Entrepreneurship: Analyzing Causation, Effectuation, and New Ventures

This essay provides an in-depth analysis of entrepreneurship, focusing on Sarasvathy's concepts of causation and effectuation. Causation involves selecting the best means to achieve a pre-determined effect, while effectuation entails choosing the most favorable effect based on available means. The essay contrasts traditional business ventures with modern entrepreneurial approaches, highlighting the shift from rigid, inflexible models to contingency-focused, innovative strategies. It explores how startups utilizing effectuation may face earlier failures but with lower investment risks, and emphasizes the importance of strategic alliances, exemplified by Uber and Spotify. The discussion also covers modern marketing tactics, short-term financial strategies, and the implementation of participative work environments, using Google as a prime example. Ultimately, the essay concludes that entrepreneurship is vital for global business growth, with new firms being more responsive, customer-led, and technologically advanced due to their networking and value-based offerings.

Essay

Introduction................................................................................................................................................................................................................................. 2
Main Body.................................................................................................................................................................................................................................... 3
Conclusion.................................................................................................................................................................................................................................... 6
References.................................................................................................................................................................................................................................... 6
Introduction
Entrepreneurship is a business concept which tends to explore creative and innovative means of running a business venture . In the current
scenario, entrepreneurship is an emerging trend which assists as well as supports business enthusiasts to come up with necessary offerings and
services which could solve an existing need or demand of the market (Arvidsson, Coudounaris and Arvidsson, 2020).The respective essay
entails a precise analysation of the key aspects of entrepreneurship research led by Sarasvathy in one of the very informative articles named as
“Causation and Effectuation”. It also highlights upon development of new business entities in comparison to the traditional units and institutions
supported by some insightful business examples.

Main Body
Entrepreneurship is a concept which promotes the idea of innovation, creativity and differentiation within the business practices by delivering
quality products and services within the market domain. It can be said that business insiders have diverse set of conflicting viewpoints,
arguments and debates in regard with their individual opinion and perspective of entrepreneurship. As per the perspective of Sarasvathy (2001),
Effectuation and causation are two of the main components which serves as the basis for formation of business unit, venture or
institution.Causation refers to a phenomena wherein the pre set effect is provided to an individual and they need to choose upon the most
appropriate driver or mean that they would like to take into consideration for facilitating their operations.Effectuation can be characterised as a
process wherein preset means are facilitated to an individual and they are required to select and choose the most apt effect which is favourable to
them in order to run a specific function or operation in their field of work.
Causation is more preferable if entrepreneurs would like to emphasize upon knowledge whereas effectuation is more profitable if entrepreneurs
would prefer to capitalise upon opportunities. Causation helps to analyze the predictabilities which lies within an uncertain business future. It
leads upon the concept that the competency of a venture to control an uncertain event is dependent upon the ability of the same to predict that
particular event. Effectuation is helpful in identifying the aspects which can be controlled in an uncertain and unpredictable future event. It
follows an assertive approach which reflects upon the idea that the degree to which and enterprise is able to control it’s environment and
surroundings is the extent to which it will be able to cope up with the uncertain future which lies ahead of the same.
Every given entrepreneurial venture has its own set of policy, procedure, base, value that it likes to adopt in order to sustain and survive in the
marketplace. There are entrepreneurial ventures which are based upon effectuation and there are some which opts for causation. It simply
depends upon the mindset and skill set of the entrepreneur in consideration with how they would like to operate the business ( Bagheri, Newman
and Eva, 2020). In the earlier times, the entrepreneurship was a very untapped concept and individual did not attempt to explore it as much as it
is done today because they were not eager to take the necessary risks with their businesses. The firms use to choose causation method more often
for setting up and operating their business organization. But with the changing times, entrepreneurs have become more resilient, confident and

passionate about there business which facilitates them with the much needed drive to take higher risks and achieve exceedingly well position in
the market.
Entrepreneurship has completely transformed and revolutionised in a positive manner where in there is scope for each and every kind of business
in the business environment. Modern entrepreneurial concepts are extremely path breaking and concept driven. Entrepreneurs no longer follows
the mundane approach and are ready to exploit new possibilities which could elevate their present success and amplify their business in the
global domain (Donbesuur, Boso and Hultman, 2020). Traditional business ventures were very rigid and inflexible. They did not follow
contingency handling approaches in a proficient manner. Modern firms are more contingency focused as they are aware of the fact that in order
to manage higher risks, the firm must possess the appropriate set of manpower, finance, resources and strategic plans .
In terms of entrepreneurial ventures, it has been identified that if start ups fails which are initialised with the process of effectuation, they are
likely to fail early at low investment stage. This means that these entrepreneurial ventures will risk less efforts, profits in comparison to a firm
which starts of its venture with causation. The reason behind the same can be termed as the analyzation that effectuation is a method which
provides ample number of opportunities to a startup within an economic market to strive harder in order to obtain success.
It is depicted that most of the ventures choose effectuation phenomena in comparison to causation when starting a business. Successful
entrepreneurial firms in the initial start of their venture must focus upon forming effective alliances in order to gain appropriate support and
assistance as it can provide them with an added leverage within the market and help them formulate better rapport and camaraderie with their
competitors. (Buccieri, Javalgi and Jancenelle, 2021). For instance, Uber and Spotify can considered to be the perfect example of strategic
alliance formed by two of the most successful business ventures in order to enhance their popularity, profitability and market share. The
respective alliance has helped both the companies to achieve greater benchmarks.
When it comes to decision making, today’s business ventures are more focused upon adopting innovative means of marketing and promotion of
their offerings. Entrepreneurial firms nowadays do not hold to traditional methods as the traditional means do not fit in within the current
dynamic and competitive market environment. The business environment has become extremely aggressive and competitive which interns
increases the requirement for the organisations to level up in terms of their retaliatory strategies to the rival companies (Kowalik, Danik and

Francioni, 2020) In order to do the same, business ventures needs to try harder upon creating, formulating, implementing and controlling
marketing tactics which could provide them with books and benefits the competition. The firms have become smart and they try to optimize
upon business means which are more flexible, adaptable and relatable to the target market. For example, marketing campaigns of Nike are
highly innovative and attractive. The company focuses upon acquiring celebrity featuring within its advertisements, social media projects etc. so
as to persuade more and more customers to invest into the offerings provided by the venture in the marketplace.
In context to finance decisions, the entrepreneurs are more relied upon aiming for short term advantages and benefits. The traditional and old
format of going for long term profitability is not the primary focus of the new firms in today’s market. They are more into experimenting with
their business practices in a manner through which they can attain short but effective results. In order to achieve prominent objectives it is
necessary for entrepreneurial venture in current time to implement a participative and collaborative culture at the workplace setting.
Participative environment builds a sense of respect, communication and initiative within the working members of an organization which in turn
allows them to express their thoughts, opinions and viewpoints confidently (Guccieri, Javalgi and Cavusgil, 2020). This is likely to impact upon
the motivation, engagement and willingness of the concerned staff to invest their efforts, ideas and time In relation to achievement of
organizational goals.Google can be termed as a well recognised firm which lays major concern over following participative environment in the
work areas. The company provides a platform to the employees in order to voice their concerns and views in the respect to the firm and its
operations. The previously utilized regular and basic business mindset is not taken into consideration by the newcomers. The upcoming
entrepreneurs are looking forward to invent and innovate their own ways of managing and running the business which is quite unique and
commendable.
Conclusion
From the above discussion, it can be summarised that entrepreneurship is one of the integral parts of global business. Entrepreneurs are very
essential and prominent for the growth of global business domain as they dedicate their efforts and services in the upliftment of the same. The
effectuation led entrepreneurial ventures are ought to face failure more times. However, they have an inbuilt ability to respond, overcome and

eliminate these failures as well. Entrepreneurs are creating new realities with their visions by converting their ideas and perspectives into
products which have the potential to cater to the required needs of the customers in a effective and considerable manner. The current status of
entrepreneurship is very diverse from what it was before. In the end, it can be stated that the new firms will be more responsive, active,
customer-led and technically advance comparison to the older ones due to their networking approaches and value based offerings.

References
Arvidsson, H.G., Coudounaris, D.N. and Arvidsson, R., 2020. The shift from causation to effectuation for international entrepreneurs: Attitudes
and attitude change versus social representations. International Journal of Entrepreneurship, 24(3), pp.1-23.
Bagheri, A., Newman, A. and Eva, N., 2020. Entrepreneurial leadership of CEOs and employees’ innovative behavior in high-technology new
ventures. Journal of Small Business Management, pp.1-23.
Donbesuur, F., Boso, N. and Hultman, M., 2020. The effect of entrepreneurial orientation on new venture performance: Contingency roles of
entrepreneurial actions. Journal of Business Research, 118, pp.150-161.
Buccieri, D., Javalgi, R.G. and Jancenelle, V.E., 2021. Dynamic capabilities and performance of emerging market international new ventures:
Does international entrepreneurial culture matter?. International Small Business Journal, 39(5), pp.474-499.
Kowalik, I., Danik, L. and Francioni, B., 2020. Specialized marketing capabilities and foreign expansion of the international new
ventures. Journal of Small Business Management, pp.1-39.
Guccieri, D., Javalgi, R.G. and Cavusgil, E., 2020. International new venture performance: Role of international entrepreneurial culture,
ambidextrous innovation, and dynamic marketing capabilities. International Business Review, 29(2), p.101639
Online
Causation and Effectuation: Toward A Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency, (2001),[Online] Retrieved
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y_to_Entrepreneurial_Contingency>