This page contains answers to commonly asked questions about effectuation. The top section is devoted to answers regarding the basic principles of effectuation while the lower section addresses specific commonly asked academic questions regarding the theory of effectuation.
What is effectuation?
Do all entrepreneurs use effectuation?
Do non-entrepreneurs use effectuation?
What is the evidence that entrepreneurs use effectuation?
Is effectuation a good thing?
If not, under what circumstances is it bad?
Who does causal reasoning anyway?
What are examples of effectuation and causation?
Do people always act completely effectually or causally?
Given that people do both, how does one differentiate between the two?
What does this mean for business plans?
Is effectuation an attribute or a trait?
Is effectuation teachable?
What is the opportunity cost of effectuation?
What is the difference between a resource and a mean?
What is the role of control groups?
How do I resolve the confounding of means and ends?
How do goals relate to means?
What is effectuation not?
Another way to help bound the theory of effectuation is to describe the things
that it is not. Below are nine characteristics of what effectuation is
not. These are fully described in Dew and
Sarasvathy's 2002 paper (click to download).
1. Effectuation is not merely a set of heuristic deviations from rational choice – it is a non-overlapping alternative paradigm to rational choice.
2. Effectuation is not a wholesale replacement for predictive rationality – it exists in parallel to it.
3. Effectuation is not irrational or non-rational – it helps, along with other notions, to pluralize the notion of rationality, not to negate it.
4. Effectuation is not a random process – it is textured and systematic with eminently learnable and teachable principles, and practical prescriptions of its own.
5. Effectuation is not a theory of “anything goes” – it is a theory of constrained creativity.
6. Effectuation is not a resource-based view of individual decision making – it does not assume valuable resources, it inquires into what makes things valuable and how one can acquire and/or create value in resources.
7. Effectuation is not just for small, start-up firms – it can be applied to large firms and economies as well.
8. Effectuation is not restricted to the domain of entrepreneurship -- just like the philosophy of rational choice, it can under-gird all the sciences of human action.
9. Effectuation is not an independent theory – it builds on and integrates the work of several well-received theories in economics and management.