Causation, Effectuation, and Contemporary Business Management

This report examines the concepts of causation and effectuation in business management, particularly in the context of new ventures. It discusses how businesses face challenges related to skills, resources, and market knowledge. Causation involves predefined goals and finding ways to achieve them, while effectuation focuses on utilizing available means to materialize into potentially undefined goals. The report highlights the principles of effectuation, such as leveraging available resources and turning unexpected events into opportunities. It also addresses common management issues like team motivation, recruitment, and communication, emphasizing the importance of both causation and effectuation in achieving business objectives within a dynamic and competitive environment. The report concludes that while both approaches differ, they are essential for the growth and success of newly established businesses.

Management Issues

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Management issues occur in different organisation that are linked with skills, resources,
knowledge and capabilities. It is important for managers of organisation to identify problem
occur in business as well as also find out solution that allow them to overcome of problem occur
in business (Arvidsson, and Coudounaris, 2020). For this, different approaches can be adopted
by managers of company which provide guidance to managers for overcome of problem occur in
business. This project report consist description of causation and effectuation. It also includes
description of understanding and relevance of business management dynamics issues in context
of contemporary business environment.
TASK
Business face different types of problem and issues in their day to day problem specially
in newly start up companies in market. These challenges are related to lack of skills and
capabilities, lack of funds, competition, technical problem, lack of market knowledge and
experience and others. Business also face other challenges including unorganized organisation
structure, lack of employee support, negative mindset of employees (Braun and Sieger, 2021).
Uncertainty is also present in market that is face by newly start up venture as they does not have
proper knowledge of market and also unable to predict different trends in market. In order to
overcome of these uncertainties, business managers needs to develop capability that assist them
for purpose of expansion of business. Causation and effectuation are considered as an important
approaches for business that assist them for development of new start ups.
Causation and effectuation are important business approach that is used by managers of
company for managing different activities of business. Business focus on offering network
resources that allow them to share ideas but in a research, it is identified that there is limited
change of knowledge among different firm. Causation and effectuation is one of approach that is
focusing on sharing ideas among firm and also perceived value of inter tenant network resources.
Causation approach is one that is implied that focus of entrepreneur is on predefined goals and it
is also aiming to find out ways to reach to goals (Futterer, Schmidt and Heidenreich, 2018). On
the other hand effectuation is one of approach in which enterprise is focusing on means that aim
to materialise into different goals which are not predefined. Entrepreneur taking effectuation
approach for sharing ideas and also for perceiving network resources for creating higher values.

Entrepreneur are considering causation approach for purpose of limiting of sharing ideas with
incubator firm and also receiving lower values from network resources.
Causation is one of term which influence from state, objective, process, event and
objectives that are making efforts for purpose of development of other state, event, object and
process at place where effect is relay on cause and cause is accountable for effect. Newly
established business is aiming at development of new ideas as well as access to new and different
resources for attainment of goals of company (Grégoire and Cherchem, 2020). There are
different types of problems occur in management of company which is needs to be solve by
managers of company in order to get success in market. For this, managers can adopt these
approach.
Effectuation is another approach that is considered as process of experience and act of
ensuring to make decision that allow to overcome of uncertainty as well as unclear goals. As per
theory of Sarasvathy for effective, it is considered as an approach that assist firm for purpose of
decision making and also performing action in entrepreneurship process that identify different
steps for assessing different resources available for achieving goals of company. It is completely
different in compare to causation as causation is predetermined goals, targets as well as process
that is needs to be attained by business for effective planning.
There are different principles includes in this approach includes Bird in hand, as per this
managers of company needs to develop solution for problems faced by them on basis of
resources available in company (Høvig, Pettersen and Aarstad, 2018). It is essential for company
to utilise their resources effectively that allow them to reduce wastage and attain goals of
business effectively. For instance, Next Plc is one of organisation which is using resources of
their own for new product development and expanding their market share. Another principles of
Lemonade principle and according to which there are different mistakes and surprises occur in
business unexpectedly which cannot be avoid by them. There are also unexpected event also
allow in business that provide them opportunity (Matalamäki, 2017). For instance, Covid-19 is a
one of disease their is unexpected for human and create situation of pandemic. This situation
create opportunity for different organisation like Netflix is one of organisation that get
opportunity with this event. In order to avoid threat of spread of disease, government announce
lock-down in countries that create change in life style of people. It increase demand of movies

and series of OTT platform like Netflix. It create opportunity for business to expand their
marketing share and also to get more growth.
Different types of issues occur in business that can create impact over operation
of company and business find it difficult to overcome of these issues. In order to resolve these
issues, Managers of company needs to motivate members of team and also needs to offer training
and development opportunity for business that is essential to get success. Business also face
problems related to recruitment and selection of capable and efficient employees that is
important in order to get success for new venture business (Servantie, and Rispal, 2018). To
overcome of this problem, managers of company needs to hire employees with diverse skill set.
Another problem face by managers of company is related to communication, it is essential for
new venture to ensure fee flow of information in order to get success. It allow them to make
informed decision and also getting support from employees. Business face problems for lack of
resources and in order to get resources, they can find out new partners in company.
Causation as well as effectuation are considered as important approaches for attainment of
goals and objectives of newly established business (Vanderstraeten, Hermans and Dejardin,
2020). Both of these approach is different from each other as causation approach starts with
formulation of goals and on the other hand effectuation start with means of organisation to know
what they are and what they know (Villani, Linder and Grimaldi, 2018). Causation approach is
emphasising on prediction and allow managers of company for making prediction for managers
of company for uncertain situation. Effectuation on the other hand is based on controlling
measure that allow them to avoid uncertain situation.
It has been analysed and reviewed that creation of a new venture within a dynamic business
environment that tend to comprises and includes of the business environment that is rapidly
changing it become vital to adapt quickly to changes and develop new ideas, products and
services to keep up with technology and new trend (Hauser, Eggers and Güldenberg, 2020). The
main contemporary issues that are faced while creation of the new venture tends to includes the
fierce level of competition along with ensuring and leading out effective financial management.
The issue of the fierce competition while creating and leading out new venture tend to be
associated with the presence of larger number of competitors thus, at that time implication and
use of some effective approach that clearly defines the business goals and brings exclusivity to
business are essentially required. Therefore, at time use and implication of the causation

approach is effective and vital as its principle tend to focus on a predefined goal and then aim to
find the means to reach this goal. Thus, it tends to supports creation and making use of pre-
defined and effective strategies that are effective for the newly created business venture to
overcome issues of dynamic global environment associated with high competition. Along with
this, the issue of finance management is also faced while creation of new venture in dynamic
environment which is associated with grabbing of current opportunity based on the availability
of resources. Thus, at that time the effectuation approach tends to provide and associated with
the issue of financial management that is being faced at the time of the creation of new venture.
Thus, the effectuation approach tends to implied the materialize use of the available resources to
effective and necessarily meet the prevailing opportunity through leading better management of
available resource and finance (Matalamäki, 2017).
CONCLUSION
From above mentioned project report, it can be concluded that newly established business
venture face different problems in business which are related to lack of knowledge and
understanding of market. There ate various approaches adopted by business in order to overcome
of these problems. For this, managers of company needs to adopt Causation and effectuation that
allow business for attainment of goals. Both of these approaches are different from reach other
but focus of it is on growth of company. Among these approaches, causation is based on
predetermined goals of company whereas effectuation is focusing on available resources in order
to find out solutions.

REFERENCES
Books and Journals
Arvidsson, H.G. and Coudounaris, D.N., 2020. Effectuation versus causation: A case study of an
IT recruitment firm. International Journal of Entrepreneurship, 24(4), pp.1-13.
Braun, I. and Sieger, P., 2021. Under pressure: Family financial support and the ambidextrous
use of causation and effectuation. Strategic Entrepreneurship Journal, 15(4), pp.716-
749.
Futterer, F., Schmidt, J. and Heidenreich, S., 2018. Effectuation or causation as the key to
corporate venture success? Investigating effects of entrepreneurial behaviors on
business model innovation and venture performance. Long Range Planning, 51(1),
pp.64-81.
Grégoire, D.A. and Cherchem, N., 2020. A structured literature review and suggestions for
future effectuation research. Small Business Economics, 54(3), pp.621-639.
Hauser, A., Eggers, F. and Güldenberg, S., 2020. Strategic decision-making in SMEs:
effectuation, causation, and the absence of strategy. Small Business Economics, 54(3),
pp.775-790.
Høvig, Ø., Pettersen, I.B. and Aarstad, J., 2018. Entrepreneurial causation vs. effectuation in a
business incubation context: Implications for recruiting policy and
management. Entrepreneurship Research Journal, 8(1).
Matalamäki, M.J., 2017. Effectuation, an emerging theory of entrepreneurship–towards a mature
stage of the development. Journal of Small Business and Enterprise Development.
Servantie, V. and Rispal, M.H., 2018. Bricolage, effectuation, and causation shifts over time in
the context of social entrepreneurship. Entrepreneurship & Regional
Development, 30(3-4), pp.310-335.
Vanderstraeten, J., Hermans, J., and Dejardin, M., 2020. SME innovativeness in a dynamic
environment: is there any value in combining causation and effectuation?. Technology
Analysis & Strategic Management, 32(11), pp.1277-1293.
Villani, E., Linder, C. and Grimaldi, R., 2018. Effectuation and causation in science-based new
venture creation: A configurational approach. Journal of Business Research, 83, pp.173-
185.