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Series:   Elements in Business Strategy

Effectuation

Rethinking Fundamental Concepts in the Social Sciences

Published online by Cambridge University Press:  25 May 2024

Saras Sarasvathy
Saras Sarasvathy
Affiliation:
University of Virginia

Summary

Effectuation has become the basis for educating entrepreneurs and managers. Derived from cognitive and behavioral economic studies of expert entrepreneurs, effectuation shows how to cocreate value in highly uncertain situations. The framework of effectuation consists in techniques that minimize the use of predictive information and ways to turn control itself into strategy. In doing so, the effectual process opens up radically new ways to rethink a variety of fundamental concepts in all the social sciences. This ranges from risk and return to markets and governments in economics; attitudes toward ends and means in psychology; opportunism and altruism in social psychology; and even success and failure in strategic management. Effectuation theory inverts several older approaches in what Herbert Simon referred to as the 'sciences of the artificial'. These inversions suggest an entrepreneurial method based on non-predictive control that complements the predictive control techniques of the scientific method.
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Keywords

entrepreneurshipbehavioral economicsexpertiseinnovationuncertainty
Type
Element
Information
Series: Elements in Business Strategy
Online ISBN: 9781009103985
Publisher: Cambridge University Press
Print publication: 13 June 2024

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