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Questions worth asking for futures worth making: an effectual approach

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  • Saras Sarasvathy

    (University of Virginia, The Darden School)

Abstract

It is not unusual in the psychology and economics of entrepreneurship to focus on decision models based on predictive reasoning that explain outcomes such as venture creation (at the micro level), firm performance (meso level), or job creation (macro level). However, in this article, derived from the literature on entrepreneurial expertise, I argue for an embrace of uncertainty, where outcomes are not only unknown, but unknowable, hence undermining predictive criteria for actions and decisions. By focusing on principles and processes that do not entail predictive reasoning, effectuation offers both practical guidance for acting in the face of multiple uncertainties and novel research questions not yet examined through the lens of the entrepreneurial method. Specifically, I offer five possible new ventures for future research built on the five principles of effectuation. These pertain to new futures worth making, without prescribing or predicting what those would, could, or should be.

Suggested Citation

  • Saras Sarasvathy, 2023. "Questions worth asking for futures worth making: an effectual approach," Small Business Economics, Springer, vol. 61(1), pages 11-21, June.
    • Handle: RePEc:kap:sbusec:v:61:y:2023:i:1:d:10.1007_s11187-023-00747-5
    DOI: 10.1007/s11187-023-00747-5
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    References listed on IDEAS

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    1. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-217, March.
    2. James G. March, 1978. "Bounded Rationality, Ambiguity, and the Engineering of Choice," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 587-608, Autumn.
    3. Saras Sarasvathy & Nicholas Dew, 2005. "New market creation through transformation," Journal of Evolutionary Economics, Springer, vol. 15(5), pages 533-565, November.
    4. Boris Urban, 2018. "Effectuation And Opportunity Recognition In The Renewable Energy Sector In South Africa: A Focus On Environmental Dynamism And Hostility," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-17, June.
    5. Saras D. Sarasvathy & Sankaran Venkataraman, 2011. "Entrepreneurship as Method: Open Questions for an Entrepreneurial Future," Entrepreneurship Theory and Practice, , vol. 35(1), pages 113-135, January.
    6. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
    7. Murphy, Matthew & Danis, Wade M. & Mack, Johnny & Sayers, (Kekinusuqs) Judith, 2020. "From principles to action: Community-based entrepreneurship in the Toquaht Nation," Journal of Business Venturing, Elsevier, vol. 35(6).
    8. Gry Agnete Alsos & Tommy Høyvarde Clausen & René Mauer & Stuart Read & Saras D. Sarasvathy, 2020. "Effectual exchange: from entrepreneurship to the disciplines and beyond," Small Business Economics, Springer, vol. 54(3), pages 605-619, March.
    9. Antoni Olive-Tomas & Susan S. Harmeling, 2020. "The rise of art movements: an effectual process model of Picasso’s and Braque’s give-and-take during the creation of Cubism (1908–1914)," Small Business Economics, Springer, vol. 54(3), pages 819-842, March.
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    Cited by:

    1. Martin Obschonka & Moren Levesque, 2024. "A Market for Lemons? Strategic Directions for a Vigilant Application of Artificial Intelligence in Entrepreneurship Research," Papers 2409.08890, arXiv.org.

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    More about this item

    Keywords

    Effectuation; Predictive reasoning; Entrepreneurial expertise; Cocreation; Problem of plenty; Loss aversion; Self-selection; Stakeholders; Negative contingencies; Teleology;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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