Effectuation is an entrepreneurial mindset that aims to deal with uncertainty and actively shape the future rather than predict it. This approach is based on four principles: resource orientation, affordable loss, using circumstances and coincidences, and partnerships and agreements. Entrepreneurs use available resources and accept uncertainties while exploring innovative avenues through creative collaboration and adaptability.
- Resource orientation: Start with your existing resources and abilities instead of fixed goals.
- Affordable loss: Manage risk by setting limits on what you are willing to lose rather than on potential gains.
- Use circumstances and coincidences: Integrate coincidences and unexpected events into your strategy to create new possibilities.
- Partnerships and agreements: Build partnerships to reduce uncertainty and identify new opportunities.
Dynamic model of effectuation3
Resources:
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Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of management Review, 26(2), 243-263.
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Last updated on 3/12/2025.
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