Causation and Effectuation: Toward a Theoretical Shift From Economic Inevitability to Entrepreneurial Contingency

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.

Journal or Publication:
Academy of Management Journal
Saras Sarasvathy
Year Published
Relevant Principles:
Lemonade (Leverage Contingencies)
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