Date Link To File
‘Expect the unexpected’: Implications of effectual logic on the internationalization process C Forza
I Kalinic
Saras Sarasvathy

International entrepreneurship literature has indicated that entrepreneurs often increase international activities along unexpected lines of reasoning without having a precise goal, resulting in “unplanned” internationalization. We argue that “unplanned” internationalization does not necessarily involve non-logical decisions; but, entrepreneurs can follow an effectual rather than causal logic and may base their decisions on the affordable loss principle rather than on the maximization of expected returns. Based on five case-studies, we discuss the implication of effectual decision-making on the internationalization process. We find that switching from causal to effectual logic allows firms to rapidly increase the level of commitment in the foreign market and could assist in overcoming liabilities of outsidership and, therefore, successfully increase the level of commitment in the foreign market.

International Business Review publish 2014
A cognitive approach for analyzing the influence of effectual network on entrepreneurs actions Faiez Ghorbel
Younes Boujelbene
Interdisciplinary Journal of Contemporary Research In Business publish 2012
A dynamic model of growth phases and survival in international business-to-business new ventures: The moderating effect of decision-making logic M Gabrielsson
P Gabrielsson

The growth and survival of international new ventures (INVs) has not been the subject of extensive in-depth qualitative study and our understanding of their decision-making is deficient. On the basis of empirical analyses in a small and open economy, a dynamic model was developed that explains the growth phases through which INVs pass as they mature in the high-technology business-to-business field. The model also recognizes rapid advancement, survival crises, and retrenchment. Propositions were devised regarding the impact of opportunities, resources and capabilities, entrepreneurial orientation, and learning on growth phases and survival. A novel finding is that the decision-making logic moderates the impact of these factors. These findings have important implications for industrial marketing scholars and practitioners.

Industrial Marketing Management publish 2013
A field study of entrepreneurial decision-making and moral imagination McVea John F

How entrepreneurs make decisions under extreme uncertainty and ambiguity is central to explaining entrepreneurial success. However, because of their pioneering nature, these decisions also have significant ethical implications. While there has been an increasing focus on the unique approaches entrepreneurs take to decision-making, less attention has been paid to the inherent ethical dimension of making decisions under high uncertainty. This study applies the concept of moral imagination to the challenges of making entrepreneurial decisions under Knightian uncertainty. It examines the extent to which entrepreneurs use moral imagination to integrate the ethical dimensions of pioneering situations into their decision-making.

Journal of Business Venturing publish 2009
A Measure of Adaptive Cognition for Entrepreneurship Research. Shepherd Dhliwayo
Haynie M
Entrepreneurship Theory and Practice publish 2009
A meta-analytic review of effectuation and venture performance Michael Song
Stuart Read
Willem smit Smit

Though much research in entrepreneurship makes the fundamental assumption that opportunities are found, new work is emerging which questions this core tenet. Effectuation, for example, positions the entrepreneur as co-creator of opportunities, together with committed stakeholders. In this study, we conduct a meta-analysis of the articles published in the Journal of Business Venturing, summarizing data on 9897 new ventures to connect three of the principles of effectuation positively with new venture performance. In so doing, we offer both specific insight into precisely measuring effectuation and a general method for extracting variables from prior work to measure new constructs.

Journal of Business Venturing publish 2009
A situated metacognitive model of the entrepreneurial mindset Shepherd Dhliwayo
Haynie J.M
Mosakowski E
P C Earley

We develop a framework to investigate the foundations of an ‘entrepreneurial mindset’ — described by scholars as the ability to sense, act, and mobilize under uncertain conditions. We focus on metacognitive processes that enable the entrepreneur to think beyond or re-organize existing knowledge structures and heuristics, promoting adaptable cognitions in the face of novel and uncertain decision contexts. We integrate disparate streams of literature from social and cognitive psychology toward a model that specifies entrepreneurial metacognition as situated in the entrepreneurial environment. We posit that foundations of an entrepreneurial mindset are metacognitive in nature, and subsequently detail how, and with what consequence, entrepreneurs formulate and inform “higher-order” cognitive strategies in the pursuit of entrepreneurial ends.

Journal of Business Venturing publish 2010
A Three-Path Model of New Venture Creation: An Image Theory Perspective. Steven Brown
Phil Bryant
Tobias Huning
Journal of Applied Management and Entrepreneurship publish 2012
Academic networks in a trichotomous categorisation of university spinouts. Nicos Nicolaou
Sue Birley Sue Birley

The paper adopts a network perspective in an attempt to understand the underlying mechanisms generating the different university spinout structures. In this respect, we propose a trichotomous categorisation of university spinouts into orthodox, hybrid and technology spinouts and argue that the academic’s embeddedness in a network of exoinstitutional and endoinstitutional ties influences the type of spinout initiated. We draw from some of the recent network research that has adopted a contingency approach in explaining the value of social networks.

Journal of Business Venturing publish 2003
Accounting for the Future: Psychological Aspects of Effectual Entrepreneurship Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

Recent attempts to study entrepreneurship as a form of expertise, rather than a collection of traits and abilities have led to the development of the theory of effectuation. Effectuation is a sequence of non-predictive strategies in dynamic problem-solving that is primarily means-driven, where goals emerge as a consequence of stakeholder commitments rather than vice versa. Most important, effectuation isolates, identifies, and exploits techniques that seek to control the future without having to predict it. In this paper we (1) bring effectuation to psychology; (2) develop it further by examining key behavioral constructs that make effectual action possible; and, (3) derive possible implications for future research in psychology, particularly in relation to a more pluralistic understanding of human rationality.

publish 2003  PDF Download
Advancing a Framework for Coherent Research on Women’s Entrepreneurship. Anne de Bruin
Candida Brush
Friederike Welter
Entrepreneurship Theory and Practice publish 2007
Advancing entrepreneurial marketing: Evidence from born global firms. Jay Weerawardena
Gillian Sullivan Mort Mort
Peter Liesch
European Journal of Marketing publish 2012
Advancing Strategic Entrepreneurship Research: The Role of Complexity Science in Shifting the Paradigm Michael Morris
minet schindehutte
Entrepreneurship Theory and Practice publish 2009
Affordable Loss: Behavioral Economic Aspects of the Plunge Decision Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

Affordable loss involves decision makers estimating what they might be able to put at risk and determining what they are willing to lose in order to follow a course of action. Using the entrepreneur’s new venture plunge decision, this article combines insights from behavioral economics to develop a detailed analysis of the affordable loss heuristic. Specifi cally, we develop propositions to explain how individuals: (1) decide what they can afford to lose; and (2) what they are willing to lose in order to plunge into entrepreneurship. The article also discusses the implications of affordable loss for the economics of strategic entrepreneurship.

Strategic Entrepreneurship Journal(sister journal to Strategic Management Journal) publish 2009
An Effectual Approach to International Entrepreneurship: Overlaps, Challenges, and Provocative Possibilities Jeffery York
Kumar Kothandaraman
Saras Sarasvathy
suresh bhagavatula

In this paper, we outline several interesting observations about international entrepreneurship (IE) research through the theoretical lens of effectuation. In doing so, we show how an effectual approach can help resolve four central conflicts and knowledge gaps identified in two recent comprehensive reviews of IE. We then present an illustrative case study from India that provides an intriguing comparison with the most recent modification of the Uppsala model to integrate with effectuation theory. Finally, we offer four provocative possibilities for future research at the intersection of IE and effectuation research.

Entrepreneurship Theory and Practice publish 2014
An investigation of hindsight bias in nascent venture activity. Gavin Cassar
Justin Craig

We posit that individuals who are actively engaged in activities to develop their own venture will exhibit hindsight bias when recalling their startup experiences. We observe that those who fail to develop their startup activity into an operating business demonstrate substantial hindsight bias concerning the probability of venture formation. In particular, the recalled probability of success, reported after their decision to quit, is lower than the probability of success solicited during the nascent process. We argue that the systematic distortion of the past has important implications for individuals involved in the venturing process. Specifically, we suggest that these individuals are at risk of overestimating their chances of success when starting future nascent activity if they do not correct for their optimistic tendencies. The evidence from this study suggests it is important to recognize that what nascent entrepreneurs believe they experienced, and what they actually experienced, may not be equivalent.

Journal of Business Venturing publish 2009
Antecedents and consequences of effectuation and causation in the international new venture creation process. Holger Schiele
Rainer Harms

The selection of the entry mode in an international market is of key importance for the venture. A process-based perspective on entry mode selection can add to the International Business and International Entrepreneurship literature. Framing the international market entry as an entrepreneurial process, this paper analyzes the antecedents and consequences of causation and effectuation in the entry mode selection. For the analysis, regression-based techniques were used on a sample of 65 gazelles. The results indicate that experienced entrepreneurs tend to apply effectuation rather than causation, while uncertainty does not have a systematic influence. Entrepreneurs using causation-based international new venture creation processes tend to engage in export-type entry modes, while effectuation-based international new venture creation processes do not predetermine the entry mode.

Journal of International Entrepreneurship publish 2012
Antecedents, moderators, and performance consequences of membership change in new venture teams. Benson Honig
Gaylen Chandler
Johan Wiklund

This paper focuses on initial team size and membership change of new venture teams in two studies: (1) a panel study of 408 emerging ventures, and (2) a cross-sectional study of 124 new ventures. The findings suggest that larger initial team size provides an advantage for new organizations, and that the benefits of adding and dropping team members are contingent on the stage of development of the organization and the dynamism of the environment. Both external environment and team composition factors are associated with turnover in venture teams.

Journal of Business Venturing publish 2005
Attributions to intuition in the venture founding process: Do entrepreneurs actually use intuition or just say that they do? Brian Blume
Jeffrey Covin

Even though entrepreneurs often cite the use of intuition as a basis for their venturing decisions, verifying that entrepreneurs are actually using intuition is very difficult. We distinguish between entrepreneurs’ attributions to intuition and their actual use of intuition. We propose characteristics of entrepreneurs that increase the likelihood that they will attribute intuition as a basis for decisions during the venture founding process. We then delineate characteristics that make the development and effective use of entrepreneurial intuition more likely. Theoretical implications for researchers studying intuition and practical implications for entrepreneurs using intuition are discussed.

Journal of Business Venturing publish 2011
Beyond creative destruction and entrepreneurial discovery: A radical Austrian approach to entrepreneurship Bluedorn, A. C.
Todd Chiles
V K Gupta

Although Schumpeter’s theory on `creative destruction’ and Kirzner’s on `entrepreneurial discovery’ dominate current entrepreneurship research in organization studies, one of the most fundamental debates in modern Austrian economics is that between Kirzner and Lachmann. Using Low and MacMillan’s (1988) key specifications as a rubric, we introduce organizational entrepreneurship scholars to Lachmann’s work, identify the direction in which his radical subjectivist approach would lead the field, and encourage exploring important questions from, and adopting methods consistent with, his provocative perspective. This unique disequilibrium perspective, which takes into account institutional contexts and multiple levels of analysis, offers new theoretical insight into how entrepreneurs create opportunities through expectations of an imagined future and exploit opportunities through continuous resource combination and recombination. Conceptualizing time as subjective and heterogeneous, it facilitates the examination of patterns in entrepreneurial activity, especially when combined with longer time frames. And it offers hermeneutics and ideal-types as alternatives to statistical models, for developing a theoretically sophisticated understanding of how entrepreneurial processes unfold.

Organization Studies publish 2007
Beyond hubris: How highly confident entrepreneurs rebound to venture again Barbara L. Fredrickson
Bill Forster
Mathew L.A. Hayward
Saras Sarasvathy

This article outlines why highly confident entrepreneurs of focal ventures are better positioned to start and succeed with another venture; and therefore why overconfidence in one’s capabilities functionally persists and pervades amongst entrepreneurs. By combining cognitive perspectives on confidence in decision making with Fredrickson’s [Fredrickson, B.L. 1998. What good are positive emotions?. Review of General Psychology, 2, 300–319.; Fredrickson, B.L. 2001. The role of positive emotions in positive psychology: the broaden-and-build theory of positive emotions. American Psychologist, 56, 218–226.; Fredrickson, B.L. 2003. The value of positive emotions. American Scientist, 91: 330–335] ‘broaden-and-build’ theory of positive emotions, this paper elaborates the manner in which such entrepreneurs can develop emotional, cognitive, social and financial resilience that can be marshaled and mobilized for a subsequent venture.

publish 2010  PDF Download
Beyond the Single-Person, Single-Insight Attribution in Understanding Entrepreneurial Opportunities. Dimo Dimov
Entrepreneurship Theory and Practice publish 2007
Business Angel Network Saras Sarasvathy

Informal venture capital (VC) – i.e., angel investing — is the largest single source of private equity capital in new venture development. Angel investors are so named because in the early 1900s wealthy individuals provided capital to help launch new theatrical productions. As patrons of the arts, these investors were considered by theater professionals as “angels.” Estimates of the number of active angel investors in the US vary widely. By triangulation of various estimates it is at least 4 or 5 times larger than the formal VC market (Freear et al, 1996; Mason & Harrison, 2002). For example, while 36,000 companies received $20 billion of angel funding for the year 2002 , approximately only 3000 companies received capital from VC firms in 2002 . Of the latter, only 22% was invested in early stage companies. A recent trend in angel investing consists of the formation of business angel “networks” such as the Band of Angels in Silicon Valley and the Alliance of Angels in the Pacific Northwest. It is estimated that there are over 150 business angel networks in the USA and several in European and Asian countries. Books and websites on business angels continue to proliferate. From a research standpoint, however, in spite of the considerably larger magnitude of business angels when compared to VCs, we know less about the former than the latter. The current state of the art in early stage investing consists almost exclusively of research into formal VCs, including descriptions of practices, calculations of returns, and theories that explain both.

publish 2003
Business Models and Tactics in New Product Creation: The Interplay of Effectuation and Causation Processes C Y Yu
M K Sitoh
S L Pan

Effectuation and causation are two contrasting approaches to new business development. We argue that these two approaches are generic decision-making mechanisms that can coexist with one another and that they are configured in specific ways during different phases in the process of new product creation. These decision-making mechanisms are influenced by internal and external market factors: the nature of activities of a phase and the interplay between the business model and tactics. Our research framework is a generic two-stage competitive process that separates business models from tactics. We conducted an in-depth case study of a console game creation project to examine these decision-making mechanisms and to explore how business models are formulated and how each mechanism influences subsequent tactics during the new product creation process. Our findings suggest the following four decision-making configurations with unique modes of interplay between business models and tactics: effectuation centric, discovery centric, causation centric, and tactic centric. The theoretical insights on the linkage between decision-making mechanisms and business models have important practical implications for new product creation.

IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT publish 2014
Causation and effectuation processes: A validation study. Alexander McKelvie
Dawn DeTienne
Gaylen Chandler
Troy Mumford

We develop and validate measures of causation and effectuation approaches to new venture creation and test our measures with two samples of entrepreneurs in young firms. Our measure of causation is a well-defined and coherent uni-dimensional construct. We propose that effectuation is a formative, multidimensional construct with three associated sub-dimensions (experimentation, affordable loss, and flexibility) and one dimension shared with the causation construct (pre-commitments). As specified by Sarasvathy (2001), we also show that causation is negatively associated with uncertainty, while experimentation, a sub-dimension of effectuation, is positively correlated with uncertainty. The major contribution is the resulting validated scales that measure causation and effectuation.

Journal of Business Venturing publish 2011
Causation and Effectuation: Toward a Theoretical Shift From Economic Inevitability to Entrepreneurial Contingency Saras Sarasvathy

In economics and management theories, scholars have traditionally assumed the existence of artifacts such as firms/organizations and markets. It is argued that an explanation for the creation of such artifacts requires the notion of effectuation. Causation rests on a logic of prediction – effectuation on the logic of control. Effectuation is illustrated through business examples and realistic thought experiments. Effectuation’s connections with existing theories and empirical evidence are examined. A list of testable propositions for future empirical work is provided.

Academy of Management Journal publish 2001  PDF Download
Causation and Effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Saras Sarasvathy

In economics and management theories, scholars have traditionally assumed the existance of artifacts such as firms/organizations and markets.I argue that an explanation for the creation of such artifacts requires the notion of effectuation. Causation rests on a logic of prediction, effectuation on the logic of control. I illustrate effectuation through business examples and realistic thought experiments, examine its connections with existing theories and emperical evidence and offer a list of testable propositions for future empirical work.

publish 2002  PDF Download
Cognitive Logics, Entrepreneurial Cognitive Style, and Growth Intentions: A Conceptual Model and an Exploratory Field Study Dutta D. K
Stuart Thornhill

Using insights based on the entrepreneurial cognition perspective, we develop a conceptual model to explain the evolution of entrepreneurial growth intentions under the influence of venture cognitive logics (causation versus effectuation) and entrepreneurial cognitive style (analytic versus holistic). Our model finds preliminary support based on qualitative data from an exploratory field study of a select group of entrepreneurs, interviewed in three waves over a 5-year timeframe.

Entrepreneurship Research Journal publish 2014
Cognitive mechanisms in entrepreneurship: Why and when enterpreneurs think differently than other people Baron, Robert A.

Because of their importance in creating wealth—both personal and societal—entrepreneurs have long been the subject of intensive study. Past research has focused on important issues such as: Why do some people, but not others, recognize or create new opportunities? Why do some, but not others, try to convert their ideas and dreams into business ventures? And why, ultimately, are some entrepreneurs successful and others not? Efforts to answer these questions in terms of the personal characteristics of entrepreneurs generally yielded disappointing results: contrary to what informal observation suggests, entrepreneurs do not appear to differ greatly from nonentrepreneurs with respect to various aspects of personality. As a result, a growing number of researchers have recently adopted a different approach—one emphasizing the role of cognitive processes in entrepreneurship. This perspective suggests that valuable insights into the questions posed above may be obtained through careful comparison of the cognitive processes of entrepreneurs and other persons. Whereas informative research has already been conducted within this framework, the present study seeks to expand this developing perspective by building additional conceptual bridges between entrepreneurship research and the large, extant literature on human cognition. Basic research on human cognition suggests that our cognitive processes are far from totally rational; in fact, our thinking is often influenced by a number of sources of potential bias and error. It is suggested here that entrepreneurs often work in situations and under conditions that would be expected to maximize the impact of such factors. Specifically, they face situations that tend to overload their information-processing capacity and are characterized by high levels of uncertainty, novelty, emotion, and time pressure. Together, these factors may increase entrepreneurs’ susceptibility to a number of cognitive biases. Several cognitive mechanisms that may exert such effects and that have not previously been considered in detail in the literature on entrepreneurship are examined. These include: counterfactual thinking—the effects of imagining what might have been; affect infusion—the influence of current affective states on decisions and judgments; attributional style—tendencies by individuals to attribute various outcomes to either internal or external causes; the planning fallacy—strong tendencies to underestimate the amount of time needed to complete a given project or the amount of work that can be achieved in a given time; and self-justification—the tendency to justify previous decisions even if they result in negative outcomes. Each mechanism is described, and specific hypotheses concerning its potential impact on the thinking of entrepreneurs are proposed. A final section of the article touches briefly on methods for testing hypotheses concerning these mechanisms and explores the implications of this cognitive perspective for future entrepreneurship research. This section emphasizes the fact that a cognitive perspective can provide researchers in the field with several new conceptual tools and may also facilitate the development of practical procedures for assisting entrepreneurs.

Journal of Business Venturing publish 1998
Commentary: Exploiting and Exploring New Opportunities Over Life Cycle Stages of Family Firms Salvato, Carlo
Sharma, Pramodita

Family firms vary with regards to success achieved in terms of opportunity creation and exploitation over time. Elaborating on this variation, this commentary argues that firms that simultaneously engage in multiple levels of innovation—incremental, progressive, and radical—are likely to enjoy sustainable performance advantages across generations. Toward this end, a strategic split of innovation responsibilities between family and nonfamily professionals is likely to be useful, contingent on the firm’s life cycle and size. In terms of entrepreneurial expertise, a combination of causal and effectual thinking is necessary to ensure exploitation of already discovered or created opportunities and exploration of new ones.

Entrepreneurship Theory and Practice publish 2011
Community-Led Social Venture Creation. Helen Haugh
Entrepreneurship Theory and Practice publish 2007
Constructing Corridors to Economic Primitives: Entrepreneurial Opportunities as Demand-side Artifacts Saras Sarasvathy

The idea is to model entrepreneurial opportunities as pathways to the edifice of economic primitives such as preferences, demand functions, production functions, and so on — things that economic theory typically takes as “given”. This means that entrepreneurial endeavors can start in non-economic spheres and entrepreneurs construct “corridors” as it were from these pre-economic realities to economic artifacts such as new firms, new markets, and even new utility functions. The essay draws upon the open-universe philosophy of pragmatism and the more concrete “social science” arguments of Simon’s Sciences of the artificial. I connect the two threads of arguments to specific examples and current empirical work in entrepreneurship. I also examine implications for entrepreneurship research and economic development policy.

Research on Management and Entrepreneurship publish 2004  PDF Download
Constructing Markets and Shaping Boundaries: Entrepreneurial Power in Nascent Fields. Filipe Santos
Kathleen Eisenhardt

We examine how entrepreneurs shape organizational boundaries and construct markets through an inductive, longitudinal study of five ventures. Our central contribution is a framework of how successful entrepreneurs attempt to dominate nascent markets by co-constructing organizational boundaries and market niches using three processes: claiming, demarcating, and controlling a market. We propose that power is the underlying boundary logic and indicate the “soft-power” strategies by which entrepreneurs compete in highly ambiguous markets. Overall, we develop a holistic view of organizational boundaries and offer insights into institutional entrepreneurship and resource dependence theories. Our most important contribution is reinvigorating the study of interorganizational power.

Academy of Management Journal publish 2009
Contextualising case studies in entrepreneurship: A tandem approach to conducting a longitudinal cross-country case study Erik Rasmussen
Jukka Partanen
Per Servais
Sylvie Chetty

Using predictive and effectuation logics as a framework, this research note explains how case study research was conducted to demonstrate rigour and relevance. The study involves a longitudinal cross-country case study on small and medium-sized firm growth and networks undertaken by research teams in three countries (Finland, Denmark and New Zealand) involving 33 firms. This research note outlines the implications of this research and provides valuable guidance and reflections upon opportunities for future research regarding the conduct of contextual studies in entrepreneurship without compromising validity and reliability.

International Small Business Journal publish 2014
Contingency as an entrepreneurial resource: How private obsession fulfills public need Susan S Harmeling

Borrowing from Rorty (1989:37), this article portrays the entrepreneurial process as a mechanism through which “private obsession” fulfills “public need.” It begins with an argument that a deeper understanding of contingency can enhance management scholarship in general and entrepreneurship in particular. It continues with an examination of contingency and entrepreneurial opportunity and then uses six narratives to show how both personal and historical contingencies become resources in the entrepreneurial process. A depiction of possible alternative responses (counterfactuals) for each narrative illustrates how entrepreneurs tend to take a resourceful, rather than an adaptive or a heroic stance toward contingency. A discussion of American Pragmatism provides theoretical support for contingency’s role in the entrepreneurial process. The paper concludes with a literature review and a look at how this view of entrepreneurial contingency illuminates the temporal context in management scholarship, among other implications for both research and practice.

Journal of Business Venturing publish 2011
Corporate effectuation: Entrepreneurial action and its impact on R&D project performance. A Engelen
Daniel Kupper
Malte Brettel
René Mauer

Innovative products are widely recognized as an important source of competitive advantage. However, many companies have difficulties finding efficient and successful approaches to different types of R&D projects, particularly those that involve a high level of innovativeness. Therefore, the present study moves effectuation theory from the entrepreneurial context to R&D research. First, the characteristics of an effectual approach in the context of R&D projects are developed and differentiated from those of conventional prediction-based strategies (causation). Second, using a thorough qualitative and quantitative scale-development process to capture particularities of effectual and causal dimensions in the R&D context, expert interviews and a pilot study (123 R&D projects), the study develops a multi-factor measurement model of effectuation and causation. These measures are validated in a follow-up study with a larger sample of 400 projects. Third, the new measures are applied to test two central hypotheses: (a) effectuation is positively related to success in highly innovative contexts, (b) causation approaches are beneficial in projects with low levels of innovativeness. Overall, this study moves the effectuation logic from the entrepreneurial to the corporate R&D context, captures its particularities, and investigates its performance outcomes.

Journal of Business Venturing publish 2012
Creating major innovations with customers: insights from small and young technology firms Nicole Coviello
R M Joseph

The marketing literature typically argues that customers cannot easily be involved with, and contribute to, the creation of major innovation (MI). This article finds otherwise. The authors use an inductive process method to study how six MIs were developed for business-to-business markets by small and young technology firms. Three of the MIs were successful, and three failed. The firms with MI success are distinguished by a nonconventional new product development process that includes five iterative and overlapping activities and up to ten different customer roles. These activities and roles are captured in a multifaceted taxonomy of customer participation. The analysis also uncovers three capabilities relevant to the development of successful MI—capabilities that are effectual rather than adaptive in nature. These findings and the propositions derived from them offer a more complete understanding of customer participation, new product development across contexts, and marketing capabilities.

Journal of Marketing publish 2012
Creating the Future Together: Toward a Framework for Research Synthesis in Entrepreneurship Elco van Burg
Georges Romme

To develop a body of evidence-based knowledge on entrepreneurship, findings and contributions from the positivist, narrative, and design research traditions in this area need to be combined. Therefore, a framework for research synthesis in terms of social mechanisms, contextual conditions, and outcome patterns is developed in this paper. Subsequently, a synthesis of the existing body of research findings on entrepreneurial opportunities serves to illustrate how this framework can be applied and provides results that inform entrepreneurial action. Finally, we discuss how this synthetic approach serves to systematically connect the fragmented landscape of entrepreneurship research, and thus gradually build a cumulative and evidence-based body of knowledge on entrepreneurship.

Entrepreneurship Theory and Practice publish 2014
Decision-making processes in biotech commercialization: Constraints to effectuation. Elicia Maine
N Dos Santos
Pek-Hooi Soh

This research explores two entrepreneurial decision-making processes utilizing effectuation and causation modes in the context of new venture creation in the biotechnology industry. Using a case study approach, we investigate the evolution of three biotech ventures from the start of the venture, featuring major decisions over a period of 10 to 20 years. Assessment of qualitative interviews with founders and CEOs demonstrates that, initially, each company began in effectuation mode and, over time, transitioned to a spectrum between effectuation and causation. The two ventures which retained effectuation logic did not engage in clinical trials. Decision making processes in this study illustrate the interplay between entrepreneurs’ ability to manage technological and market uncertainty and circumstantial changes arising from change leadership, venture capital funding and development of lead candidates in the clinical stage of product development.

Technology Management for Emerging Technologies (PICMET) publish 2012
Delineating the Domain of Development Entrepreneurship: A Market-Based Approach to Facilitating Inclusive Economic Growth. Jeffery McMullen
Entrepreneurship Theory and Practice publish 2011
Designing Organizations that Design Environments: Lessons from Entrepreneurial Expertise Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

Entrepreneurship has traditionally been viewed as an individual characteristic. Besides investigating personality traits and attributes, studies have examined gender differences (Carter, Gartner, Shaver, & J., 2003), risk aversion (Miner, Smith, & Bracker, 1994) and even sociopathy as possible traits or characteristics of entrepreneurs (Winslow & Solomon, 1987). Unfortunately, these efforts have returned little more than inconclusive results on what defines an entrepreneur and sustains him or her through a continuing career in entrepreneurship. But recently, there is a move to study entrepreneurship as expertise – i.e., a set of skills, models and processes that can be acquired with time and deliberate practice. Take for example, Mitchell (1997) that sought to understand the nature of entrepreneurial expertise in management; or, Reuber & Fischer (1994) that showed an empirical relationship between entrepreneurial expertise and firm performance. Expertise has traditionally been studied in cognitive science using protocol analysis (Ericsson & Simon, 1993). This method consists of having experts solve typical problems from their domain of expertise while continuously thinking aloud. The think-aloud protocols are usually recorded on tape and the contents of the transcribed protocols are analyzed in order to extract the baseline models used by the expert. Sarasvathy (1998) used this time-tested method on a subject pool consisting of 27 founders of companies ranging in size from $200 million to $6.5 billion to induce a baseline model of entrepreneurial expertise called “effectuation.”

Organization Studies publish 2008
Discovery and creation: alternative theories of entrepreneurial action. Jay Barney
Sharon Alvarez
Strategic Entrepreneurship Journal(sister journal to Strategic Management Journal) publish 2007
Do market information processes improve new venture performance? Mark Parry
Michael Song
Tang Wang

Does market information improve new venture performance? While some researchers argue that entrepreneurs do not need formal processes to collect and use market information, others suggest that the use of formal market information processes is positively related to firm performance. In this paper, we hypothesize that new venture performance is an increasing function of (1) the firm’s level of customer interaction and (2) the use of formal processes for collecting and utilizing market information. We also hypothesize that these linkages will be stronger among new ventures serving emerging markets (i.e., markets in which customer needs and segments are evolving). We test these hypotheses using data collected from 224 new ventures located in the United States. Our findings indicate that, regardless of market condition, formal processes for the collection of market information are positively associated with the use of formal processes for market information utilization and this relationship is stronger among firms serving established markets. In addition, new venture performance is positively associated with the use of formal processes for utilizing market information and this relationship is also stronger in established markets. We also find that, in emerging markets, new venture performance is a positive function of the use of formal processes for collecting market information. Contrary to expectations, we find that, regardless of market condition, the level of customer interaction has a negative relationship with the use of formal processes for market information utilization and no significant relationship with performance.

Journal of Business Venturing publish 2010
Does family employment enhance MSEs performance?: Integrating socioemotional wealth and family embeddedness perspectives. Christina Cruz
Julio De Castro
Rachida Justo

This paper analyzes the effect of family employment on performance in micro and small enterprises (MSEs) by combining two research perspectives that, until now, have been conducted separately: the family embeddedness perspective of entrepreneurship (Aldrich and Cliff, 2003) and the socioemotional wealth (SEW) approach to family business (Gomez-Mejia et al 2007). Our integrated perspective allows us to highlight how the nature of the employment relationships in MSEs enhances the benefits derived from the socioemotional endowment associated with family labor, and reduces the opportunity costs of employing relatives. Moreover, we assert that this relationship is moderated by specific family characteristics that determine the firm’s ability to preserve the SEW, while at the same time pursuing financial goals. Our results provide partial support to the enhancing role of family labour on MSEs performance: employing family members increases sales but decreases profitability as measured by ROA. This effect also results in improved performance for women-led firms and for firms that have received family funding, but impairs MSEs performance when the business is the main source of the owner´s household income.

Journal of Business Venturing publish 2010
Effectual Networks: A Pre-commitment Approach to Bridging the Gap Between Opportunism and Trust Nick Dew
Saras Sarasvathy

One of the theoretical puzzles concerning how organizations and markets come to be has to do with our fundamental behavioral assumptions. While economic theories are built on assumptions of opportunism, organizational and sociological theories either look for existing structures of trust as ways to overcome opportunism, or emphasize the role of a third-party arbiter. In this paper, we bring together two existing concepts in previous literature, namely, docility and effectuation, to construct a pre-commitment approach to the creation of new networks that proceeds in the face of motivational uncertainty – i.e. irrespective of assumptions of opportunism or trust. We develop our synthesis within the context of new market creation in entrepreneurship. Instead of strong behavioral assumptions based on opportunism or trust, we begin with the far weaker assumption of docility – i.e. the fact that human beings are, to varying degrees, persuadable. Furthermore, in the context of extremely nascent or non-existent markets, actors may not only be uncertain about each others’ motivations, but may be unsure of their own future preferences and goals. Under such circumstances of combined motivational and environmental uncertainty, non-predictive strategies such as effectuation are called for in creating and managing new networks. The effectual pre-commitment approach we develop in this setting is analogous to other pre-commitment approaches developed in areas such as finance, jurisprudence, and economic psychology. A pre-commitment is defined as a self-imposed non-negotiable constraint that stacks the deck in favor of or against specific future choices.

Academy of Management Conference publish 2003  PDF Download
Effectual Reasoning in Entrepreneurial Decision Making: Existence and Bounds Saras Sarasvathy

That entrepreneurs create firms is a simple fact. But that entrepreneurs often create firms in the absence of markets is an idea that is recently gaining ground with researchers (Shane & Venkataraman, 1999). The phenomenon is further complicated by the fact that much of the information required to bring new markets into existence itself does not come into existence until those markets are created (Arrow, 1974). In an attempt to tackle the issues raised by this central research question in entrepreneurship, Sarasvathy (2001) has proposed effectuation as the dominant decision model for entrepreneurial decision making, particularly in the absence of pre-existent markets. Through a verbal protocol study of 27 expert entrepreneurs, this paper establishes the existence of effectual reasoning in their cognitive processes and delineates the bounds between their use of causation and effectuation. In quantitative terms, over 63% of the subjects used effectuation more than 75% of the time.

Academy of Management Journal publish 2001  PDF Download
Effectual reasoning in expert entrepreneurial decisions: Existence and bounds Saras Sarasvathy

Recent theorizing in entrepreneurship has proposed effectuation as a dominant decision model in entrepreneurial decision making. Through a verbal protocol study of 27 expert entrepreneurs who were asked to identify the market for a single new product, this paper establishes the existence of effectual reasoning in their cognitive processes and delineates the bounds between their use of causation and effectuation. In quantitative terms, over 63% of the subjects used effectuation more than 75% of the time.

publish 2001
Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

In support of theory, this study demonstrates that entrepreneurial experts frame decisions using an “effectual” logic (identify more potential markets, focus more on building the venture as a whole, pay less attention to predictive information, worry more about making do with resources on hand to invest only what they could afford to lose, and emphasize stitching together networks of partnerships); while novices use a “predictive frame” and tend to “go by the textbook.” We asked 27 expert entrepreneurs and 3 7 MBA students to think aloud continuously as they solved typical decision-making problems in creating a new venture. Transcriptions were analyzed using methods from cognitive science. Results showed that expert entrepreneurs framed problems in a dramatically different way than MBA students. Published by Elsevier Inc.

Journal of Business Venturing publish 2009
Effectuation 10 year waypoint S Dolmans
Stuart Read
International Review of Entrepreneurship publish 2012
Effectuation and causation in entrepreneurship education Puhakka, Vesa
S.makimurto koivumaa

Entrepreneurship refers to development and enactment of entrepreneurial opportunities at the intersection of venture creation and market creation. The present study approaches entrepreneurship education as effectuation of possible futures and causation of relevant knowledge in the creation of entrepreneurial opportunities. Through emphasis on the role of effectuation, a creative process view of entrepreneurship education is advocated. It builds on the cognitive and social-psychological schools of entrepreneurship and cognitive, contextual and creation views on entrepreneurial opportunities. As a result, we suggest a model in which effectuation could be used systematically together with causation in entrepreneurship education. Effectuation in entrepreneurship education is proposed to open a new pedagogic view and context to increase student awareness of their ability to create societal impact rather than to accomplish the effective establishment of a company.

International Journal of Entrepreneurial Venturing publish 2013
Effectuation and entrepreneurial orientation in high-technology firms B Urban
T S Mthanti

Effectuation provides an explanation of the behaviour of entrepreneurial firms in transforming environments. This article empirically investigates the influence of effectuation on entrepreneurial orientation (EO) and firm performance, while considering environmental uncertainty as a moderating influence. A survey is administered to a sample of high-technology firms and hypotheses are tested using correlational and regression analysis. A positive relationship between effectuation and the firm’s level of EO is established, where this effectuation moderates the relationship between EO and firm performance. However, the interaction effect between effectuation and environmental dynamism and hostility proves to be non-significant. By applying an empirical lens this study increases the relevance and generalisability of effectuation theory by expanding it from mostly a descriptive nature to a theory that accounts for moderators in the EO–performance relationship.

Technology Analysis & Strategic Management publish 2014
Effectuation and home-based online business entrepreneurs Daniel Kupper
Di Domenico MariaLaura
Sharma, Pramodita

This article explores effectual processes within home-based, online businesses. Our empirical evidence provides a number of refinements to the concept of effectuation in this specific domain. First, the ubiquity of non-proprietary online trading platforms encourages the adoption of effectual approaches and removes the importance of forming proprietary strategic alliances and pre-commitments. Second, the notion of affordable loss – a central tenet of effectuation – should be extended beyond the notion of economic to social affordable loss, including loss of status and reputation, and finally, home-based online businesses allow effectuation to be associated with low levels of entrepreneurial self-efficacy and experience.

International Small Business Journal publish 2014
Effectuation and over-trust: Debating Goel and Karri Nick Dew
Saras Sarasvathy

In their article on entrepreneurship, effectuation, and over-trust, Goel and Karri suggest relationships between effectuation, over-trust, and certain psychological characteristics of entrepreneurs. In this response we debate their article. Goel and Karri are correct in claiming that effectuation supposes over-trust. However, we argue that effectual logic works in a different way than they presented because it neither predicts nor assumes trust. Goel and Karri’s article also draws attention to the behavioral assumptions underlying constructs such as over-(under) trust. Our suggestion is that effectuation is based on alternative behavioral assumptions that open up interesting avenues for future research in entrepreneurship.

Entrepreneurship Theory and Practice publish 2008
Effectuation and Over-Trust: Response to Sarasvathy and Dew. Ranjan Karri
Sanjay Goel
Entrepreneurship Theory and Practice publish 2008
Effectuation in the Management of Knightian Uncertainty: Evidence From the RealNetworks Case Saras Sarasvathy
Suresh Kotha

This study investigates how entrepreneurs in the Internet economy manage Knightian uncertainty during the early stages of the new venture creation process (Knight, 1921). Based on a detailed analysis of the decision-events that created RealNetworks, a leading audio/video streaming firm, we demonstrate both the existence and the extensive use of processes of effectuation to combat the Knightian uncertainty that typifies the new economy. Specifically, we show how RealNetworks used the three principles of effectuation – (1) affordable loss, (2) strategic partnerships, and (3) leveraging contingencies – to deal with complex and multiple manifestations of Knightian uncertainties in its micro and macro decision environments. We highlight how this firm used the logic of action and control, rather than that of analysis and prediction, to create its markets for streaming media and other applications on the World Wide Web. We argue that this logic is particularly useful in areas where human action (locally or in the aggregate) is the predominant factor shaping the future.

Research on Management and Entrepreneurship publish 2001  PDF Download
Effectuation, Causation, and Bricolage: A Behavioral Comparison of Emerging Theories in Entrepreneurship Research Greg Fisher

This study provides a critical examination of how different theoretical perspectives in entrepreneurship research translate into individual behavior, and whether such behavior is evident in the creation and development of new ventures. Using an alternative templates research methodology, the behaviors underlying the theories of effectuation, causation, and bricolage are evaluated to see whether such behaviors are observable in case study data describing the early development of six new ventures. The analysis highlights behavioral similarities and differences between the various theoretical perspectives in entrepreneurship research, providing insight into how these perspectives contrast and complement one another, and how they could be integrated in future research.

Entrepreneurship Theory and Practice publish 2012
Effectuation: Elements of Entrepreneurial Expertise. Saras Sarasvathy
Academy of Management) publish 2008
Emerging Firms and the Allocation of Control Rights: A Bayesian Approach. Sharon Alvarez
Simon Parker

This paper suggests that founders often use firm formation to exploit opportunities and must sometimes make organizing decisions about the allocation of control before the economic value of the opportunity can reliably be known even probabilistically. Motivated by questions surroundings such settings, we use incomplete contract theory and apply a Bayesian learning model to the allocation process of ownership control rights of founders in emerging firms. This model examines how founders learn and build on their prior beliefs, enabling them to allocate and change ownership control rights under differing conditions of risk and uncertainty.

Academy of Management Review publish 2009
Entrepreneurial Action And The Role Of Uncertainty In The Theory Of The Entrepreneur. Shepherd Dhliwayo
Jeffery McMullen

By considering the amount of uncertainty perceived and the willingness to bear uncertainty concomitantly, we provide a more complete conceptual model of entrepreneurial action that allows for examination of entrepreneurial action at the individual level of analysis while remaining consistent with a rich legacy of system-level theories of the entrepreneur. Our model not only exposes limitations of existing theories of entrepreneurial action but also contributes to a deeper understanding of important conceptual issues, such as the nature of opportunity and the potential for philosophical reconciliation among entrepreneurship scholars.

Academy of Management Review publish 2006
Entrepreneurial Effectuation: A Review and Suggestions for Future Research Gaylen Chandler
Gergana Markova
John Perry

Effectuation represents a paradigmatic shift in the way that we understand entrepreneurship. Since its introduction, however, few researchers have attempted to empirically test effectuation. Our purpose is to encourage effectuation research. To do so, we review the effectuation literature and make suggestions for how to design and conduct empirically rigorous effectuation studies consistent with the developmental state of the research stream.

Entrepreneurship Theory and Practice publish 2012
Entrepreneurial exit as a critical component of the entrepreneurial process: Theoretical development Dawn DeTienne

By demonstrating the importance of entrepreneurial exit to the entrepreneur, the firm, the industry, and the economy I contend that our understanding of the entrepreneurial process is incomplete without the inclusion of entrepreneurial exit. I define entrepreneurial exit and demonstrate how this conceptualization provides concepts that are unique from those addressed by researchers in other domains; thus outlining a space for it within the literature. In each phase of the entrepreneurial process I explore the development of an exit strategy, reasons for exit and options for exit.

Journal of Business Venturing publish 2010
Entrepreneurial logics for a technology of foolishness Nick Dew
Saras Sarasvathy

Several years ago Professor March pointed out that rational choice involves two guesses, a guess about uncertain future consequences and a guess about uncertain future preferences, and called for the development of a technology of foolishness to complement the technologies of intelligence that have been developed to improve the first guess. In this essay we use empirical data from two separate studies of entrepreneurial expertise, one involving the creation of new ventures and the other the birth of a new industry to identify three logics that constitute working elements of a technology of foolishness: (1) the logic of identity, as opposed to the logic of preferences; (2) the logic of action, as opposed to the logic of belief; and (3) the logic of commitment, as opposed to the logic of transaction.

publish 2005
Entrepreneurs, Effectual Logic, and Over-Trust. Ranjan Karri
Sanjay Goel
Entrepreneurship Theory and Practice publish 2006
Entrepreneurship as a Process: Toward Harmonizing Multiple Perspectives Kevin Hindle
Peter Moroz

Are there any common denominators within the diversity of entrepreneurship literature that may serve as foundations for understanding the entrepreneurial process in a systematic and comprehensive way that is useful to both scholars and practitioners? The objective of this paper was to discover about the entrepreneurial process what, if anything, is both generic (all processes that are “entrepreneurial” do this) and distinct (only entrepreneurial processes do this). Our approach was to evaluate published models of entrepreneurial process to discover what scholars have argued about what entrepreneurs do and how they do it (the processes they use) and to seek out any key commonalities that scholars claim are associated with the phenomenon. Unfortunately for the field, the investigation demonstrates that, as at the time of our investigation, the 32 extant models of entrepreneurial process are highly fragmented in their claims and emphases and are insufficient for establishing an infrastructure upon which to synthesize an understanding of entrepreneurial process that is both generic and distinct. Insights gained in the study lead to suggestions for future research and theory development of which the most urgent is the need to develop a single harmonized model of entrepreneurial process capable of embracing the best of what is on offer and adding new theoretical arguments in areas where practice shows that they are lacking.

Entrepreneurship Theory and Practice publish 2012
Entrepreneurship As a Science of the Artificial Saras Sarasvathy

This essay connects four key ideas from Herb Simon’s “Sciences of the Artificial” to recent research on entrepreneurial expertise: (1) Natural laws constrain but do not dictate our designs; (2) We should seize every opportunity to avoid the use of prediction in design; (3) Locality and contingency govern the sciences of the artificial; and, (4) Near-decomposability is an essential feature of enduring designs. The essay is based on a series of conversations and emails with Herb about the empirical findings of my doctoral dissertation that involved a protocol analysis study of expert founder-entrepreneurs.

Journal of Economic Psychology publish 2003  PDF Download
Entrepreneurship as a science of the artificial Saras Sarasvathy

This essay connects four key ideas from Herbert Simons ‘‘Sciences of the Artificial’’ to recent research on entrepreneurial expertise: (1) natural laws constrain but do not dictate our designs (2) we should seize every opportunity to avoid the use of prediction in design (3) locality and contingency govern the sciences of the artificial; and (4) near-decomposability is an essential feature of enduring designs. The essay is based on a series of conversations and emails with Simon about the empirical findings of my doctoral dissertation that involved a protocol analysis study of expert founder-entrepreneurs.

publish 2003
Entrepreneurship as Economics with Imagination Saras Sarasvathy

To date, economics has failed to develop a useful theory of entrepreneurship because of its inability to break out of the static equilibrium framework and the modeling of success/failure as a 0-1 variable. Entrepreneurship research also has not achieved this task due to its preoccupation with the quest for “the successful entrepreneur” and/or the successful firm. This essay calls for a new vocabulary for entrepreneurship, consisting of: (1) a plural notion of the entrepreneurial process as a stream of successes and failures, wherein failure management becomes the key science of entrepreneurship; (2) an effectual notion of bringing together particular entrepreneurs and particular environments through creative action; and, (3) a contingent notion of aspirations that places imagination at the center stage of economics. Together, the new vocabulary allows us to ask new questions and develop new approaches that allow entrepreneurship to tackle the central task of imagination in economics – i.e., to create from the society we have to live in, the society we want to live in.

Business Ethics Quarterly publish 2001  PDF Download
Entrepreneurship as Elixir and Mutagen Lundmark, Erik
Westelius, Alf

Metaphors are powerful tools for sensemaking, sensegiving, and theory development, but they are often concealed in academic writing. This paper uncovers two metaphors underlying entrepreneurship discourse and research—elixir and mutagen. The elixir metaphor is uncovered by examining critiques of entrepreneurship research, and serves as a compact description of problematic aspects entrepreneurship scholars should be mindful of. The mutagen metaphor is uncovered by examining evolutionary frameworks, focusing on the role entrepreneurship plays in them. The paper illustrates how the mutagen metaphor can be used to reframe entrepreneurship, and uses the metaphors to interest, inform, and provoke.

Entrepreneurship Theory and Practice publish 2014
Entrepreneurship as Method: Open Questions for an Entrepreneurial Future Saras Sarasvathy
S. Venkataraman

In this essay, we outline the provocative argument that in the realm of human affairs there exists an “entrepreneurial method” analogous to the scientific method spelled out by Francis Bacon and others with regard to the natural realm. We then suggest a series of open questions that we believe will help future scholars spell out the contents of such a method and ways in which it can be put to work in the design and achievement of socio-economic ends. At least one normative implication of accepting the argument would be to teach entrepreneurship not only to entrepreneurs but to everyone, as a necessary and useful skill and an important way of reasoning about the world.

Entrepreneurship Theory and Practice publish 2011
Entrepreneurship Education: Toward a Model of Contingency-Based Business Planning. Benson Honig

Despite the ubiquity of business planning education in entrepreneurship, there is little evidence that planning leads to success. Following a discussion of the theoretical and historical underpinnings, three pedagogical models are compared, including two alternative experiential methods: simulations and the contingency approach. The contingency model, as introduced, utilizes Piaget’s concept of equilibration, and is asserted to provide both cognitive tools and flexibility in accommodating unanticipated environmental factors faced by future entrepreneurs.

Academy of Management Learning & Education publish 2004
Entrepreneurship in action: bringing together the individual, organizational and institutional dimensions of entrepreneurial action T J Waston
Entrepreneurship & Regional Development publish 2013
Entrepreneurship Research in Germany. Friederike Welter
Jurgen Schmude
Stefan Heumann
Entrepreneurship Theory and Practice publish 2008
Environmental Perceptions and Scanning in the United States and India: Convergence in Entrepreneurial Information Seeking? Arvind Kalia
Ruth May
Wayne Stewart
Entrepreneurship Theory and Practice publish 2008
Escaping the green prison: Entrepreneurship and the creation of opportunities for sustainable development David Payne
Desirée F. Pacheco
Thomas J. Dean

While entrepreneurial activity has been an important force for social and ecological sustainability; its efficacy is dependent upon the nature of market incentives. This limitation is sometimes explained by the metaphor of the prisoner’s dilemma, which we term the green prison. In this prison, entrepreneurs are compelled to environmentally degrading behavior due to the divergence between individual rewards and collective goals for sustainable development. Entrepreneurs, however, can escape from the green prison by altering or creating the institutions–norms, property rights, and legislation–that establish the incentives of competitive games. We provide a variety of evidence of such entrepreneurial action and discuss its implications for theory and practice.

Journal of Business Venturing publish 2010
Ethics and entrepreneurship Harry Sapienza
Jared Harris
Norman Bowie Norman Bowie

As the study of entrepreneurship and the study of business ethics become increasingly established, the intersection of entrepreneurship and ethics is receiving increasing scholarly attention. In this paper, we review the research connecting ethics and entrepreneurship, classifying the literature into three broad themes; we also identify and integrate the key themes that emerge, and we offer suggestions for future research. We conclude by introducing the articles in this special issue.

Journal of Business Venturing publish 2009
Event- and outcome-driven explanations of entrepreneurship Rhonda Engleman
Andrew Van de Ven

Aldrich [J. Manag. Inq. 10 (2001) 115] importantly points out that not all forms of process research are equal or the same. He emphasizes the need to distinguish between outcome-driven and event-driven research. We build upon Aldrich’s distinctions, arguing that event-driven and outcome-driven explanations represent different kinds of process and variance theories that are based on fundamentally different ontological assumptions. We examine and compare these variance and process theory assumptions in order to sharpen our understanding of process theory as distinct and not derivable from variance theory. We conclude by arguing that variance and process theories must be evaluated on their own items.

Journal of Business Venturing publish 2004
Experience, effectuation, and something good does the use of effectuation lead to positive outcomes T E Nelson

The theory of effectuation is ascending in entrepreneurship education. Hundreds of articles have been written on the topic. Many textbooks mention the theory, and one college level textbook teaches entrepreneurship entirely from an effectual perspective. Given its acceptance, the natural assumption is that effectuation is somehow ‘good.’ That is, there is some unique benefit that an entrepreneur gains from using effectuation. This dissertation examines the concept of effectuation, and its value to entrepreneurship. It seeks to determine if entrepreneurs who use effectual logic outperform entrepreneurs who don’t. Four hundred and fifty entrepreneurs across three states are surveyed to determine if and how much they effectuate, their business’s performance, and their satisfaction with their business’s performance, as well as their lives overall. Findings indicate that entrepreneurs with more experience adopt the effectual idea of seeking out pre-commitments before starting a new venture. Findings also indicate that the entrepreneur’s perception of his business’s financial performance is positively related to his or her inclination to experiment, be flexible, and to evaluate business opportunities by considering how much he or she can afford to lose.

University of Louisville publish 2012
Exploring internal corporate venturing in SMEs: Effectuation at Work in a new context M R Evald
Martin Senderovitz
Journal of Enterprising Culture publish 2013
Exploring the Role of Trust in Entrepreneurial Activity. David Smallbone
Friederike Welter
Entrepreneurship Theory and Practice publish 2006
Failing Firms And Successful Entrepreneurs: Serial Entrepreneurship As A Simple Machine Anil menon
Saras Sarasvathy

A detailed review of four literatures, namely, (1) Industrial organization, (2) Population ecology, (3) Labor and micro economics, and (4) Entrepreneurship, suggests that entrepreneurial performance is almost always confounded with firm performance. Serial entrepreneurial experience is at best seen as one of the inputs into firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates (as compared to firm success rates) by exploiting contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically sound implications about the size distribution of firms in the economy and suggests more nuanced approaches toward future research. For example, both failed firms and successful ones entail useful learning effects and path dependencies in the careers of serial entrepreneurs.

Management Science publish 2002  PDF Download
Failing firms and successful entrepreneurs: Serial entrepreneurship as a temporal portfolio. Anil menon
Saras Sarasvathy

A detailed review of four literatures, namely, (1) Industrial organization, (2) Population ecology, (3) Labor and micro economics, and (4) Entrepreneurship, suggests that entrepreneurial performance is almost always confounded with firm performance. Serial entrepreneurial experience is at best seen as one of the inputs into firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates (as compared to firm success rates) by exploiting contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically sound implications about the size distribution of firms in the economy and suggests more nuanced approaches toward future research. For example, both failed firms and successful ones entail useful learning effects and path dependencies in the careers of serial entrepreneurs.

publish 2012
Focus on opportunities as a mediator of the relationship between business owners’ age and venture growth. Michael Gielnik
MIchael Frese Zacher

Focus on opportunities as a mediator of the relationship between business owners’ age and venture growth.

Journal of Business Venturing publish 2010
Fostering Creativity in New Product Development through Entrepreneurial Decision Making M Blauth
Malte Brettel
René Mauer
Creativity and Innovation Management publish 2014
Founding Moral Reasoning on Evolutionary Psychology: A Critique and an Alternative Saras Sarasvathy

In this paper I develop a critique of the strong adaptationist view inherent in the work of Leda Cosmides and John Tooby, as presented at the Ruffin Lectures series in 2002. My critique proceeds in two stages. In the first stage, I advance arguments as to why I find the particular adaptation story that the authors advance for their experimental results unpersuasive even when I fully accept the value of their experimental results. In the second stage, I grant them their adaptation story and critique the implications of such stories for business ethics and for future research. In sum, I argue against recasting key problems in the social sciences to fit the use of tools developed in the so-called “hard” sciences. Instead, I urge that we deal with these problems on their own terms, i.e. through their basis in and dependence on deliberate social action.

Science and Business Ethics publish 2003  PDF Download
Founding moral reasoning on evolutionary psychology: A critique and an alternative. Saras Sarasvathy

At the heart of economics is an ethical story. From Adam Smith’s invisible hand (Smith, 1976) to Vilfredo Pareto’s innovation on the notion of optimality (Pareto, 1980) and Amartya Sen’s basic capability equality (Sen, 1998), economists do indeed preach the ethics of creative freedom and allocative justice. Yet, the charge, that homo economicus as a species — decked out in rational raiment and utilitarian hat — has limited imagination, is not exactly specious. Economics has repeatedly been criticized for its (presumably) arrogant presumptions to “hardness” as opposed to other social sciences. Philosophers have criticized its utilitarianism (Rawls, 1999); psychologists have criticized its rationality (Simon, 1959; Gigerenzer, 1999); sociologists have criticized its individualism (Merton, 1957; Joas, 1996); historians have criticized its static method (Galambos, 1988); and its own rhetoricians have criticized its metaphors (McCloskey, 1990). On the one hand, one could argue that the root cause of this astonishing barrage of critical attention focused on economics is precisely due to its unarguable success in the living vocabularies and actions of recent generations of educated human beings around the world. On the other hand, however, the particular charge being investigated in this essay is the failure of economics to date to incorporate the task of imagination within its domain and therein develop a useful theory of entrepreneurship.

publish 2003
Founding moral reasoning on evolutionary psychology: A critique and an alternative. Saras Sarasvathy

In this paper I develop a critique of the strong adaptationist view inherent in the work of Leda Cosmides and John Tooby, as presented at the Ruffin Lectures series in 2002. My critique proceeds in two stages. In the first stage, I advance arguments as to why I find the particular adaptation story that the authors advance for their experimental results unpersuasive even when I fully accept the value of their experimental results. In the second stage, I grant them their adaptation story and critique the implications of such stories for business ethics and for future research. In sum, I argue against recasting key problems in the social sciences to fit the use of tools developed in the so-called “hard” sciences. Instead, I urge that we deal with these problems on their own terms, i.e. through their basis in and dependence on deliberate social action.

publish 2003
Framing the Entrepreneurial Experience Kuratko Donald F.
Michael Morris
minet schindehutte
Spivack, April J.

Building on affective events theory (AET), an experiential perspective for conceptualizing entrepreneurship is introduced. As a “lived experience,” entrepreneurship represents a cumulative series of interdependent events that takes on properties rooted in affect and emotion. Unique characteristics of entrepreneurial experiences are examined. The entrepreneur is presented as actor in an unscripted temporal performance who continually encounters novelty. A model and set of propositions are presented linking pre-venture experience, key events, experiential processing, learning, affective outcomes, and decision making. It is argued that the entrepreneur and venture emerge as a function of ongoing experience, with the venture creating the entrepreneur as the entrepreneur creates the venture.

Entrepreneurship Theory and Practice publish 2012
Grappling With the Unbearable Elusiveness of Entrepreneurial Opportunities. Dimo Dimov

The notion of opportunity, as currently discussed in entrepreneurship research, is theoretically exciting but empirically elusive. This article seeks to stimulate a new conversation about entrepreneurial opportunities by distinguishing two conceptions of entrepreneurial behavior—formal and substantive—and situating the construct of opportunity within the latter. It discusses three substantive premises for studying opportunities empirically: (1) opportunity as happening; (2) opportunity as expressed in actions; and (3) opportunity as instituted in market structures. These premises stimulate research questions that can invigorate and expand the study of entrepreneurial opportunities. They invite a continuous dialogue between qualitative and quantitative methodologies in behalf of understanding how opportunities emerge and evolve at the level of individual entrepreneurs.

Entrepreneurship Theory and Practice publish 2011
HelppoAsu aikoo tehdä Metallicat ja valloittaa maailman effektuaalisesti Mia Patanen
Erno Salmela
Tekes-uutiset in Finnish publish 2016  PDF Download
How can we know the dancer from the dance?: Reply to “Entrepreneurship as the structuration of individual and opportunity: A response using a critical realist perspective”. J Dillard
Thomas J. Dean
Yolanda Sarason
Journal of Business Venturing publish 2010
How do Firms Come to Be? Towards a Theory of the Entrepreneurial Process Saras Sarasvathy

The paper presents a model of the pre-firm — defined here as the entity that transforms an idea into a firm. The entrepreneur who undertakes the pre-firm process creates the firm through a set of entrepreneurial decisions that arise out of four interconnected decision domains. Every pre-firm, whether it aborts early or creates a firm, provides the economy with an opportunity to create economic novelty and discover/create new demand — and leads to constraints and consequences that influence economic realities down the road. Developing a theory of the pre-firm should enhance our understanding of a variety of economic phenomena in terms of their initial conditions.

Frontiers of Entrepreneurship Research publish 1998  PDF Download
How great entrepreneurs think L Buchanan
Inc. Magazine publish 2011
How Opportunities Develop in Social Entrepreneurship Marcus Ho
Patricia Corner

The purpose of this article was to extend existing research on opportunity identification in the social entrepreneurship literature through empirically examining this phenomenon. We used an inductive, theory-building design that surfaced patterns in social value creation across multiple case studies. The patterns showed actors seeing a social need and prospecting ideas that could address it. Data also revealed multiple, not individual, actors, dynamically engaged in interactions that nudged an opportunity into manifestation. Also, data suggested complementarities to effectuation and rational/economic processes that are divergent theoretical approaches to the study of entrepreneurship to date.

Entrepreneurship Theory and Practice publish 2010
I Like How You Think’: Similarity as an Interaction Bias in the Investor–Entrepreneur Dyad Troy Harting
Haynie J.M
Murnieks, Charles Y.
Rob Wiltbank

Investigating the factors that influence venture capital decision-making has a long tradition in the management and entrepreneurship literatures. However, few studies have considered the factors that might bias an investment decision in a way that is idiosyncratic to a given investor–entrepreneur dyad. We do so in this study. Specifically, we build from the literature on the ‘similarity effect’ to investigate the extent to which decision-making process similarity (shared between the investor and the entrepreneur) might bias or otherwise impact the investor’s evaluation of a new venture investment opportunity. Our findings suggest venture capitalists evaluate more favourably opportunities represented by entrepreneurs who ‘think’ in ways similar to their own. Moreover, in the presence of decision-making process similarity, the impacts of other factors that inform the investment decision actually change in counter-intuitive ways.

Journal of Management Studies publish 2011
Identity in entrepreneurship effectuation theory: a supplementary framework Astrid Heidemann Lassen
Suna Lowe Nielsen

The article proposes a new framework on identity construction in entrepreneurship that in valuable ways supplements the logic of identity presented in Sarasvathy’s (2001, 2008) popular effectuation theory. Effectuation theory assumes that identity is a given and relative stable precondition of the entrepreneurial process that support the entrepreneur in ordering preferences in the process of effectuating resources, stakeholder commitment, etc.. The article shows that identity construction is an active and integral part of the effectuation process, and it importantly influences the manner in which the entrepreneur acts and makes decisions in the process. The article seeks to challenge and advance effectuation theory’s view on identity based on a narrative study of ten novice student entrepreneurs. The study gives insight into the identity processes involved in becoming a student entrepreneur, and it may serve as a guide to how entrepreneurship educators and counselors can place more emphasis on identity related struggles involved in the entrepreneurial effectuation process.

International Entrepreneurship and Management Journal publish 2012
Imagining and Rationalizing Opportunities: Inductive Reasoning and the Creation and Justification of New Ventures. john clarke
Joep Cornelissen Joep Cornelissen

We argue that creating novel ventures consists of inductive analogical or metaphorical reasoning, which generates a platform for the creation and commercialization of novel ventures and facilitates the comprehension and justification of a venture. We argue that such inductive reasoning is shaped by two determinants (the applicability of prior entrepreneurial experience and the motivation to resolve uncertainty and acquire legitimacy) that interrelate to predict and explain patterns of analogical and metaphorical reasoning by which novice and experienced entrepreneurs construct meaning for themselves as well as others in the early stages of creating a venture.

Academy of Management Review publish 2010
Immortal Firms in Mortal Markets? An Entrepreneurial Perspective on the Innovator’s Dilemma. Nick Dew
Saras Sarasvathy

“The Innovators’ Dilemma” consists in the fact that by doing the right thing – i.e., listening to current customers, leading firms often end up losing their markets to upstart newcomers. Therefore, understanding how entrepreneurs successfully create such upstart firms and new markets ought to have direct implications for strategic management theorizing about this dilemma. This paper examines such implications of some recent developments in entrepreneurship and outlines how effectual reasoning may be used to overcome the innovators’ dilemma in large corporations. The paper also identifies new questions for future research in the overlap between strategic management and entrepreneurship.

publish 2008
Immortal Firms in Mortal Markets? How Entrepreneurs Deal with “The Innovators’ Dilemma” Nick Dew
Saras Sarasvathy

“The Innovators’ Dilemma” consists in the fact that by doing the right thing – i.e., listening to current customers, leading firms often end up losing their markets to upstart newcomers. Therefore, understanding how entrepreneurs successfully create such upstart firms and new markets ought to have direct implications for strategic management theorizing about this dilemma. This paper examines such implications of some recent developments in entrepreneurship and outlines how effectual reasoning may be used to overcome the innovators’ dilemma in large corporations. The paper also identifies new questions for future research in the overlap between strategic management and entrepreneurship.

Strategic Management Journal publish 2001  PDF Download
Innovation in Large Corporations: A Development of the Rudimentary Theory of Effectuation. Erik Svensrud
Havard Asvoll

Motivated by the rudimentary theory of effectuation, this theoretical study was conducted in order to develop the theory to encompass effectual innovation in large corporations, and to include the aspect of tacit knowledge and time. We present a theoretical socio dynamic model focusing on the relationship between the use of effectual strategies and the evolution of the value of opportunities over time. We suggest that effectuation processes are valuable for innovation in large corporations, especially in the early stages of the opportunity growth, and that tacit knowledge and time can be important aspects of the effectuation strategies.

In Academy of Entrepreneurship publish 2011
Innovations, stakeholders and entrepreneurship. Nick Dew
Saras Sarasvathy

modern societies entrepreneurship and innovation are widely seen as key sources of economic growth and welfare increases. Yet entrepreneurial innovation has also meant losses and hardships for some members of society: it is destructive of some stakeholders wellbeing even as it creates new wellbeing among other stakeholders. Both the positive benefits and negative externalities of innovation are problematic because entrepreneurs initiate new ventures before their private profitability and/or social costs can be fully recognized. In this paper we consider three analytical frameworks within which these issues might be examined: pre-commitments, contractarianism, and an entrepreneurial framework. We conclude that the intersection of stakeholder theory and entrepreneurial innovation is a potentially rich arena for research.

Journal of Business Ethics publish 2007
Integrating Cognition, Evolution, and Design: Extending Simonian Perspectives to Strategic Organization Mie Augier
Saras Sarasvathy

Several streams of research in strategic management and organizational theory build upon the early work of Herbert Simon. Yet, as content analyses of articles published in leading management journals show, key ideas from his later years are for the most part either neglected or misinterpreted. We bring to strategic organization three constructs from Simon’s later work and make a case for their use in future research in strategic management and entrepreneurship: Docility is a fundamental behavioral assumption in lieu of opportunism or embedded networks of trust; Near-decomposability is an evolutionarily robust structural feature that permeates Nature’s designs and has implications for human artifacts; and, Artifacts are products of human design that reshape local environments and/or help select between them to create and achieve human purposes. Each of these constructs embodies a uniquely Simonian integration of evolution, cognition, and design. Together they enable us to conceptualize empirical phenomena as thick three-dimensional reality rather than as abstractions entailed by any one of these perspectives alone.

Strategic Organization publish 2004
Integrating Cognition, Evolution, and Design: Extending Simonian Perspectives to Strategic Organization Saras Sarasvathy

Several streams of research in strategic management and organizational theory build upon the early work of Herbert Simon, in particular, and the ideas of James March, Richard Cyert and the behavioral model developed by the Carnegie School in general. Yet, as we show in this paper through a variety of citation and content analyses of articles published in leading management journals, key ideas developed by Simon in his later years are for the most part either neglected (e.g. his work on docility), or misinterpreted (e.g. his work on near-decomposability). We bring to strategic organization three constructs from his later work – namely, docility, near-decomposability and artifact – and make a case for their use in future research in strategic management and entrepreneurship. The primary appeal of these constructs lies in the fact that each embodies a uniquely Simonian integration of evolution, cognition, and design, enabling us to conceptualize empirical phenomena as thick three-dimensional reality rather than thin abstractions entailed by any one of these perspectives alone.

Strategic Organization publish 2004  PDF Download
International Entrepreneurship: Exploring the Logic and Utility of Individual Experience Through Comparative Reasoning Approaches Casulli, Lucrezia
Marian Jones

In this paper, we suggest that individual experience and reasoning, as applied to new endeavors in internationalization, are concepts with high potential to advance conceptual and empirical research in international entrepreneurship (IE). Experience is known to be important in internationalization, but the logic or reasoning with which it is applied is insufficiently understood. Cognitive, comparison-based reasoning theories explain how individuals draw on experience to make sense of uncertain, novel, and complex situations. Drawing on two such theories, heuristics and analogical reasoning, we delineate the logic of experience and advance speculative propositions on its utility in the context of internationalization research.

Entrepreneurship Theory and Practice publish 2014
Internationalization as an entrepreneurial process Johanson, Jan
Schweizer, Roger
Vahlne, Jan-Erik

When firms cross-borders it is, by definition, internationalization. We believe that often internationalization should be seen as either a by-product of a firm’s efforts to improve its position within its network or networks, or as the result of an entrepreneurial action. We consider three theoretical approaches as a starting point and breathe life into them with a rich case study. We suggest adjustments to Johanson and Vahlne’s business network internationalization process model, an update of the Uppsala internationalization process model, to emphasize the entrepreneurial aspects of the process.

Journal of International Entrepreneurship publish 2010
Introduction to Special Topic Forum multilevel theory. Dave Ketchen
Daved Barry
Violina Rindova
Academy of Management Review publish 2009
Investment Practices and Outcomes of Informal Venture Investors Rob Wiltbank

This study explores a model of venture investing developed from the literature on formal venture capital research in the setting of angel investing in the United States. The model explores the role of venture stage, due diligence, deal flow, co-investing, and post investment participation on the distribution of returns to angel investors. Doing so directly addresses an interesting question regarding the extent to which formal venture capital practices are appropriate and effective in the typical angel investment setting. In the process, results from the first relatively large scale study of angel investor outcomes in the U.S. are reported and related to earlier findings for U.K. angel investors.

Venture Capital: International Journal of Entrepreneurial Finance publish 2005  PDF Download
Is effectuation Lachmannian? A response to Chiles et al. Nick Dew
Saras Sarasvathy
Organization Studies publish 2008
Is effectuation Lachmannian? A response to Chiles, Bluedorn, and Gupta Nick Dew
Saras Sarasvathy
Organization Studies publish 2008
Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs Bausch, Andreas
Jan Brinckmann
Rosenbusch, Nina

The performance implications of innovation in small and medium-sized enterprises (SMEs) have attracted considerable interest among academics and practitioners. However, empirical research on the innovation-performance relationship in SMEs shows controversial results. This meta-analysis synthesizes empirical findings in order to obtain evidence whether and especially under which circumstances smaller, resource-scarce firms benefit from innovation. We find that innovation-performance relationship is context dependent. Factors such as the age of the firm, the type of innovation, and the cultural context affect the impact of innovation on firm performance to a large extent.

Journal of Business Venturing publish 2011
Is There Conceptual Convergence in Entrepreneurship Research? A Co-Citation Analysis of Frontiers of Entrepreneurship Research, 1981-2004. Jean-Pierre Bechard
Denis Gregoire
MArtin Noel
Richard Dery

Conceptual convergence is often seen as a holy grail in entrepreneurship research. Yet little empirical research has focused specifically on the extent and nature of this convergence. We address this issue by content-analyzing the networks of co-citation emerging from the 20,184 references listed in the 960 full-length articles published in the Frontiers of Entrepreneurship Research series between 1981 and 2004. Our results provide evidence for the varying levels of convergence that have characterized entrepreneurship research over the years, as well as the evolution of the conceptual themes that have attracted scholars’ attention in different periods. In addition, we provide evidence that the field relies increasingly on its own literature, something that points toward the unique contribution that it makes to the management sciences.

Entrepreneurship Theory and Practice publish 2006
Journal of Evolutionary Economics Nick Dew
Saras Sarasvathy

Is new market creation a search and selectionprocess within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? In this article we consider new market creation as a process involving a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and convergingconstraints that result in the new market. The dynamic model was induced from two empirical investigations, a cognitive science-based investigation of entrepreneurial expertise, and a real time history of the RFID industry.

Journal of Evolutionary Economics publish 2005
Judging a business by its cover: An institutional perspective on new ventures and the business plan Benson Honig
Tomas Karlsson

Business plans are widely spread among new businesses, and they are supported by various universities, governmental assistance agencies, management consultants and a wide array of literature. Business plans are often taken for granted as highly useful tools that should be frequently updated and used. This study is based on data from six companies and their environments, over five years, using several forms of data collection such as interviews, observations, and archival data. In contrast to previous studies, we found that initial conformity to business plan norms gradually and without exception lead to loose coupling. Entrepreneurs who wrote business plans never updated or rarely referred to their plans after writing them.

Journal of Business Venturing publish 2009
Knowing what to do and doing what you know: Entrepreneurship as a form of expertise. Saras Sarasvathy
Stuart Read

The authors acknowledge that entrepreneurship is a complex phenomenon that merits a variety of approaches to study it. They add to extant approaches the study of entrepreneurial expertise–that is, a set of skills, models, and processes that can be …

The Journal of Private Equity publish 2005
La dérive “situationniste”. Le plus court chemin pour apprendre à entreprendre? Jacqueline Fendt Jacqueline Fendt
Sylvain Bureau

Les formations en entrepreneuriat au sein des écoles de commerce et à l’université semblent déconnectées des pratiques réelles des entrepreneurs. La pédagogie traditionnelle demande aux étudiants d’appliquer des connaissances présentées dans le cadre de cours théoriques, dans un contexte prévisible où le raisonnement causal standard est parfaitement adapté. Les auteurs proposent de construire de nouvelles situations d’apprentissage basées sur la théorie de l’effectuation et sur une expérimentation, la dérive, fondée sur les travaux de l’Internationale Situationniste. Ils montrent comment ce dispositif permet d’apprendre à entreprendre.

Revue française de gestion publish 2012
Learning asymmetries and the discovery of entrepreneurial opportunities Andrew Corbett Andrew Corbett

Discovering entrepreneurial opportunities requires that individuals not only possess some form of prior knowledge, but that they also have the cognitive abilities that allow them to value and exploit that knowledge. This article builds upon and extends this line of inquiry by examining the relationship between opportunity identification and learning. Based upon an experimental task and other data collected from 380 technology professionals, the article defines a relationship between how individuals acquire and transform information and experience (i.e., learning) in order to identify opportunities. After analyzing the empirical data, the article develops the concept of learning asymmetries and explains how the manner in which people learn may affect their ability to identify entrepreneurial opportunities.

Journal of Business Venturing publish 2007
Learning Strategies of Nascent Entrepreneurs Benson Honig
Per Davidsson
Saras Sarasvathy
Tomas Karlsson

This research utilizes a longitudinal methodology to study the entrepreneurial learning strategies of a representative sample (n=171) of nascent entrepreneurs in Sweden. We examine Sarasvathy’s theory of effectuation with respect to six different learning strategies and their effect on the progression of start-up processes. The results show that the progression of the start-up process, as represented by the number of gestation activities undertaken during each time period, is systematically related to the nascent entrepreneur’s learning strategy. The analysis covers 24 months, and findings indicate that learning strategies associated with effectuation processes have positive effects on the progression of the start-up process. We also found positive effects from persistent learning strategies in the progression of the start up process.

University of Haifa publish 2002  PDF Download
Letter from the editor-in-chief: Dean A. Shepherd Shepherd Dhliwayo
Journal of Business Venturing publish 2010
Linking Effectuation to Causation in Chinese High-Tech Entrepreneurship: Strategic Framing Based on Culture, Cognition and Institutional Context. A Issak
YiPeng Liu
RESEARCH IN ENTREPRENEURSHIP AND SMALL BUSINESS publish 2011
Made, as well as found: Researching entrepreneurship as a science of the artificial. Nick Dew
Saras Sarasvathy
S. Venkataraman
Yale University Press. publish 2010
Making It Happen: Beyond Theories of the Firm to Theories of Firm Design Saras Sarasvathy

Current theories of the firm fail to distinguish between firm and entrepreneur and provide no explanation for entrepreneurial success except in terms of firm success. Even in current theories of the entrepreneur (psychological and otherwise) he or she is entirely cast as a bundle of traits or behaviors or heuristics and biases that serve to explain firm performance. In this paper, I suggest we put the entrepreneur center stage and adopt an instrumental view of the firm. I draw heavily upon theories of symbolic cognition from the Sciences of the Artificial and explore more recent work on semantic cognition to illustrate how we can go beyond theories of the firm to theories of firm design.

Conference on Entrepreneurial Cognition publish 2002
Making the Most of Failure Experiences: Exploring the Relationship Between Business Failure and the Identification of Business Opportunities Brandon Mueller
Shepherd Dhliwayo

Although previous research has extolled the importance of business failure as a precursor to transformational learning, few studies have explored the conditions under which such learning occurs or the content of the resulting knowledge. We explore several cognitive moderators of the relationship between failure experiences and a specific type of opportunity identification knowledge—the use of structural alignment processes. Results indicate that learning from failure is facilitated for entrepreneurs who possess a cognitive toolset that consists of opportunity prototypes and an intuitive cognitive style. Moreover, we found that prior professional knowledge negatively moderates this relationship.

Entrepreneurship Theory and Practice publish 2014
Management as a Science of the Artificial Mie Augier
Saras Sarasvathy

In some of his final papers on organization economics, Simon suggested building a new theoretical edifice of organizations and markets based on a “full-bodied” theory of the firm, as opposed to the “skeletal” view currently embraced by economics. The full-bodied firm would, in Simon’s conceptualization, rest upon: (a) the fundamental behavioral assumption of docility rather than opportunism; (b) focus on design activities of managers as well as on their decision making; and, (c) challenge the ubiquity and exogeneity of markets, making them instead an artificial product of human design. In other words, the endeavor he left us with is to begin constructing a behavioral theory of markets.

Journal of Economic Psychology publish 2003  PDF Download
Managing Disruptive Innovation: Entrepreneurial Strategies and Tournaments for Corporate Longevity. S J S Yang
Yanto Chandra

Extant research on disruptive innovation has implicitly incorporated entrepreneurship as the underlying driver of the disruptive phenomenon. We integrate recent developments from entrepreneurship and innovation research streams to better understand the conditions and causal mechanisms that influence disruptive innovation. Drawing on effectuation, evolutionary entrepreneurship, lead-users, collective intelligence, and opportunity tournament literature, we develop a theoretical framework that explains disruptive innovation as a co-evolutionary entrepreneurial process at the firm, product, and customer level. The framework offers a set of testable propositions to advance theory and practice in the field. We suggest avenues for future research and conclude entrepreneurial strategies to help general managers create and cope with disruptive innovation.

SSRN publish 2011
Marketing Under Uncertainty: A Knock on the Door. Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

How do people approach marketing in the face of uncertainty, when the product, the market, and the traditional details involved in market research are unknowable ex ante? The authors use protocol analysis to evaluate how 27 expert entrepreneurs approach such a problem compared with 37 managers with little entrepreneurial expertise (all 64 participants are asked to think aloud as they make marketing decisions in exactly the same unpredictable situation). The hypotheses are drawn from literature in cognitive science on (1) expertise in general and (2) entrepreneurial expertise in particular. The results show significant differences in heuristics used by the two groups. While those without entrepreneurial expertise rely primarily on predictive techniques, expert entrepreneurs tend to invert these. In particular, they use an effectual or nonpredictive logic to tackle uncertain market elements and to coconstruct novel markets with committed stakeholders.

Journal of Marketing publish 2009
Marketing under uncertainty: The logic of an effectual approach. Michael Song
Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

How does one approach marketing in the face of uncertainty, where the product, the market and the traditional details involved in market research are unknowable ex ante? We use protocol analysis to evaluate how 27 expert entrepreneurs approach such a problem, compared to 37 managers with little entrepreneurial expertise, with all 64 subjects being asked to think aloud as they make marketing decisions in exactly the same unpredictable situation. Our hypotheses are drawn from literature in cognitive science on (a) expertise in general and (b) entrepreneurial expertise in particular. Results show significant differences in heuristics used by the two groups. While those without entrepreneurial expertise rely primarily on predictive techniques, expert entrepreneurs tend to invert these. In particular, they use an effectual or non-predictive logic to tackle uncertain market elements and co-construct novel markets with committed stakeholders.

Journal of Marketing publish 2009
MAZES without minotaurs: Herbert Simon Saras Sarasvathy
In this essay, I remember Herbert Simon as author of Sciences of the Artificial and my thesis advisor and collaborator. Even for a lifetime of deep insights into human behavior and its role in shaping the world we live in, Simons insight into the need for a whole new class of sciences is an astonishing one. The artificial is essential for entrepreneurship and for developing an organization-centric view of markets and economies.
publish 2012
Measuring emergence in the dynamics of new venture creation Benyamin Lichtenstein
kevin Dooley
Thomas Lumpkin

Modeling the dynamics of nascent entrepreneurship provides insight into how organizations are created. In order to study this complex phenomenon we develop a longitudinal case study and analyze it with respect to three modes of organizing: vision, strategic organizing, and tactical organizing. Multiple sources of data are used to identify changes within and across these three modes. Using longitudinal content analysis and other complexity science methods, we found a nearly simultaneous shift in all three modes, indicating a punctuation event. We define this punctuation as an “emergence event,” and provide a process model of organizational emergence showing that a shift in tactical organizing generated a shift in strategic organizing, which resulted in a shift in the vision (identity) of the firm. We conclude with some theoretical implications of our analysis.

Journal of Business Venturing publish 2006
Metallicalta oppia suomalaiselle elinkeinoelämälle – Kuinka raivataan tie autotallista maailman huipulle ja luodaan uudet markkinat Erno Salmela
Tekes-uutiset in Finnish publish 2016  PDF Download
Mindful deviation through combining causation and effectuation: a design theory-based study of technology entrepreneurship K Middleton
M Johanson

Technology entrepreneurship can be seen as building upon, while also deviating from, technological paths. Such deviation has primarily been described as singular events where individuals with prior knowledge discover a new opportunity. In this article, we will instead study deviation as a process of collective decision making, seen more as something mindful than singular. The purpose is to explore mindful deviation as decision making by nascent technology entrepreneurs as they conceptualize an early platform technology. Based on case assignments undertaken by 13 teams in a venture creation programme, C-K design theory is used to trace how nascent technology entrepreneurs in action combine causal and effectual decision-making logics. Individually answered questionnaires also offered insights into how the entrepreneurs perceived their decision making in hindsight. The findings break with our received wisdom around how opportunities are recognized as well as how effectual and causal logics occur. As a result, mindful deviation through combinations of effectual and causal logic is suggested as a means to understand early-stage technology entrepreneurship.

Creativity and Innovation Management publish 2015
Mission Drift Or Strategic Shift? Group Formation Strategies Within Meps. B Luke
V Chu

Mission drift is a common criticism of microenterprise programs (MEPs) that target those likely to succeed rather than those most in need. This note examines approaches to group formation within international NGOs operating MEPs in Vietnam. A deliberate strategy of involving both poor and non-poor households in MEPs emerges through effectuation, learning from past challenges. This approach represents a shift in focus away from the extremely poor but presents a potential pathway for effective and sustainable poverty alleviation, if undertaken as part of an integrated program. Copyright © 2012 John Wiley & Sons, Ltd.

Journal of International Development publish 2012
Nascent entrepreneurs and venture emergence: Opportunity confidence, human capital, and early planning Dimo Dimov

Nascent entrepreneurs continuously evaluate the merits of the opportunities they pursue and so can abandon those that lack promise and persist with those that remain attractive. This paper articulates this evolving judgment about the opportunity as the nascent entrepreneur’s opportunity confidence. It situates this construct in the context of the nascent entrepreneur’s human capital and early planning actions in respect to the pursued opportunity, and in respect to the emergence of the nascent venture. Analyses of PSED data show that opportunity confidence positively affects venture emergence and that, through it, entrepreneurial experience and early planning have only indirect effects on venture emergence. In contrast, industry experience has a direct, positive effect on venture emergence. These results provide some novel insights into the nascent entrepreneurial process as well as into the role of human capital and early planning in that process.

Journal of Management Studies publish 2010
New market creation as transformation. Nick Dew
Saras Sarasvathy

Is newmarket creation a search and selection process within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? In this article we consider new market creation as a process involving a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and converging constraints that result in the new market. The dynamic model was induced from two empirical investigations, a cognitive science-based investigation of entrepreneurial expertise, and a real time history of the RFID industry.

Journal of Evolutionary Economics publish 2005
Nordic Entrepreneurship Research. Daniel Hjorth

This article describes and discusses Nordic entrepreneurship research (NER). It does so by providing a broader context for conducting entrepreneurship research, including historical, sociocultural, and disciplinary elements substantiating an understanding of “Nordic.” Contextualizing NER this way, we attempt for the article to do what it says, i.e., to also write here in a style we argue is characteristically Nordic. This includes a priority to the local and particular, and a subsequent focus on questions resonant with nominalist research. We thereby enable an experience of NER as a cultural practice, as we argue that this is a crucial part of understanding what it is. Drawing on a tracing of NER in journal publications (in between 2001 and 2005), the article identifies trends and tendencies. We identify three generations of entrepreneurship research and suggest directions for the future development of the third. This way, the discussion and conclusions are drawn toward images of what a Nordic entrepreneurship research might become.

Entrepreneurship Theory and Practice publish 2008
Offical Response to Arend et al: Co-Creating Effectual Entrepreneurship Research Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

In the October issue, the Academy of Management Review published a critique of effectuation (Arend et al, 2015). Forthcoming from Read et al (2016) is a dialog piece in response to that critique. Until the dialog piece is published in the Academy of Management Review, it will be available for download here. Please note that our forthcoming dialog is accompanied by a non-peer reviewed document which adds detail to our response: <a href=”http://www.effectuation.org/paper/unreasonable-assumptions”>Link to ASB Assumptions</a> We understand that there are several more dialog pieces in the works from other authors, and as they become available, we will provide links to them here.

Academy of Management Review publish 2016  PDF Download
On Lachmannian and Effectual Entrepreneurship: A Rejoinder to Sarasvathy and Dew (2008) Bluedorn, A. C.
Todd Chiles
V K Gupta
Organization Studies publish 2008
On the Entrepreneurial Genesis of New Markets: Effectual Transformations Versus Causal Search and selection Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

The generation of new markets is an emerging area of interest among researchers working in the traditions of evolutionary economics. And true to those traditions, the current study incorporates empirical evidence from psychology and cognitive science to develop micro-foundations for evolutionary theories of new market generation. In this paper we present an in-depth analysis of how expert entrepreneurs use effectual logic to conceptualize the creation of new markets. Our results challenge received wisdom based on search and selection processes and move beyond combinatorial ideas to develop instead a “transformational” view of market genesis.

publish 2011
On the Theory of Entrepreneurial Incentives and Alertness McCaffrey, Matthew

This paper analyzes the theory of “entrepreneurial incentives” in the work of Israel Kirzner. It argues that there is a logical problem with the notion of profit opportunities as exogenous causal agents: Without additional assumptions, the existence of opportunities alone does not sufficiently explain the alertness of entrepreneurs. The paper considers both stronger and weaker versions of this problem. It also questions the relation between entrepreneurial incentives and the tendency toward entrepreneurial success. Finally, it provides some commentary on the relevance of entrepreneurial incentives for an overall theory of the entrepreneur, and identifies several potential solutions to the problems discussed.

Entrepreneurship Theory and Practice publish 2014
Opportunities as Existing and Created: A Study of Entrepreneurs in the Swedish Mobile Internet Industry Henrik Berglund

The notion of opportunities is fast becoming a central theme in the field of entrepreneurship research. As part of this growing interest, the ontological status of opportunities has been scrutinized with researchers tending to view them as either objectively existing or socially created. In the present treatment, this ontological debate is partly avoided in favor of a phenomenological examination of Mobile Internet entrepreneurs, which naturally bridges these distinctions. The empirical findings are used to propose a framework in which opportunities are seen as both existing and created in the evolving set of perceptions and projections, sometimes fixed and sometimes mutable, that provide the cognitive and practical drivers needed to guide entrepreneurial action.

Journal of Enterprising Culture publish 2007  PDF Download
Optimal Inertia: When organizations should fail Brent Goldfarb
Nick Dew
Saras Sarasvathy

We challenge the premise that the CEO’s job is to keep the corporation alive and thriving at all costs and under all circumstances. We briefly review the differing normative views of strategic management theorists and organizational theorists about organizational inertia. We then develop an economic model of incumbent behavior in the face of challenger competition that accommodates complementary assets. The model predicts and describes conditions under which organizational inertia, as subsequent organizational failure, is optimal. We then extend the logic and propose that the failure of entrepreneurial firms does not necessarily imply the failure of entrepreneurs. We conclude with a call to study ‘‘exit’’ as a viable strategic option.

publish 2006
Organising new business in a turbulent context: Opportunity discovery and effectuation for IJV development in transition markets Mainela, Tuija
Puhakka, Vesa

Research on entrepreneurship has suggested entrepreneurial phenomena to take place in a wide variety of contexts that deal with new venture emergence. Opportunity discovery and effectuation are seen as the essence of entrepreneurship. The present study examines entrepreneurial behaviour in the organising of an international joint venture (IJV) in Polish transition markets. The paper aims to answer the following question: How is an international joint venture organised in turbulent context through opportunity-discovery and effectuation behaviours? Based on theoretical analysis and a longitudinal case study, we illustrate the organising of an international joint venture in transition markets through specific behaviours of opportunity discovery and effectuation. We show especially the relationship-based nature of all the behaviours. The study advances international entrepreneurship research by emphasising the intertwinedness of the entrepreneurial behaviours with the drastic developments in the transition markets and the evolution of the IJV partnership.

Journal of International Entrepreneurship publish 2009
Organizational emergence: The origin and transformation of Branson, Missouri’s musical theaters Todd Chiles
A. D. Meyer
T J Hench

We draw on complexity theory to explain the emergence of a new organizational collective, and we provide a much-needed empirical test of the theory at the collective level of analysis. Taking a case study approach, we use four dynamics of emergence posited by complexity theory’s dissipative structures model—fluctuation, positive feedback, stabilization, and recombination—to explain how a collective of live musical performance theaters in Branson, Missouri, came into being and periodically transformed itself over a 100-year period. Our findings suggest a strong match between the theoretical perspective employed and the empirical processes uncovered, empirically validating the model at the collective level. The study demonstrates the value of conceptualizing evolution in terms of emergence, highlighting distinctions between the nascent complexity approach to evolution and the neo-Darwinian evolutionary approach that has dominated the theoretical conversation in organization science for the past generation. Our findings complement the insights of the dominant theoretical perspectives in organization theory, providing a more comprehensive understanding of organizational evolution by directly addressing the heretofore intractable phenomenon of emergence.

Organization Science publish 2004
Outlines of a behavioral theory of the entrepreneurial firm Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

In A Behavioral Theory of the Firm (BTF), Cyert and March [Cyert, R.M., March, J.G., 1963. A Behavioral Theory of the Firm. Prentice-Hall, Englewood Cliffs, NJ] present a clutch of ideas for explaining the behavior of established firms within an environment of well-defined markets, stakeholder relationships, technologies, and so on. In this paper, we outline a behavioral theory of the entrepreneurial firm that emphasizes transforming environments rather than acting within extant ones. In particular, we explicate three ideas that parallel key concepts in BTF: (1) accumulating stakeholder commitments under goal ambiguity (in line with a political conception of goals), (2) achieving control (as opposed to managing expectations) through non-predictive strategies, and (3) predominately exaptive (rather than adaptive) orientation. (c) 2008 Elsevier B.V. All rights reserved.

Journal of Economic Behavior and Organization publish 2008
Overoptimism and the performance of entrepreneurial firms A A Ziedonis
R A Lowe

Recent theoretical and empirical research on cognitive bias in decision making suggests that overoptimism critically influences entrepreneurs’ decisions to establish and sustain new ventures. We investigate whether such cognitive bias influences entrepreneurial venture performance using data on commercialization efforts for university inventions. In contrast to prior studies, our results suggest that entrepreneurial overoptimism does not appear to be the determining factor in the decision to found a firm. We do find that entrepreneurs continue unsuccessful development efforts for longer periods of time than do established firms, which is consistent with entrepreneurial overoptimism in the development of technologies with uncertain market prospects. This latter finding is also consistent with rationality-based models of decision-making behavior, however. We find that the economic returns associated with many of the technologies in our sample are realized after the start-up has been acquired by an established firm, suggesting that start-ups may serve as a transitional organizational form in the market for technology commercialization.

Management Science publish 2006
Partnership Steering Wheels H Schirmer
Journal of Corporate Citizenship publish 2013
Perceived Institutional Ambiguity and the Choice of Organizational Form in Social Entrepreneurial Ventures. David Townsend
Timothy Hart

Social entrepreneurship (SE) is emerging as a common approach to meeting social needs. However, SE founders appear to be organizing under both for-profit and nonprofit organizational forms to engage in essentially the same activities. We investigate this lack of consistency regarding the choice of organizational form by examining two possible explanations: a difference in motivational goals among social entrepreneurs or perceived ambiguity regarding trends in core dimensions of the institutional environment. Overall, we argue that founder perceptions of an ambiguous institutional environment are leading to the variance in choice of organizational form for SE ventures. Both theoretical and practical directions for future research are discussed as well.

Entrepreneurship Theory and Practice publish 2008
Perceiving and Managing Business Risks: Differences Between Entrepreneurs and Bankers Herbert A Simon
Lester Lave
Saras Sarasvathy

We compared entrepreneurs with bankers in their perception and management of a variety of risks. Problems included financial risk, risk to human life and health, and risk of a natural disaster. Cluster analysis and content analysis of think-aloud protocols revealed surprising details. Entrepreneurs accept risk as a given and focus on controlling outcomes at any given level of risk; they also frame their problem spaces with personal values and assume greater personal responsibility for outcomes. Bankers focus on target outcomes — attempting to control risk within structured problem spaces and avoiding situations where they risk higher levels of personal responsibility.

Journal of Economic Behavior and Organization publish 1998  PDF Download
Performance Configurations Over Time: Implications for Growth- and Profit-Oriented Strategies. Jason Fitzsimmons
Paul Steffens
Per Davidsson

Strategic entrepreneurship can be described as simultaneous opportunity seeking and advantage seeking. Younger firms are generally more flexible and therefore enjoy “discovery advantages,” whereas established firms tend to be resource rich and more experienced and consequently enjoy “exploitation advantages.” The resulting evolution of the two important performance dimensions, “growth” and “profitability,” by firm age is not well understood. In this article we integrate several theoretical arguments concerning profit–growth relationships to develop a dynamic model of firm development, which suggests different development pathways for young firms. This leads to several unidirectional, competing hypotheses that we examine by studying the profitability-growth configurations of approximately 3,500 small firms and how these configurations evolve over time. We find that for both young and old firms a focus on achieving above-average profitability and then striving for growth is a more likely path toward achieving sustained above-average performance than is first pursuing strong growth in the hope of building profitability later. In line with our hypothesis we find that younger firms are over represented as “Stars” (high on both growth and profitability) and underrepresented as “Poor” (low on both growth and profitability). However, young firms in the “Star” category are also less likely than their older counterparts to maintain that position. Furthermore, our results indicate that young firms are overrepresented not only among “Stars,” but also among growth-orientated firms, regardless of the level of profitability. The findings strongly caution against the blind pursuit of growth for young firms, in favor of a thoughtful analysis of how both growth and profitability might be developed by firms. The results also question whether simultaneous high performance in terms of growth and profitability among young firms usually reflects a successful entrepreneurial strategy. The results can also be interpreted as luck on the part of a subgroup of young firms who indiscriminately pursue growth opportunities with varying profit prospects, and in many cases, the high growth–profit performance will be short lived.

Entrepreneurship Theory and Practice publish 2009
Persistence and heterogeneity in entrepreneurship: An evolutionary game theoretic analysis Graciela Kuechle

Studies show that countries exhibit a relatively stable level of entrepreneurial activity. To account for this fact, we adopt an evolutionary game theoretic approach. Based upon the analysis of games that capture essential features of the entrepreneurial phenomenon, we ascertain conditions under which evolutionary stable equilibria will be played by a population consisting of agents who engage in entrepreneurship and agents who do not. We show that entrepreneurship may persist even without assuming strategic complementarities or group selection. Lastly, we explain how information about equilibrium payoffs to self- and paid employment could help address the question of whether entrepreneurs differ from other economic agents.

Journal of Business Venturing publish 2011
Perspective, classification and concept in understanding entrepreneurship: comparing effectuation and entrepreneurial capacity. Kevin Hindle
Peter Moroz
Advancing small business and entrepreneurship publish 2012
Portfolio entrepreneurs: an effectuation approach to multiple venture development Sussie Morrish
Journal of Research in Marketing and Entrepreneurship publish 2009
Prediction and Control Under Uncertainty: Outcomes in Angel Investing Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

Venture investing plays an important role in entrepreneurship not only because financial resources are important to new ventures, but also because early investors help shape the ventures’ managerial and strategic destiny. In this study of 121 angel investors who had made 1038 new venture investments, we empirically investigate angel investors’ differential use of predictive versus non-predictive control strategies. We show how the use of these strategies affects the outcomes of angel investors. Results show that angels who emphasize prediction make significantly larger venture investments, while those who emphasize non- predictive control experience a reduction in investment failures without a reduction in their number of successes.

while those who emphasize non- predictive control experience a reduction in investment failures without a reduction in their number of successes. publish 2009  PDF Download
Product Innovation Processes in Small Firms: Combining entrepreneurial effectuation and managerial causation H Berends
I Reymen
M Jelinek
R Stultiens

This article reports a multimethod study of product innovation processes in small manufacturing firms. Prior studies found that small firms do not deploy the formalized processes identified as best practice for the management of new product development (NPD) in large firms. To explicate small firms’ product innovation, this study uses effectuation theory, which emerged from entrepreneurship research. Effectuation theory discerns two logics of decision-making: causation, assuming that means are selected to attain goals; and effectuation, assuming that goals are created based upon available means. The study used a process research approach, investigating product innovation trajectories in five small firms across 352 total events. Quantitative analyses revealed early effectuation logic, which increasingly turned toward causation logic over time. Further qualitative analyses confirmed the use of both logics, with effectual logic rendering product innovation resource-driven, stepwise, and open-ended, and with causal logic used especially in later stages to set objectives and to plan activities and invest resources to attain objectives. Because the application of effectuation logic differentiates the small firm approaches from mainstream NPD best practices, this study examined how small firms’ product innovation processes deployed effectuation logic in further detail. The small firms: (1) made creative use of existing resources; (2) scoped innovations to be realizable with available resources; (3) used external resources whenever and wherever these became available; (4) prioritized existing business over product innovation projects; (5) used loose project planning; (6) worked in steps toward tangible outcomes; (7) iterated the generation, selection, and modification of goals and ideas; and (8) relied on their own customer knowledge and market probing, rather than early market research. Using effectuation theory thus helps us understand how small firm product innovation both resembles and differs from NPD best practices observed in larger firms. Because the combination of effectual and causal principles leverages small firm characteristics and resources, this article concludes that product innovation research should more explicitly differentiate between firms of different sizes, rather than prescribing large firm best practices to small firms.

Journal of Product Innovation Management publish 2014
Properties of emerging organizations: An empirical test. Candida Brush
Tatiana Manolova

The process of new venture creation is central to the field of entrepreneurship. The effects of initial organizing have a direct influence on survival, yet empirical examination of the dimensions of emergent organizations is limited. Using longitudinal data on nascent entrepreneurs, this paper empirically tests four properties of emerging organizations-intentionality, resources, boundary and exchange- and their effect on likelihood of continued organizing [Katz, J., Gartner, W.B., 1988. Properties of emerging organizations. Academy of Management Review 13(3), 429–441]. Our results suggest that all four properties are necessary for firm survival in the short-term and those firms that organize more slowly are more likely to continue to organize. Further, nascent ventures in which intentionality preceded the other organizing properties were not significantly more likely to continue in the organizing effort. Our results suggest an extension of the original Katz and Gartner [Katz, J., Gartner, W.B., 1988. Properties of emerging organizations. Academy of Management Review 13(3), 429–441] framework.

Journal of Business Venturing publish 2008
Questions from the Effectuation Conference June 6 & 7, Bodo Norway Saras Sarasvathy
Stuart Read

At the 2016 effectuation conference, participants submitted 14 open questions. These questions derived from conversations at the conference and span research and practice topics. In the effectual spirit, we shared the questions around with the effectuation community and have consolidated responses to these questions in this document, as well as “Two cents from Saras” on every one. We are quick to note that these responses are not definitive answers, but a part of a conversation and an invitation to continue it. We hope you find them useful.

publish 2017  PDF Download
Reconciling diverse approaches to opportunity research using the structuration theory Chad Saunders
Mike Chiasson

Structuration theory (ST) is used to reconcile six approaches to opportunity research that emphasize either the recognition or formation of entrepreneurial opportunity. While opportunity recognition focuses on the restricting role of business and social structure on entrepreneurial activity, opportunity formation emphasizes the creation of opportunities by the entrepreneur. In contrast to this dichotomy, ST argues that recognition and formation are recursively implicated because it dissolves the dichotomy between structure and agency, thus showing how entrepreneurial action is both enabled and constrained by the conscious selection, imitation, and modification of business scripts by entrepreneurs. The implications for opportunity research and practice are discussed.

Journal of Business Venturing publish 2005
Related Debates in Ethics and Entrepreneurship: Values, Opportunities and Contingency R Edward Freeman
Saras Sarasvathy
Susan S Harmeling

In this paper, we review two seemingly unrelated debates. In business ethics, the argument is about values: are they universal or emergent? In entrepreneurship, it is about opportunities – are they discovered or constructed? In reality, these debates are similar as they both overlook contingency. We draw insight from pragmatism to define contingency as possibility without necessity. We analyze real-life narratives and show how entrepreneurship and ethics emerge from our discussion as parallel streams of thought.

Journal of Business Ethics publish 2009
Report on the Seminar on Research Perspectives in Entrepreneurship. Saras Sarasvathy
Journal of Business Venturing publish 2000
Representational Gaps, Information Processing, and Conflict in Functionally Diverse Teams. Laurie Weingart
M Cronin

Functional diversity in teams, while potentially beneficial, increases the likelihood that individual team members will perceive the team’s task differently, leading to gaps between teammates’ interpretations of what is needed for the team to be successful. These representational gaps are likely to create conflict as teammates try to solve what are essentially incompatible problems. Understanding how these general mechanisms work should deepen our understanding of information processing and conflict in diverse teams.

Academy of Management Review publish 2007
Resource integration H Woratschek
Hughes T
L D Peters
M Kleinaltenkamp
P Frow
R J Brodie
Marketing Theory publish 2012
Returns to Angels In Groups Warren Boeker
Rob Wiltbank

Entrepreneurs and investors regularly wonder what the returns are in angel investing. The completion of this research project provides robust data on this subject that has never before been available. Our findings in this study are based on the largest data set of accredited angel investors collected to date, with information on exits from 539 angels. These investors have experienced 1,137 “exits” (acquisitions or Initial Public Offerings that provided positive returns, or firm closures that led to negative returns) from their venture investments during the last two decades, with most exits occurring since 2004. Analysis of the data revealed important details of the investment outcomes for angel investors connected to angel organizations.

publish 2007  PDF Download
Schumpeter’s ‘conduct model of the dynamic entrepreneur’: scope and distinctiveness Anthony Endres
Christine Woods

Schumpeter formulated a ‘conduct model’ of entrepreneurial behaviour. Received wisdom has emphasised the economic functions of Schumpeter’s entrepreneur, neglecting behavioural aspects. Schumpeter’s model is examined; it posits a continuum of behaviours which are ‘entrepreneurial’, that rely on socially situated, tacit knowledge and are expressions of conscious, subjective rationality. Schumpeter’s model excluded unconscious optimisation and decision rules derived from bounded rationality. Comparisons are drawn with modern neoclassical, Austrian, and the older behavioural characterisations of entrepreneurial behaviour. The newer ‘effectuation’ model of entrepreneurial behaviour is also contrasted with Schumpeter’s approach. We find, among other things, that modern Schumpeterian economics associated with Nelson and Winter is not a natural continuation of Schumpeter’s model. However, some developments in neo-Schumpeterian economics, including the effectuation model deriving from the older behavioural tradition, are congruent with both the original ‘conduct model’ and Schumpeter’s directions for further research.

Journal of Evolutionary Economics publish 2010
Search and discovery by repeatedly successful entrepreneurs J O Fiet
V G Clouse
W I Norton

This article examines the use of a model of search by entrepreneurs; for decades they have been advised to remain alert but now, new approaches are more open to effectuation and creation. However, so far none provides guidance regarding how to improve search effectiveness. We report upon a phenomenological investigation of Fiet’s model of constrained, systematic search which offers a prescriptive alternative. In order to test the latter’s effectiveness, 10 participants who started 47 ventures were interviewed. The article presents evidence of its use by these repeatedly successful entrepreneurs, finds support for the model and discusses its limitations and contributions.

International Small Business Journal publish 2013
Selection and Return in Angel Investments Saras Sarasvathy
Rob Wiltbank

In this paper, we argue that the decision processes used by angels and VCs differ in their cognitive content and overall logic, and that this difference impacts their returns differentially. More precisely, while VCs tend to use a causal approach based on predictive rationality, angels are more effectual and make their choices based on the logic of non-predictive control. This suggests a primary hypothesis for differentials in returns to the two types of investors – i.e., the theory of effectuation predicts that while angels may or may not obtain a higher overall rate of return than VCs, they will obtain a higher hit rate (proportion of investments that survive and succeed). The paper also provides a substantial review of extant theories of private equity financing.

Babson Conference publish 2002  PDF Download
Self-regulation and moral awareness among entrepreneurs. Peter Bryant Peter Bryant

Moral awareness underpins moral reasoning and ethical decision making. This mixed methods study investigates a critical feature of these phenomena among entrepreneurs, namely the influence of social cognitive self-regulation on moral awareness. Results suggest that entrepreneurs with stronger self-regulatory characteristics are more morally aware and relate such awareness to maintaining personal integrity and building inter-personal trust. In contrast, entrepreneurs with weaker self-regulatory characteristics appear less morally aware overall, and focus primarily on moral issues relating to failure and loss. I conclude the paper by discussing the implications for future research and practice.

Journal of Business Venturing publish 2009
Seminar on research perspectives in entrepreneurship (1997) Saras Sarasvathy
Journal of Business Venturing publish 2000
Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning-performance relationship in small firms Diana Kapsa
Dietmar Grichnik
Jan Brinckmann

Entrepreneurship research engages in an intense debate about the value of business planning. Prior empirical findings have been fragmented and contradictory. This study contributes insights to the business planning discussion by following an evidence-based research approach. We conduct a meta-analysis on the business planning-performance relationship and specifically focus on contextual factors moderating the relationship. Results indicate that planning is beneficial, yet contextual factors such as newness of the firms and the cultural environment of firms significantly impact the relationship. Based on this evidence, we propose a concomitant and dynamic approach that combines planning and learning.

Journal of Business Venturing publish 2010
Should I stay or should I go? Career choice intentions of students with family business background Frank Halter
Philipp Sieger
Thomas Zellweger

Personal and motivational patterns of intentional founders have been researched in great depth; however, antecedents to career choices of intentional successors have been conspicuously missing in entrepreneurship research. By drawing on theory of planned behavior, we investigate how intentional founders, successors, and employees differ in terms of locus of control and entrepreneurial self-efficacy as well as independence and innovation motives. We find that transitive likelihood of career intent depends on degree of entrepreneurial self-efficacy and the independence motive. Unexpectedly, we see that high levels of internal locus of control lead to a preference of employment, which challenges traditional entrepreneurship research and suggests that the feasibility of an entrepreneurial career path does not automatically make it desirable. Our findings suggest that students with family business background are pessimistic about being in control in an entrepreneurial career, but optimistic about their efficacy to pursue an entrepreneurial career.

Journal of Business Venturing publish 2011
Siding with the Angels – Business Angel Investing: Promising Outcomes and Effective Strategies Rob Wiltbank

After entrepreneurs develop an opportunity, and use up their own resources, they often turn to business angel investors for early investment to keep the venture growing. At this point in the development of new ventures the risk of failure is significant; many aspects of the business including customer relationships, pricing strategy, talent, and other key factors are quite unclear. Yet there are a growing number of investors known as ‘business angels’ willing to invest at this point. They have become an increasingly important source of equity finance over the last decade for new and nascent businesses as venture capital investors are not able to accommodate a large number of small deals with their attendant due diligence and oversight needs. Business angels are now prominent co- investment partners in the early-stage market. Understanding why investors would involve themselves in anything so risky is important, given the contribution of innovative start-up businesses to the economy. Although there is no comprehensive survey of business angel activity available, an estimated 4,000 to 6,000 business angels were investing up to £1 billion annually by 2000. Despite their increasing importance, little is known about the outcomes of business angel investment and returns in the UK. Mason and Harrison5 conducted the first attempt to identify the returns and characteristics of the UK business angel investors, pointing out the lack of evidence on the outcomes of investments by business angels. They suggested that this “represents a significant gap in our knowledge and understanding of an important segment of the venture capital market”.

NESTA / British Angels Business Association publish 2009  PDF Download
Simon on Altruism, Near Decomposability, and Design: Extensions on a Behavioral Theory of Strategic Management Mie Augier
Saras Sarasvathy

This paper develops a view of strategic management that is based on the ideas of Herbert Simon in particular, and insights from the behavioral theory of the firm in general. Building on certain well-received elements of his work in strategy, we add implications from his other (rather under-studied) work, especially on altruism, near-decomposability, and design. Each of these fills an important gap at the individual, organizational, and environmental levels of analysis in mainstream strategic management theorizing today. We argue that these three extensions, when integrated, can re-shape future scholarship in strategic management in a manner consistent with key results both from the dynamic capabilities view, and the resource based view.

LINKS Conference Copenhagen publish 2002  PDF Download
Social Bricolage: Theorizing Social Value Creation in Social Enterprises Di Domenico MariaLaura
Helen Haugh
Tracey, Paul

Current theorizations of bricolage in entrepreneurship studies require refinement and development to be used as a theoretical framework for social entrepreneurship. Our analysis traces bricolage’s conceptual underpinnings from various disciplines, identifying its key constructs as making do, a refusal to be constrained by limitations, and improvisation. Although these characteristics appear to epitomize the process of creating social enterprises, our research identifies three further constructs associated with social entrepreneurship: social value creation, stakeholder participation, and persuasion. Using data from a qualitative study of eight U.K. social enterprises, we apply the bricolage concept to social entrepreneurial action and propose an extended theoretical framework of social bricolage.

Academy of Management Conference Entrepreneurship Theory and Practice publish 2010
Social interaction via new social media: (How) can interactions on Twitter affect effectual thinking and behavior? Eileen Fischer
Becky Reuber

Social interaction plays a central role in effectuation processes, yet we know little about the implications for effectuation when an entrepreneur interacts via particular channels such as social media. To address this gap, our paper uses an inductive, theory-building methodology to develop propositions regarding how effectuation processes are impacted when entrepreneurs adopt Twitter. Twitter is a microblogging platform that can facilitate a marked increase in interaction. We posit that Twitter-based interaction can trigger effectual cognitions, but that high levels of interaction via this medium can lead to effectual churn. We also posit that there is one factor, perceived time affordability, that predicts the level of social interaction in which an entrepreneur engages via Twitter. Further, we propose two factors that moderate the consequences of social interaction through Twitter. These factors are community orientation and community norm adherence. Implications for our understanding of effectuation, of social interaction, and of the impact of social media on entrepreneurial firms are discussed.

Journal of Business Venturing publish 2011
Strategic Decision-Making of a Born Global: A Comparative Study From Three Small Open Economies N Nummela
P Jokela
S Loane
S Saarenketo

This paper extends current understanding on international growth process of born global firms from the perspective of strategic decision-making. The data were collected from three software companies in Finland, Ireland and Israel both in real-time and retrospectively, and data triangulation was employed to increase the validity of the findings. With a longitudinal approach, we captured the dynamics of the post-entry international growth process and the critical events that act as decision-making triggers. The decision-making of born global firms seems to be characterised by alternating periods of causation- and effectuation-based logics. Triggers for amending the logic include, for example, change of key persons and the search for external funding. Co-existence of the two decision-making logics is possible, due to different degrees of uncertainty in market and technology or multiple decision-makers involved. The contribution of the study is threefold: first, it addresses gaps in international entrepreneurship research by describing how born global firms make strategic decisions and who are involved in the decision-making. Second, it identifies critical incidents which trigger a change in the decision-making process of a born global firm. Third, it provides alternative insights to why decision-making logic may change or why two decision-making logics may co-exist.

Management International Review publish 2014
Strategy and Entrepreneurship: Outlines of an Untold Story Saras Sarasvathy
S. Venkataraman

In their 1994 book, Rumelt, Schendel, and Teece identify four fundamental issues that comprise a research agenda in strategic management: (1) How do firms behave? (2) Why are firms different? (3) What limits the scope of the firm? (4) What determines success or failure in international competition? In answering the four questions stated above, economics and strategic management theories generally tend to focus on rational decision making (whether unbounded or bounded and linear or non-linear) based on causal reasoning and the logic of prediction. Based on effectual reasoning and the logic of control, we provide alternative answers to these four fundamental issues in strategy. These new answers together connect strategy and entrepreneurship in a new synthesis.

Handbook of Strategic Management publish 2001  PDF Download
Strategy and Entrepreneurship: Outlines of an untold story. Saras Sarasvathy
S. Venkataraman

In his book “Invention,” Professor Norbert Wiener (1993), commenting on the relative importance accorded to individuals and institutions in historical narratives of science and inventions, asks us to imagine Shakespeare’s “Romeo and Juliet” without either Romeo or the balcony. The story is just not the same. He likens much of the study of the economic history of science and accounts of inventions as “all balcony and no Romeo.” The balcony for Norbert Weiner captures the context in which the story unfolds – the culture, the institutions, the constraints and the catalysts that move the plot forward and thicken it. Romeos, for Weiner, play the leading parts in the story, because there is a strong fortuitous element to inventions and there is no inevitability that a possible discovery will be made at a given time and space. Take away either one, Romeo or the balcony, and the whole story falls apart. In a similar vein, we would liken studies of strategy to “all balcony and no Romeo.” But if we accuse strategy of being “all balcony and no Romeo,” strategy scholars could legitimately accuse entrepreneurship of being “all Romeo and no balcony.” In this paper we wish to suggest a point of view from entrepreneurship that will allow strategy scholars to accommodate more Romeos in their stories. Although these two fields have much to offer each other (trade in balconies and Romeos), they have developed largely independent of each other. We wish to suggest that entrepreneurship has a role to play in strategy theory and that strategy theory enriches our understanding of the entrepreneurial process, although this latter aspect will not be the focus of this paper.

publish 2001
Strategy making, novelty and analogical reasoning – commentary on Gavetti, Levinthal, and Rivkin (2005). Moshe Farjoun

This commentary responds to and builds upon a recent article about the role of analogical reasoning in strategy making (Gavetti, Levinthal, and Rivkin, 2005). Based on conceptual and formal analysis, the authors state that in complex and novel contexts, analogical reasoning may be superior to two established models: rational choice and local incremental search. I show that given an alternative conceptualization of the strategy-making context and main models, analogical reasoning is not necessarily superior. Furthermore, in novel and complex contexts, this model and other approaches such as mental experimentation can play a larger role, particularly in inventing effective strategies. I further extend the analysis by considering some boundary conditions in which analogical reasoning and its alternatives best apply, exploring the idea that blending and adapting several search strategies may be more effective than using only one method, such as analogical reasoning, and advancing new directions for empirical research. Copyright © 2008 John Wiley & Sons, Ltd.

Strategic Management Journal publish 2008
Sustainable development and entrepreneurship: Past contributions and future directions. Gregory Daneke
Jeremy Hall
Michael Lenox

This article discusses the emerging research concerned with sustainable development and entrepreneurship, which is the focus of this special issue of the Journal of Business Venturing. Entrepreneurship has been recognized as a major conduit for sustainable products and processes, and new ventures are being held up as a panacea for many social and environmental concerns. However, there remains considerable uncertainty regarding the nature of entrepreneurship’s role and how it may unfold. We begin with an overview of sustainable development and the role of entrepreneurship and outline recent contributions exploring this role. We then summarize the papers presented in this special issue and conclude with suggestions for further research.

Journal of Business Venturing publish 2010
Swinging a double-edged sword: The effect of slack on entrepreneurial management and growth Steve Bradley Steve Bradley
Shepherd Dhliwayo
Johan Wiklund

Resource slack represents a double-edged sword, simultaneously fueling and hindering growth. Drawing on Penrose’s growth theory and Stevenson’s entrepreneurial management theory, we have developed and tested a conceptual model that provides a more nuanced account of the resource slack-growth relationship. Using a large dataset spanning six years, we have found that slack has a positive direct effect on growth but a negative effect on entrepreneurial management, and that entrepreneurial management has a positive effect on growth. Our empirical and conceptual findings are important to the development of firm growth theory and explicate causal mechanisms transforming slack into firm-level outcomes.

Journal of Business Venturing publish 2011
Team Conflict contributing to Entrepreneurial Learning: understanding conflict as positive within an Effectual Problem Space C Butler
K Middleton

The impact of team conflict seems to depend upon context. Entrepreneurship literature suggests that learning from diverse perspectives in teams can contribute to entrepreneurial action (Harper 2008; West III, 2007; Williams-Middleton, 2010), while management literature has shown that conflict in teams often negatively affects creativity (Jehn et al., 2010). Recent research streams suggest that entrepreneurial learning might be better understood by applying an effectual logic perspective, instead of causal logic (Sarasvathy and Venkataraman, 2011). This causes us to question whether conflict is experienced similarly in entrepreneurial versus managerial teams. We suggest negative consequences of team conflict found in management literature may be due to the causal logic underlying this literature, and thus not readily applicable to entrepreneurial learning. Through exploring relationships between team work, team conflict, and effectuation, we propose that positive learning outcomes can emerge from experience of team conflict within an effectual and uncertain problem space.

International Entrepreneurship and Management Journal publish 2014
Text-analytic measurement of effectuation and causation orientations among small and global business managers. Helge Helmersson
J Mattsson

We demonstrate how one can measure overall quality in texts gathered from interviews by means of PERTEX text analytic method. We compare text analytic measures and content for locally active Scandinavian small business managers and globally operating Indian IT managers when recapitulating the reasons behind company growth. Using Ward’s clustering method (J Am Stat Assoc 58:236–244, 1963) on a binary matrix for connections between textual components, we suggest using the ESS value from clustering to calculate AFFI as an overall measure of quality. By further splitting the AFFI into three sub-components we are also able to display the degree of fragmentation, focus and integration in the text. We show how AFFI measures differ between managers with a causation or effectuation orientation irrespective of their role as small business manager or as an established global manager. Hence, we posit that effectuation and causation orientations may be generic characteristic of managers in general.

Quality & Quantity publish 2012
The age-effect of financial indicators as buffers against the liability of newness Shepherd Dhliwayo
Johan Wiklund
Thomas Baker

This paper builds on the liabilities of newness literature to suggest that accounting information is important for new firms. Using a sample of over 30,000 companies followed during their first 7†years of existence, we find evidence that financial indicators mitigate the liability of newness and that this buffering effect is stronger the younger the organization. These results represent three primary contributions to the literature. First, our conceptualization of accounting measures as indicators of external (creditworthiness enhancing legitimacy) as well as internal (targets for management) buffers to the liabilities of newness provides a novel way of viewing these constructs and explains why they are important to new firms despite their uncertainty and opacity. Second, we theoretically justify and empirically validate that these constructs are more important the younger the new firm is, which runs counter to the common wisdom of these constructs in the entrepreneurship literature. Third, we identify buffers against failure for new firms that are generalizable across industries.

Journal of Business Venturing publish 2010
The Central Question in Entrepreneurial Cognition Research 2007. Barbara Bird Barbara Bird
Brock Smith
Connie Marie Gaglio
Eric Morse
Jeffery McMullen
Lowell Busenitz
Ronald Mitchell

In this article, we take note of advances in the entrepreneurial cognition research stream. In doing so, we bring increasing attention to the usefulness of entrepreneurial cognition research. First, we offer and develop a central research question to further enable entrepreneurial cognition inquiry. Second, we present the conceptual background and some representative approaches to entrepreneurial cognition research that form the context for this question. Third, we introduce the articles in this Special Issue as framed by the central question and approaches to entrepreneurial cognition research, and suggest how they further contribute to this developing stream. Finally, we offer our views concerning the challenges and opportunities that await the next generation of entrepreneurial cognition scholarship. We therefore invite (and seek to enable) the growing community of entrepreneurship researchers from across multiple disciplines to further develop the “thinking–doing” link in entrepreneurship research. It is our goal to offer colleagues an effective research staging point from which they may embark upon many additional research expeditions and investigations involving entrepreneurial cognition.

Entrepreneurship Theory and Practice publish 2007
The co-evolution of institutional entrepreneurship: A tale of two theories. Desirée F. Pacheco
Jeffery York
Saras Sarasvathy
Thomas J. Dean

This article provides a review and analysis of institutional entrepreneurship research with a focus on the emergence of this literature within two largely divergent streams: sociology-based institutional theory and economics-based institutional economics. The authors completed a review of 141 articles from these concurrent, but unlinked, research streams to understand how their integration might contribute to the further understanding of institutional entrepreneurship. Each stream is reviewed on its respective approaches to the following topics: the nature of the institutional entrepreneur, the types of institutions addressed, the determinants of institutional entrepreneurship, the mechanisms used in the process, and the empirical focus of each stream. The article recommends greater assimilation of the two streams and discusses specific opportunities for conceptual integration. Finally, the article offers an agenda for incorporating entrepreneurship research into the study of institutional entrepreneurship. Findings from this review suggest that while institutional economics focuses mostly on the antecedents and outcomes of institutional entrepreneurship, the institutional theory perspective is more concerned with the process and mechanisms that drive such change. The authors also suggest that entrepreneurship theory can greatly advance our understanding of institutional entrepreneurship by informing whether and how opportunities for institutional change are recognized, discovered, and created, as well as by providing insights on the antecedents and mechanisms of such activity. Most important, integrating the unique perspectives and domains of institutional theory, institutional economics, and entrepreneurship research in the study of institutional entrepreneurship provides substantial opportunity for expanding our understanding of the concept and its implications.

Journal of Management publish 2010
The Coevolution of Institutional Entrepreneurship: A Tale of Two Theories Desirée F. Pacheco
Jeffery York
Saras Sarasvathy
Thomas J. Dean

This article provides a review and analysis of institutional entrepreneurship research with a focus on the emergence of this literature within two largely divergent streams: sociology-based institutional theory and economics-based institutional economics. The authors completed a review of 141 articles from these concurrent, but unlinked, research streams to understand how their integration might contribute to the further understanding of institutional entrepreneurship. Each stream is reviewed on its respective approaches to the following topics: the nature of the institutional entrepreneur, the types of institutions addressed, the determinants of institutional entrepreneurship, the mechanisms used in the process, and the empirical focus of each stream. The article recommends greater assimilation of the two streams and discusses specific opportunities for conceptual integration. Finally, the article offers an agenda for incorporating entrepreneurship research into the study of institutional entrepreneurship. Findings from this review suggest that while institutional economics focuses mostly on the antecedents and outcomes of institutional entrepreneurship, the institutional theory perspective is more concerned with the process and mechanisms that drive such change. The authors also suggest that entrepreneurship theory can greatly advance our understanding of institutional entrepreneurship by informing whether and how opportunities for institutional change are recognized, discovered, and created, as well as by providing insights on the antecedents and mechanisms of such activity. Most important, integrating the unique perspectives and domains of institutional theory, institutional economics, and entrepreneurship research in the study of institutional entrepreneurship provides substantial opportunity for expanding our understanding of the concept and its implications.

Journal of Management publish 2010  PDF Download
The contrasting interaction effects of improvisational behavior with entrepreneurial self-efficacy on new venture performance and entrepreneur work satisfaction Andrew Corbett Andrew Corbett
Keith Hmieleski

Although improvisation is often considered to be an elemental component of entrepreneurship, little work has been done to evaluate factors that influence the relationship of entrepreneur improvisational behavior with important outcome variables. In an attempt to partly fill this gap, the current study examines the moderating effect of entrepreneurial self-efficacy on the relationship of founders’ improvisational behavior with both the performance of their startups and their individual level of work satisfaction using a national (United States) random sample of 159 entrepreneurs. In alignment with our predictions, improvisational behavior was found to have a positive relationship with new venture performance (i.e., sales growth) when exhibited by founders who were high in entrepreneurial self-efficacy, whereas improvisational behavior was found to have a negative relationship with new venture performance when exhibited by founders who were low in entrepreneurial self-efficacy. Contrary to our expectations, entrepreneurial self-efficacy was found to have a negative moderating effect on the relationship between entrepreneur improvisational behavior and work satisfaction.

Journal of Business Venturing publish 2008
The Distinctive and Inclusive Domain of Entrepreneurial Cognition Research. Brock Smith
Eric Morse
Lowell Busenitz
Patricia McDougall
Ronald Mitchell
Theresa Lant

Through mapping both distinctive and inclusive elements within the domain of entrepreneurial cognition research, we accomplish our task in this introductory article to Volume 2 of the Special Issue on Information Processing and Entrepreneurial Cognition: to provide a fitting backdrop that will enhance the articles you will find within. We develop and utilize a “boundaries and exchange” concept to provide a lens through which both distinctive and inclusive aspects of the entrepreneurship domain are employed to frame this special issue.

Entrepreneurship Theory and Practice publish 2004
The Economic Implications of Exaptation Nick Dew
Saras Sarasvathy
S. Venkataraman

Accounts of economic change recognize that markets create selective pressures for the adaptation of technologies in the direction of customer needs and production efficiencies. However, non-adaptational bases for technological change are rarely highlighted, despite their pervasiveness in the history of technical and economic change. In this paper the concept of exaptation – a feature co-opted for its present role from some other origin – is proposed as a characteristic element of technological change, and an important mechanism by which new markets for products and services are created by entrepreneurs. Exaptation is shown to be a missing but central concept linking the evolution of technology with the entrepreneurial creation of new markets and the concept of Knightian uncertainty.

publish 2004  PDF Download
THE ECONOMIC IMPLICATIONS OF EXAPTATION Saras Sarasvathy

Accounts of economic change recognize that markets create selective pressures for the adaptation of technologies in the direction of customer needs and production efficiencies. However, non-adaptational bases for technological change are rarely highlighted, despite their pervasiveness in the history of technical and economic change. In this paper the concept of exaptation – a feature co-opted for its present role from some other origin – is proposed as a characteristic element of technological change, and an important mechanism by which new markets for products and services are created by entrepreneurs. Exaptation is a missing but central concept linking the evolution of technology with the entrepreneurial creation of new markets and the concept of Knightian uncertainty.

publish 2004
The entrepreneur–environment nexus: Uncertainty, innovation, and allocation Jeffery York
S. Venkataraman

We build upon a recent stream of research that has proposed entrepreneurship as a solution to, rather than a cause of, environmental degradation. Our proposition is that under certain conditions entrepreneurs are likely to supplement, or surpass, the efforts of governments, NGOs and existing firms to achieve environmental sustainability. Entrepreneurs can contribute to solving environmental problems through helping extant institutions in achieving their goals and by creating new, more environmentally sustainable products, services and institutions. Our model illustrates how entrepreneurs 1) address environmental uncertainty, 2) provide innovation and 3) engage in resource allocation to address environmental degradation.

Journal of Business Venturing publish 2010  PDF Download
The Essence of Strategic Leadership: Managing Human and Social Capital R Duane Ireland
Michael A Hitt

A new type of strategic leadership is required to help firms successfully navigate the dynamic and uncertain environment in which they compete today. The strategic leadership needed in 21st century firms is involved with building company resources and capabilities with an emphasis on intangible human capital and social capital. Human capital is the firm’s repository of valuable knowledge and skills; social capital provides access to critical resources. Both are significant contributors to achievement of a competitive advantage. Leaders must effectively manage these important resources for the firm. Management of these resources involves evaluating current resource stocks and making changes such as adding (e.g., developing or acquiring externally) and deleting (e.g., layoffs) human resources and external relationships. To create value, the resources must be configured to develop capabilities that can be leveraged in ways to create competitive advantages. The dimension of strategic leadership we describe here is called effectuation. This new type of approach to leadership has important implications for management scholars and practitioners.

publish 2002  PDF Download
The Future of Entrepreneurship Research Audretsch, David B.
Johan Wiklund
Karlsson, Charlie
Per Davidsson
Entrepreneurship Theory and Practice publish 2011
The influence of causation and effectuation logics on targeted policies: the cases of Singapore and Israel D Kaufmann

We examine the causation and effectuation logics for implementing targeted biotechnology policies using two case studies: Singapore (causation) and Israel (effectuation). After more than a decade of implementing targeted biotechnology policies, both Singapore and Israel have failed to create fully fledged biotech clusters. Singapore has been unsuccessful in creating vibrant entrepreneurial activity that will support its transformation into a knowledge economy. Israel has failed to turn its 1000 small, dedicated biotechnology firms into a substantial engine of growth and employment. The paper questions how these two policy approaches influenced the targeting of the biotechnology sectors and identifies the limits of these approaches in supporting targeting. We conclude that a combination of the two logics is needed, especially when targeting complex sectors with a yet unknown development path.

Technology Analysis & Strategic Management publish 2013
The influence of sustainability orientation on entrepreneurial intentions – Investigating the role of business experience. Andreas Kuckertz
Marcus Wong

Do individuals who are concerned by issues of sustainability also exhibit stronger entrepreneurial intentions? Given that existing imperfections in the market create numerous opportunities for entrepreneurship connected with sustainable development, adding individual sustainability orientation to models of entrepreneurial intention could increase their explanatory power. Based on survey data collected from engineering and business students and alumni of three universities, we provide evidence that entering sustainability orientation into the equation is actually meaningful. However, our findings suggest that the positive impact of sustainability orientation vanishes with business experience. Consequently, we suggest measures to nourish an evidently existing potential for sustainable entrepreneurship.

Journal of Business Venturing publish 2010
The Legitimacy of Social Entrepreneurship: Reflexive Isomorphism in a Pre-Paradigmatic Field. Alex Nicholls

Following Kuhn, this article conceptualizes social entrepreneurship as a field of action in a pre-paradigmatic state that currently lacks an established epistemology. Using approaches from neo-institutional theory, this research focuses on the microstructures of legitimation that characterize the development of social entrepreneurship in terms of its key actors, discourses, and emerging narrative logics. This analysis suggests that the dominant discourses of social entrepreneurship represent legitimating material for resource-rich actors in a process of reflexive isomorphism. Returning to Kuhn, the article concludes by delineating a critical role for scholarly research on social entrepreneurship in terms of resolving conflicting discourses within its future paradigmatic development.

Entrepreneurship Theory and Practice publish 2010
The Nature of the Entrepreneurial Process: Causation, Effectuation, and Pragmatism, in Aard Groen, Ray Oakey, Peter Van Der Sijde, Gary Cook (ed.). Jeroen Kraaijenbrink
New Technology-Based Firms in the New Millenium publish 2012
The Need for Design Thinking in Business Schools C Baughn
C Suciu
R Glen

The demands placed on today’s organizations and their managers suggest that we have to develop pedagogies combining analytic reasoning with a more exploratory skill set that design practitioners have embraced and business schools have traditionally neglected. Design thinking is an iterative, exploratory process involving visualizing, experimenting, creating, and prototyping of models, and gathering feedback. It is a particularly apt method for addressing innovation and messy, ill-structured situations. We discuss key characteristics of design thinking, link design-thinking characteristics to recent studies of cognition, and note how the repertoire of skills and methods that embody design thinking can address deficits in business school education.

Academy of Management Learning & Education publish 2014
The ordinary entrepreneur A Ramesh
Bill Forster
Saras Sarasvathy
The Routledge Companion to Entrepreneurship publish 2014
The Process of Entrepreneurial Learning: A Conceptual Framework Diamanto Politis

The present article seeks to advance the theoretical knowledge of entrepreneurial learning by reviewing and synthesizing available research into a conceptual framework that explains the process of entrepreneurial learning as an experiential process. The framework identifies three main components in the process of entrepreneurial learning: entrepreneurs’ career experience, the transformation process, and entrepreneurial knowledge in terms of effectiveness in recognizing and acting on entrepreneurial opportunities and coping with the liabilities of newness. Based on the arguments in the article, five major propositions were developed to refine our understanding of entrepreneurial learning. Finally, theoretical and practical implications were discussed.

Entrepreneurship Theory and Practice publish 2005
The Questions We Ask and the Questions We Care About Saras Sarasvathy

The questions we ask often prevent us from asking the questions we really care about. This paper examines some key questions in current research in entrepreneurship and reformulates them into issues that we actually care about investigating and understanding.

Journal of Business Venturing publish 2003  PDF Download
The questions we ask and the questions we care about:: reformulating some problems in entrepreneurship research Saras Sarasvathy

Both history of science and creativity research have shown that reformulating the questions we ask can lead to breakthroughs more often than trying harder to search for more rigorous answers. In such a spirit of creative play, I suggest we throw away our obsession with dividing the world intoentrepreneurs and nonentrepreneurs and focus instead on categories within entrepreneurs. In particular, (a) those who want to become entrepreneurs but do not suggest compelling research questions about barriers to entrepreneurship; while, (b) those who do become entrepreneurs need to develop expertise, impelling our research to focus on the rubric of design.

Journal of Business Venturing publish 2004
The Role of Affect in the Creation and Intentional Pursuit of Entrepreneurial Ideas Cholakova Magdalena
Hayton, James C.

The creation and intentional pursuit of entrepreneurial ideas lies at the core of the domain of entrepreneurship. Recent empirical work in a number of diverse fields such as cognitive psychology, social cognition, neuroscience, and neurophysiology all suggest that dual processes involving affect and cognition have a significant impact on judgment and decision making. Existing cognitive models ignore this significant role. In this article we develop a framework for understanding the role of affect on idea perception and the intention to develop the entrepreneurial idea. We present a set of testable propositions that link affect to entrepreneurial idea perception through its influence on attention, memory, and creativity. A second set of propositions links affect to the intention to pursue these ideas further. We explore the boundary conditions and moderators of the proposed relationships, and discuss the implications of this framework for existing cognitive and psychological perspectives on entrepreneurship.

Entrepreneurship Theory and Practice publish 2012
The role of entrepreneurial decision-making in opportunity creation and recognition Elicia Maine
N Dos Santos
Pek-Hooi Soh

This qualitative study investigates effectuation and causation as two opposing decisionmaking modes leading to opportunity creation and recognition. Prior literature posits that effectuation is linked to opportunity creation when the venture׳s future is highly uncertain and causation to opportunity recognition when the entrepreneur perceives risk rather than uncertainty. However, such a linear approach towards opportunity generation offers limited explanation as to how entrepreneurs decide to either create or search for entrepreneurial opportunities. This limitation becomes particularly apparent in the highly uncertain context of the biotechnology industry, where entrepreneurial decision-making processes iterate over long periods of time. To address this gap, we employ the embedded case study method to investigate 30 decisions made by three scientist-entrepreneurs commercializing platform biotechnology inventions.

We inductively derive a model of entrepreneurial decision-making, which connects the environment to decision-making mode and opportunity generation. Our evidence reveals the iterative nature of opportunity generation and of decision-making modes as entrepreneurs respond to their evolving environment and to the level of regulatory and funding constraint, such that entrepreneurs can shift from effectuation to causation, remain in one particular mode, or adopt a combination mode. We also illustrate that effectuation does not always lead to opportunity creation.

Technovation publish 2014
The Role of Organizational Learning in the Opportunity-Recognition Process. Benyamin Lichtenstein
Thomas Lumpkin

Firms engage in entrepreneurship to increase performance through both strategic renewal and the creation of new venture opportunities. Organizational learning (OL) has become an effective avenue for strategic renewal. But what of creating venture opportunities—can OL enhance the process of recognizing and pursuing new ventures? This article argues that OL can strengthen a firm’s ability to recognize opportunities and help equip them to effectively pursue new ventures. First, we identify three approaches to OL—behavioral, cognitive, and action. Then, we introduce a creativity-based model of opportunity recognition (OpR) that includes two phases—discovery and formation. Next, we show how each of the three types of learning is linked to the two phases of OpR. We suggest propositions that support our claim that OL enhances OpR and offer examples of firms that have used these organizational-learning approaches to more effectively recognize and pursue venture opportunities. These insights have important implications for entrepreneurial firms seeking to advance the venture-creation process.

Entrepreneurship Theory and Practice publish 2005
The Role of Prediction in New Venture Investing Richard Sudek
Rob Wiltbank

Early stage investors openly discount/ignore the predictions that entrepreneurs show in their business plans as they pitch to investors. At the same time, many predictions about the venture continue to anchor investor evaluations. However, investors’ use of predictive and non-predictive information varies based on their own approach to dealing with uncertainty, their own entrepreneurial experience, and the steps in the evaluation process (i.e. screening, due diligence, and funding). Evaluating data from more than 2,700 individual investor evaluations of 150 new ventures, we find that investors with more entrepreneurial experience are more effectual in how they approach the development of new ventures. We also find that investors grade their area of emphasis more stringently, i.e. those who weight predictive information grade it “tougher.” Overall, investors emphasize predictive information more than they might suppose, especially early in the selection process, but once a venture has moved through the funding process to due diligence and investment, non-predictive information is the key factor.

publish 2005  PDF Download
The use of networks in human resource acquisition for entrepreneurial firms: Multiple “fit” considerations Aegean Leung
Jing Zhang
MawDer Foo
Poh Kam Wong

This study proposes a multi-dimension, multi-contingent “fit” perspective for examining different practices adapted by entrepreneurial firms in acquiring human resources. We posit that while environmental constraints are important considerations for adapting recruitment practices through networks, strategic needs and interpersonal dynamics are the key drivers behind the evolution of such practices. As they transit from the startup to the growth phase, entrepreneurial firms utilize different network pools in search of diversity, yet cling to strong ties to find talents with common values and goals. Our findings carry important implications for future research in human resource management by integrating the macro- and micro-perspective, and at the same time, enhance the understanding of network effects and their strategic bearings in the entrepreneurial process, specifically in the acquisition of human resources.

Journal of Business Venturing publish 2006
The young, the fast and the furious: a study about the triggers and impediments of youth entrepreneurship D Koek
W Hulsink

Existing literature argues that young entrepreneurs lack the human, financial and social capital to establish a growing business. Since opportunity costs for them are low, there are also a few triggers for start-up entrepreneurship, which brings us to our research question: What are the triggers for starting a business at a young age and how do young entrepreneurs mitigate the lack of education, experience, knowledge and other critical resources in the start-up process?Twelve entrepreneurs younger than 25 were interviewed, although they clearly lack the human, social and financial capital needed to start a new business, they do not experience this as a disadvantage. Young entrepreneurs deal with these issues by using bootstrapping and effectuation mechanisms to accommodate financial capital constraints and mobilise social support from their parents and other entrepreneurial family members and friends. By taking part in all kinds of small-scale ventures and by being granted access to additional opportunities and introductions to new customers by senior managers of established companies on the basis of their originality, creativity and energy, young entrepreneurs acquire the experiences and the contacts they need for their next entrepreneurial step.

International Entrepreneurship and Management Journal International Journal of Entrepreneurial Venturing publish 2014
Thinking different René Mauer

no abstract for this!

The Routledge Companion to Entrepreneurship publish 2014
Three Views of Entrepreneurial Opportunity Nick Dew
Rama Velamuri
Saras Sarasvathy
S. Venkataraman

Every invention engenders opportunities for the creation of several possible economic (as well as other types of socially significant) effects. In the foregoing sections we have examined three sets of views with regard to how these effects come to be. Approaches based on the view of the market as an allocative process focus entirely on the final effects of opportunity creation, treating the processes leading to these final effects as mere detail; approaches based on the view of the market as a discovery process emphasize only the origins of the opportunity for creation, treating the final effects as inevitable products of competitive markets; and finally, approaches based on the view of the market as a creative process emphasize the decisions and actions of the agents, making both origins and final effects contingent upon those decisions and actions. In our view, if we are to deepen our understanding of entrepreneurial opportunity, we need to integrate these three approaches, emphasize contingencies rather than inevitabilities in each. As a first step in that direction, we offer the following fundamental argument for the study of the central phenomena of entrepreneurship – viz., entrepreneurial opportunities.

publish 2010  PDF Download
Towards an alternative theory of entrepreneurial success: Integrating bricolage, effectuation and improvisation summary G R Archer
René Mauer
Thomas Baker

Contemporary theoretical perspectives in entrepreneurship suggest an idealized linear model of successful entrepreneurship in which advantage goes to those who discover lucrative opportunities (Kirzner, 1997; Shane and Venkataraman, 2000), adopt consistent goals and strategies to exploit them (Wiklund & Shepherd, 2005), marshal appropriate high quality resources and deploy these resources in a capable and disruptive manner (Schumpeter, 1934) to earn monopoly rents. Increasingly, however, empirical research suggests that much entrepreneurial activity and even successful entrepreneurship sometimes violate multiple aspects of this model (Carter, Gartner & Reynolds, 1996; Alvarez & Barney, 2006; Lichtenstein, et al., 2007). Against this backdrop, scholars have proposed several theoretical perspectives – including bricolage (Garud & Karnoe, 2003; Baker & Nelson, 2005), effectuation (Sarasvathy, 2001; Wiltbank et al., 2006) and improvisation (Miner, et al., 2001; Crossan et al., 2005) – that are useful in making sense of these discordant patterns. Despite several common themes and family resemblances among these perspectives, little work has clarified important distinctions among them or attempted an integrative framework. Both tasks are necessary in order to make progress toward an alternative theory of entrepreneurial success.

Frontiers of Entrepreneurship Research publish 2009
Uncertain but able: Entrepreneurial self-efficacy and novices? use of expert decision-logic under uncertainty N G Dimitrova
S N Khapova
T Elfring
Y Engel

Entrepreneurs׳ initial strategy choices are made in the face of inherently uncertain and fundamentally unpredictable futures. Yet, unlike experts, novice entrepreneurs still tend to rely on predictions and forecasts as they move their ideas through the venture creation process. This study examines the role of entrepreneurial self-efficacy (ESE) and situational framing in mitigating the seemingly negative consequences of an “experience deficit” and promoting the use of effectuation – a non-predictive logic associated with entrepreneurial expertise. The results of a randomized experiment show that, in contrast to a control group and a low ESE group, novices who experienced an increase in ESE were more likely to use effectuation under uncertainty. This relationship was mediated by the framing of the situation as an opportunity.

Journal of Business Venturing Insights publish 2014
Unpacking the uncertainty construct: Implications for entrepreneurial action Alexander McKelvie
Haynie M
Veronica Gustavsson

Uncertainty is central to entrepreneurship; however robust and generalizable findings that explain the conditions in which uncertainty may impede [or promote] entrepreneurial action remain elusive. We operationalize uncertainty as a multi-dimensional construct composed of state, effect, and response types of uncertainty (Milliken, 1987) to investigate the relationship between uncertainty and entrepreneurial action. We decompose more than 2800 exploitation decision policies nested within a sample of new product decision-makers working in entrepreneurial software firms. We focus on the primary decision-maker’s willingness to exploit a given opportunity in the face of varying combinations and manifestations of uncertainty and find that the type of uncertainty experienced influences the willingness to engage in entrepreneurial action differently. Further, we find that differences in how each type of uncertainty is manifested in the environment, the scale of exploitation (i.e. large vs. small), and the entrepreneur’s expertise serve to moderate the relationship between uncertainty and action in counter-intuitive ways. We discuss the implications for both theory and practice.

Journal of Business Venturing publish 2011
Unreasonable Assumptions in ASB Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

In the October issue, the Academy of Management Review published a critique of effectuation (Arend et al, 2015). This page references two documents which address that critique. The first document is a formal response (Read et al 2016) that will be published in the Academy of Management Review. That manuscript is currently available for download on this website (http://www.effectuation.org/paper/response-arend-et-al-co-creating-effectual-entrepreneurship-research), and will continue to be until it is released by the Academy of Management Review. The second non-peer reviewed document offers a detailed discussion of assumptions made in Arend et al (2015) which we find inconsistent with both effectuation theory and with extant literature. That document is referenced in Read et al (2016) and is available for download from this page. If you have any additional questions, please email info@effectuation.org.

Academy of Management Review publish 2015  PDF Download
Untangling the Intuition Mess: Intuition as a Construct in Entrepreneurship Research. Mitchell j
Paul Friga
Ronald Mitchell

Entrepreneurs often use intuition to explain their actions. But because entrepreneurial intuition is poorly defined in the research literature: the “intuitive” is confused with the “innate,” what is systematic is overlooked, and unexplained variance in entrepreneurial behavior remains high. Herein we: (1) bound and define the construct of entrepreneurial intuition within the distinctive domain of entrepreneurship research; (2) apply a levels-of-consciousness logic and process dynamism approach to; (3) organize definitions, antecedents, and consequences; and (4) produce propositions that lead to a working definition of entrepreneurial intuition. Our analysis renders intuition more usable in entrepreneurship research, and more valuable in practice.

Entrepreneurship Theory and Practice publish 2005
Value Creation Through Entrepreneurship: Reconciling the Two Meanings of the Good Life Andrew C Wicks
Saras Sarasvathy

Ethicists and economists have always highlighted the tension between the individual and social meanings of the pursuit of the “good” life. Recently, entrepreneurship scholars too have acknowledged this as a key problem in value creation. In this paper, we bring two ideas from the work of Simon (docility) and March (the technology of foolishness) to synthesize a theoretical framework that not only begins to resolve this tension but also underpins the actual practice of entrepreneurship.

Academy of Management Review publish 2003
Vive La Resitance: Competing Logics and the Consolidation of US Community Banking. Christopher Marquis
Michael Lounsbury

We investigate how competing logics facilitate resistance to institutional change, focusing on banking professionals’ resistance to large, national banks’ acquisitions of smaller, local banks. Acquisitions led to new bank foundings, particularly when out-of-town banks were the acquirers and a community’s local population of bank professionals was large. We argue that the national banks’ efforts to introduce a banking logic emphasizing efficiencies of geographic diversification triggered new forms of professional entrepreneurialism intended to preserve a community logic of banking. Contributions to a synthesis of ecological and institutional perspectives and to research on entrepreneurship and resistance to institutional change are discussed.

Academy of Management Journal publish 2007
What Effectuation is Not: Further Development of an Alternative to Rational Choice Saras Sarasvathy
Rob Wiltbank

The theory of effectual reasoning advanced by Sarasvathy (2001a) proposes a decision process employed by entrepreneurs that differs substantially from the rational choice paradigm. This paper seeks to clarify this distinctive point of view on entrepreneurial decision-making by pointing to nine things that effectuation is not. The paper further explains the effectual paradigm and illustrates how effectuation integrates with other theories used in management science.

Academy of Management Conference publish 2010  PDF Download
What Effectuation is Not. Working paper, accessed from www.effectuation.org. Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank
Working Paper publish 2011
What makes entrepreneurs entrepreneurial Saras Sarasvathy

How good are you at putting together large jigsaw puzzles? If you can quickly begin to predict what the picture will look like and then fi t the pieces together, you have a pretty good idea what entrepreneurs do–at least, that is the prevailing myth about entrepreneurship. Let’s get behind that myth by imagining instead that a lot of people bring you a variety of fabric patches, and you have to stitch together a prize-winning quilt that not only pleases the eye but warms the body. Neither the picture nor all the pieces are given; it is for you to imagine patterns that will attract and inspire those who have contributed the fi rst patches and may be initialusers of the quilt—let’s call them stakeholders— while giving later stakeholders a say in the fi nal picture. Throughout the process, you have to deliver real value in real time. Welcome to the world of expert entrepreneurship.

publish 2004
What Makes Entrepreneurs Entrepreneurial? Saras Sarasvathy

Saras’s concise 9-pager introduction to effectuation. A key paper to download and read to grasp the foundations of effectuation.

Darden Business Publishing publish 2001  PDF Download
What to do next? The case for non-predictive strategy. Nick Dew
Saras Sarasvathy
Stuart Read
Rob Wiltbank

Two prescriptions dominate the topic of what firms should do next in uncertain situations:planning approaches and adaptive approaches. These differ primarily on the appropriate roleof prediction in the decision process. Prediction is a central issue in strategy making owing tothe presumption that what can be predicted can be controlled. In this paper we argue for the independence of prediction and control. This implies that the pursuit of successful outcomes can occur through control-oriented approaches that may essentially be non-predictive. We further develop and highlight control-oriented approaches with particular emphasis on the question of what organizations should do next. We also explore how these approaches may impact the costsand risks of firm strategies as well as the firm’s continual efforts to innovate.

Strategic Management Journal publish 2006
When Contingency Is a Resource: Educating Entrepreneurs in the Balkans, the Bronx, and Beyond Saras Sarasvathy
Susan S Harmeling

The research project described in this paper began as an inductive field study of entrepreneurship education in two very different settings—a university in war-torn Eastern Croatia and an entrepreneurship program in inner-city high schools in the United States. It evolved into a study of the two unlikely entrepreneurs who founded these education initiatives. Through a detailed counterfactual analysis of the narratives on the programs’ founding and evolution, we offer compelling evidence for the role of contingency in the entrepreneurial process. We present an inductive conceptual framework of responses to contingency based on entrepreneurs’ beliefs about agency and environment and conclude with implications of this research for entrepreneurship education.

Entrepreneurship Theory and Practice publish 2013
When Markets are Grue Nick Dew
Saras Sarasvathy

Is new market creation a search and selection process within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? We draw upon Goodman’s (1983) Grue paradox to explain the dynamics of a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and converging constraints that result in the new market. The dynamic model was induced from two empirical investigations, a cognitive science-based investigation of entrepreneurial expertise, and a real time history of the RFID industry.

Journal of Evolutionary Economics publish 2004  PDF Download
Whither the promise? Moving forward with entrepreneurship as a science of the artificial Bill Forster
Saras Sarasvathy
S. Venkataraman

In this article we speak of roads taken and paths yet to be traversed. Over the past decade, entrepreneurship researchers have accumulated considerable work related to opportunities. Here we outline new possibilities opened up by that work and seek to recast entrepreneurship as a science of the artificial in three ways: understanding opportunities as made as well as found, moving beyond new combinations to transformations, and developing a new nexus around actions and interactions.

Academy of Management Review publish 2012
Why Metallica changed music world – Effectuation perspective Erno Salmela
Business and non-profit organizations facing increased competition and growing customers´demand Vol. 15 publish 2016  PDF Download
Without judgment: An empirically-based entrepreneurial theory of the firm. Nick Dew
Saras Sarasvathy

Austrian ideas about the firm have grown rather naturally out of the central body of Austrian thought with its focus on entrepreneurship, subjectivism and market processes. In this paper we critically evaluate some Austrian ideas on the firm, with particular attention to the concept of entrepreneurial judgment. We then describe recent empirical work in entrepreneurship that has identified key elements of what might reside inside the “black box” of entrepreneurial decision making. We conclude that expertise in this type of decision making embodies procedural knowledge that is adaptive in the absence of substantive knowledge, i.e. without judgment.

Review of Austrian Economics publish 2011
Worldmaking Saras Sarasvathy

This chapter outlines a general framework for studying the entrepreneurial method. Simply put, what the scientific method has afforded us in terms of understanding the actual world we live in, the entrepreneurial method enables us in terms of making new ones. At least one key ingredient of the entrepreneurial method for worldmaking consists in the logic of effectuation identified through a decade long research program into the elements of entrepreneurial expertise. More specifically, given a world imbued with true uncertainty, the framework outlined here urges us to develop research streams focused on choosing between Type I and Type II errors in addition to ways of avoiding them altogether or finding the perfect Goldilocks balance between them.

publish 2012
You Say Illegal, I Say Legitimate: Entrepreneurship in the Informal Economy. David Sirmon
Duane Ireland
Justin Webb
Laszlo Tihanyi
Academy of Management Review publish 2009