Effectuation and Causation: Relevance in Contemporary Business Context

This essay critically assesses the relevance of theoretical models of entrepreneurship, particularly effectuation and causation, in the contemporary business context, which is characterized by uncertainty and major global dislocations such as climate change. It defines entrepreneurship and explores psychological, sociological, economic, and cultural theories. Effectuation involves providing unique goods and services, while causation focuses on achieving company objectives. The essay highlights how effectuation helps businesses capture opportunities and sustain competitive advantage, while causation emphasizes knowledge and resource optimization. It also discusses the importance of strategic decision-making, innovation, and stakeholder guidance for business success, referencing examples like Starbucks and Apple. Ultimately, the essay concludes that contemporary management issues create barriers, but entrepreneurship and effective encouragement can enhance employee motivation and business performance.

Effectuation and
Causation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The contemporary management is referring to one kind of approach which assist the
individual to evaluate multiple business functions which are established in workplace area. The
various kinds of functions which are carried through top level management are planning the
operations, utilizing various types of strategies and methods. But in aspect of entrepreneurship it
refers to the reediness and capability of each individual who organize, develop and focusing on
creativity and innovation within business (Ahmed and Hamid, 2022). In today’s time the main
purpose of various entrepreneurs or companies is to facilitate best quality goods and services to
consumers as per their requirements for long time. This essay will covers Critically assessing the
theoretical model of entrepreneurship has little relevance in the contemporary business context
characterised by uncertainty and major global dislocations such as climate change.
MAIN BODY
The entrepreneurship is basically defined as the procedure which is carried by individual
for establishing strong and new business in various locations. In this procedure entrepreneurs
will have utilized various types of strategies and ideas for gaining better output for the company
in market. By using different kinds of tactics and ideas revenue and reputation of company are
easily increased at higher rate. Basically there are four theories which is followed by
entrepreneurs and those are psychological, sociological, economic and cultural theory. In relation
to Sarasvathy, the main elements regarding the formation of entrepreneurial ventures which
facilitates structure to their business are effectuation and causation. The effectuation is basically
defined as the procedure where unique goods and services are provided to every individual. But
in respect to causation it refers to the situation or process which is utilized by various
entrepreneurs to meet their company vision, mission and objectives. In context to trends it is
observed by entrepreneurs and to the activities of organization are easily run in smooth manner
In respect of effectuation it is a scenario where business owner captured various
opportunities which are already available in targeted market at large scale. The term causation is
referring to specific position or scenario where entrepreneurs facilitates high emphasis on
individual knowledge which enhance the all over growth and performance of company. Due to
the effective utilization of effectuation concept various entrepreneurs are able to sustain
competitive advantage in market for long duration. The entrepreneurs are required to fix aims

and goals in their business and due to this entrepreneur always facilitate high quality goods and
services to users. The technique of effectuation is also utilized by entrepreneur for generating
their revenue at maximum level. The formation of strong and accurate strategies is also
providing effective contribution to entrepreneurs for enhancing their success in business at
higher rate. Entrepreneurs also supports the entrepreneurs to take major considerations to analyse
various aspects which are monitored and managed in uncertain situation. The decisions which
are taken in this procedure have special impact on the business activities. Due to taking correct
decision by business enterprise in the changing time popularity and growth of firm are easily
maintained in market. With help of utilizing various theories and approaches firm is able to
diversify their goods and services at higher rate.
The approach of causation will assist the entrepreneurs for establishing strong network
which is beneficial for them to carry various business activities in smooth manner (Baggen, Lans
and Gulikers, 2021). Due to the effective use of causation concept firm is able to utilize their
resources in optimized manner. At the time of past also on the basis of causation all the activities
of business are performed. Here the mind-set of various entrepreneurs played the crucial role for
gaining best output in their business. In the approach of causation, entrepreneurs plan various
strategies for delivering best quality services and goods to society and clients for long time.
Those strategies are allocation of right technology, resources and managing the operations in
effective manner. Due to this the growth and success of organization are highly increased within
low time. There are different types of skills which is used by entrepreneurs for enhancing their
success in business which involves leadership, decision-making, problem solving etc. Due to
considering all these elements entrepreneur is able to decrease risk and scarcity of resources in
their business in the present changing era effectively. It is also important for organization to
sustain their brand image, profit and position in market. This is one of the crucial factor which
makes it more sustainable in market. For example, start-up named curry in the hurry which is
been established to facilitate high quality service to users. It is totally depending on the
procedure of causation. When the individual conducted their business in simple manner then
entrepreneurs easily sustain their competitive advantage in market for long time. In this way new
innovation and continuous improvement has been executed by firm for improving their critical
areas in efficient manner. With help of continuous improvement and innovation the needs and

desires of customers are easily fulfilled in time. In this way the positive relationship between
employee and customers are effectively maintained for long duration.
The entrepreneurship is one of the aspect which is responsible for occurring the
transformation and revolution in systematic way. Therefore, this become very essential concept
in the activities of business. Here entrepreneurs get all kinds of scope in the business
environment by accessing certain specific scenario in business. But in today’s time entrepreneurs
did not explore various approaches which assist them to brings opportunity to specific business
for increasing their growth in present time. For ensuring higher success and various opportunity
in environment approaches leads the entrepreneur to avail them with high possibilities. In aspect
of traditional business, they did not accept the change because here flexibility is very less. In
today's time entrepreneurs utilized various tactics and new ideas which assist them to secure their
growth and profit margin in future aspect. In the process of strategies and ideas organization is
able to maximize their revenue at maximum level within short duration. The new type of ideas
supports the entrepreneurs to achieve competitive benefit in market. On other side it is necessary
for entrepreneurs that they must take proper guidance from the experts and stakeholders (Guili,
and Alami, 2020). In this way they are able to facilitate best quality services and products to
consumers quickly. For providing high quality goods and services to customers is the major
challenge.
The best strategic example for new type of business world Starbucks, Noble and Apple.
They utilized multiple tactics for attracting the users in large number which leads to increase the
sale of their products effectively. As per the changing dynamic situations they made the alliances
for dominating the market and also for increasing the revenue at maximum level. They also take
the procedure of decision very seriously with help of analysing the productivity of prior
organization. Partner of both firms have utilized innovative way for creating the valuable base of
consumers. With help of considering the process of both effectuation, causation and strategies
firm easily developed strong positive relationship with new and existing customers in short
duration. I also assist them to sustain strong positive brand integrity in market. There are
different types of models and theories which is utilized by firm to produce best quality product.
Due to the effective use various theories and models entrepreneur easily maintained in workplace
area among employees which leads to enhance company productivity effectively. For example,
Apple is one of the company who believes in simplicity and provides best quality phones and

other products to users. Due to this loyalty of consumers and their engagement are easily
sustained towards them through online and offline mode.
In particular business lots of risks and opportunities are occurred which leads to judge the
success and failure of organization. This will initially impact on the investment and operation
steps where entrepreneurs have minimum profits and high threats. This will have resulted in the
form of causation from the beginning of business. The major reason behind this issue to that
effectuation procedure is that it supports the business for exploring different opportunities which
is essential for various business ventures to increase their economic growth. The above
mentioned models, theories and the concept of effectuation and causation assist entrepreneurs for
gaining the success in various aspects. Those are more concentrating on the development to gain
support and assistance in starting period of the venture. During the time of working with various
entrepreneurs they have leverage in market which permits them to give effective sociability. The
financial decisions which are taken by entrepreneurs in business will provide focus on long term
and short term objectives which leads to enhance goodwill of company at maximum level in
market.
In traditional market the main focus of firm is to develop their overall performance and
economic growth (Guo, 2018). In today's generating revenue is the ultimate motive of all types
of company and for this purpose organization used advanced technology in their workplace area
among employees. In today’s time business also become more dynamic and innovative because
innovation is highly essential for sustaining the popularity of company goods and services in
market. It is also essential for firm to execute effective business plan and strategies and by using
various business plan and strategies entrepreneur is able to sustain their vision, mission and
objectives in long term. The business enterprise also played the major role for fulfilling the needs
and desires of society in time. Because enterprise is mainly developed for society and without the
proper understanding of society firm is not able to run their activities in systematic manner. The
issue which is occurred due to the ineffective understanding of community is that firm is not able
to maintain balance in the demand and supply of products effectively.
The various business enterprises utilized various kinds of strategic approaches in the
activities and in overall business. Due to this the owner of firm is able to identify the real issues
of lower level employees which is highly important in present time. Without the proper
identification of their problems management is not able to maintain standard in their services. It

leads to decrease their performance at large scale. For solving their various issues company is
providing advanced training to them which is highly useful. By facilitating advanced training
skills and talents of employees are highly improved. In this way they are able to sole complicated
problems within low time. The other benefit for receiving advanced training is that here
employees understand that in which manner work are done. This is very important for them to
accomplish the task in attractive and systematic manner. Training also support to develop strong
communication between all departments regarding job roles and responsibilities. Through the
entrepreneurs are motivated and have willingness to work in a productive and appropriate
manner with the purpose of meeting the definite goals and objectives of the business.

CONCLUSION
After the analysis of above data, it concludes that contemporary management issues plays
crucial role for creating barriers in business activities. Due to facing various management issues
employees within firm is not able to conduct their job roles and responsibilities in effective
manner. The concept of entrepreneurship played important role for enhancing the motivation
level of employees at large scale. This essay will covers Critically assessing the theoretical
model of entrepreneurship has little relevance in the contemporary business context characterised
by uncertainty and major global dislocations such as climate change. By effective
encouragement workers easily done their task without facing any kind of stress.

REFERENCES
Books and Journals
Ahmed, S.K. and Hamid, S.A.R., 2022. The Role of Effectuation as a Device to Stimulate
Innovativeness. Journal of Workplace Behavior, 3(1), pp.66-82.
Baggen, Y., Lans, T. and Gulikers, J., 2021. Making entrepreneurship education available to all:
Design principles for educational programs stimulating an entrepreneurial
mindset. Entrepreneurship Education and Pedagogy, p.2515127420988517.
Guili, H.E. and Alami, Y., 2020. Internationalisation process and international performance of
emerging countries' small and medium-sized enterprises (SMEs): a conceptual model
based on effectuation and causation approaches. International Journal of Comparative
Management, 3(3), pp.230-253.
Guo, R., 2018. Strategic decision-making logics, entrepreneurial capability and opportunity
exploitation in high-tech new ventures. Journal of Business Economics and
Management, 19(2), pp.235-252.
Klenner, N.F., Gemser, G. and Karpen, I.O., 2022. Entrepreneurial ways of designing and
designerly ways of entrepreneuring: Exploring the relationship between design thinking
and effectuation theory. Journal of Product Innovation Management, 39(1), pp.66-94.
Liu, Y., 2020. Contextualising risk and building resilience: Returnees versus local entrepreneurs
in China. Applied Psychology, 69(2), pp.415-443.
McGowan, P., 2020. Use of effectuation by established micro businesses: short-term gain, long-
term pain?. Journal of Business & Industrial Marketing, 36(1), pp.60-71.
Szambelan, S.M. and Jiang, Y.D., 2020. Effectual control orientation and innovation
performance: clarifying implications in the corporate context. Small Business
Economics, 54(3), pp.865-882.
Tryba, A. and Fletcher, D., 2020. How shared pre-start-up moments of transition and cognitions
contextualize effectual and causal decisions in entrepreneurial teams. Small Business
Economics, 54(3), pp.665-688.
Yang, X., Sun, S.L. and Zhao, X., 2019. Search and execution: examining the entrepreneurial
cognitions behind the lean startup model. Small Business Economics, 52(3), pp.667-
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