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Entrepreneurial logics for a technology of foolishness

Published on Dec 1, 2005in Scandinavian Journal of Management1.42
· DOI :10.1016/j.scaman.2005.09.009
Saras D. Sarasvathy33
Estimated H-index: 33
(UVA: University of Virginia),
Nicholas Dew24
Estimated H-index: 24
(NPS: Naval Postgraduate School)
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Abstract
Several years ago Professor March pointed out that rational choice involves two guesses, a guess about uncertain future consequences and a guess about uncertain future preferences, and called for the development of a technology of foolishness to complement the technologies of intelligence that have been developed to improve the first guess. In this essay we use empirical data from two separate studies of entrepreneurial expertise, one involving the creation of new ventures and the other the birth of a new industry to identify three logics that constitute working elements of a technology of foolishness: (1) the logic of identity, as opposed to the logic of preferences; (2) the logic of action, as opposed to the logic of belief; and (3) the logic of commitment, as opposed to the logic of transaction.
  • References (38)
  • Citations (100)
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References38
Newest
Published on Nov 1, 2005in Journal of Evolutionary Economics1.44
Saras D. Sarasvathy33
Estimated H-index: 33
(UVA: University of Virginia),
Nicholas Dew24
Estimated H-index: 24
(NPS: Naval Postgraduate School)
Is new market creation a search and selectionprocess within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? In this article we consider new market creation as a process involving a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and convergingconstraints that result in the new market. The dynamic mode...
Published on Jul 1, 2004in Journal of Socio-economics
Metin M. Cosgel15
Estimated H-index: 15
(UConn: University of Connecticut),
Lanse Minkler9
Estimated H-index: 9
(UConn: University of Connecticut)
Religions typically prescribe their followers to display distinct behavior in consumption, production, and exchange. Well-known are the examples of Catholics not eating meat on Fridays during Lent, Hindus being vegetarian and Muslims and Jews avoiding pork, Muslims praying five times a day, and Jews and Christians observing the Sabbath. As a common theme in these examples, individuals are asked to commit to a behavioral pattern by consistently choosing one course of action over its alternatives ...
Published on Jan 1, 2004in Journal of Applied Psychology5.07
Wayne H. Stewart10
Estimated H-index: 10
(Clemson University),
Philip L. Roth41
Estimated H-index: 41
(Clemson University)
J. B. Miner and N. S. Raju (2004) contended that there are additional studies that compare the risk propensity of entrepreneurs and managers, which, when added to the data from W. H. Stewart and P. L. Roth (2001) and meta-analyzed, produce relationships between risk propensity and entrepreneurial status that are substantially weaker than previously believed. This conclusion was evaluated by identifying and examining methodological problems associated with their inclusion of effect sizes (i.e., d...
Published on Apr 1, 2003in The American Economic Review4.10
Andrew Schotter35
Estimated H-index: 35
(NYU: New York University)
In many of the decisions we make we rely on the advice of others who have preceded us. For example, before we buy a car, choose a dentist, choose a spouse, find a school for our children, sign on to a retirement plan, etc. we usually ask the advice of others who have experience with such decisions. The same is true when we make major financial decisions. Here people easily take advice from their fellow workers or relatives as to how to choose stock, balance a portfolio, or save for their child’s...
Published on Jan 1, 2003
S. Venkataraman1
Estimated H-index: 1
(NPS: Naval Postgraduate School),
Nicholas Dew24
Estimated H-index: 24
(NPS: Naval Postgraduate School)
This study explores the real-time emergence of the RFID (radio frequency identification) industry by investigating how the Auto ID Center, a MIT-based network of business organizations, is creating an infrastructure for computers to communicate with objects via The Internet of Things. The analysis shows how the Auto ID network originated in a “garbage can” fashion and used effectuation to grow through a series of stakeholder commitments. Effectual strategies are primarily means-driven and non-pr...
Published on Jan 1, 2002
Saras D. Sarasvathy33
Estimated H-index: 33
(UW: University of Washington)
Published on Jan 1, 2002in New Scientist0.33
Jonathan Fildes1
Estimated H-index: 1
Published on Aug 1, 2001
Saras D. Sarasvathy33
Estimated H-index: 33
Recent theorizing in entrepreneurship has proposed effectuation as a dominant decision model in entrepreneurial decision making. Through a verbal protocol study of 27 expert entrepreneurs who were asked to identify the market for a single new product, this paper establishes the existence of effectual reasoning in their cognitive processes and delineates the bounds between their use of causation and effectuation. In quantitative terms, over 63% of the subjects used effectuation more than 75% of t...
Published on Apr 1, 2001in Academy of Management Review10.63
Saras D. Sarasvathy33
Estimated H-index: 33
(UW: University of Washington)
In economics and management theories, scholars have traditionally assumed the existence of artifacts such as firms/organizations and markets. I argue that an explanation for the creation of such artifacts requires the notion of effectuation. Causation rests on a logic of prediction, effectuation on the logic of control. I illustrate effectuation through business examples and realistic thought experiments, examine its connections with existing theories and empirical evidence, and offer a list of ...
Published on Jan 1, 2001in Journal of Applied Psychology5.07
Wayne H. Stewart10
Estimated H-index: 10
(Clemson University),
Philip L. Roth41
Estimated H-index: 41
(Clemson University)
Research examining the relative risk-taking propensities of entrepreneurs and managers has produced conflicting findings and no consensus, posing an impediment to theory development. To overcome the limitations of narrative reviews, the authors used psychometric meta-analysis to mathematically cumulate the literature concerning risk propensity differences between entrepreneurs and managers. Results indicate that the risk propensity of entrepreneurs is greater than that of managers. Moreover, the...
Cited By100
Newest
Published on 2020in Journal of Business Research4.03
Liang Wu1
Estimated H-index: 1
(SYSU: Sun Yat-sen University),
Heng Liu10
Estimated H-index: 10
(SYSU: Sun Yat-sen University),
Kun Su (NPU: Northwestern Polytechnical University)
Abstract Existing research provides mixed insights concerning the impact of effectuation on new product advantages. We address these contradictions by highlighting the dual nature of the relationship between effectuation and new product advantages. By arguing that effectuation differentially affects two types of new product advantages, namely new product development (NPD) speed and new product quality (NPQ), we hypothesize that effectuation is positively related to NPD speed but has an inverted ...
Mette Lindahl Thomassen , Karen Williams Middleton9
Estimated H-index: 9
+ 2 AuthorsLorraine Warren14
Estimated H-index: 14
Purpose – Context impacts the design and practice of entrepreneurship education, but there is limited focus on context in entrepreneurship education literature. The purpose of this paper is to review the entrepreneurship education literature to understand how context has been addressed, derives contextual elements from prioritized literature and explores how context can be adapted to and designed with in entrepreneurship education. Design/methodology/approach – A systematic literature review is ...
Yu-Te Liu (NTU: National Taiwan University)
In this research, we tackle a critical yet less explored factor that affects entrepreneurs’ effectuation logic, the original aspiration, which refers to the entrepreneur’s initial and most dominant aspiration in the venture-creation process. Based on a qualitative and process research on abundant entrepreneurs’ decision events from eight start-ups over a three-year time span, we discover the nature of original aspiration and its significant role on entrepreneurial decision-making over the entrep...
Published on Jun 3, 2019in Small Business Economics3.56
Masoud Karami , Ben Wooliscroft13
Estimated H-index: 13
(University of Otago),
Lisa McNeill12
Estimated H-index: 12
(University of Otago)
Effectuation theory has been increasingly applied in research examining the internationalisation of small- and medium-sized enterprises (SMEs). This study systematically reviews the SME internationalisation literature to clarify the ways effectuation theory helps international entrepreneurship (IE) scholarship respond to key questions of how international opportunities are developed. The review identified central topics of limited resources, networking, and an unplanned approach, which connect e...
Benedetto Lorenzo Cannatelli5
Estimated H-index: 5
,
Matteo Pedrini8
Estimated H-index: 8
,
Michael R. Braun9
Estimated H-index: 9
Using an inductive, qualitative approach involving fifty-five entrepreneurs in the Italian craft brew industry we explore the relationship between alternative entrepreneurial logics of action based on effectuation and causation principles and two types of passion – respectively, passion for the product and passion for growth. Our findings suggest entrepreneurs led by a passion for product prioritize decisions made according to the principles of effectuation, while those led by a passion for grow...
Published on Mar 19, 2019in Small Business Economics3.56
Denis A. Grégoire8
Estimated H-index: 8
(HEC Montréal),
Naïma Cherchem1
Estimated H-index: 1
(HEC Montréal)
In spite of all the scholarly attention it has garnered, effectuation research continues to face a series of theoretical and methodological challenges. In order to help move effectuation research forward, we content-analyze a comprehensive sample of 101 effectuation articles published in JCR®-listed journals between 1998 and 2016 (inclusively), with the specific aim of uncovering the main conceptual and methodological articulations that have underpinned effectuation research to date. In doing so...
Published on Feb 28, 2019in Small Business Economics3.56
Yashar Mansoori (Chalmers University of Technology), Martin Lackéus6
Estimated H-index: 6
(Chalmers University of Technology)
There has been a growing interest among entrepreneurs and students in explicit guidance for entrepreneurial action. Both scholars and practitioners have responded to this demand by suggesting a variety of entrepreneurial methods. This has led, however, to a proliferation of relatively unrelated methods with varying degrees of rigor and relevance. In an attempt to organize and bring clarity to the range and diversity of entrepreneurial methods, this article compares effectuation with five other e...
Published on Feb 1, 2019in Journal of Business Research4.03
Ken Matsuno8
Estimated H-index: 8
(Ramon Llull University),
Florian Kohlbacher1
Estimated H-index: 1
(Economist Intelligence Unit)
Abstract Strategic flexibility, and explorative and exploitative capabilities have been argued as critical capabilities and as fundamental ingredients of entrepreneurial marketing. Most past studies have tested the efficacy of these capabilities for firms' proactive marketing responses in the context of immediate task environments over which a firm has considerable direct influence. Unfortunately, few empirical studies have researched general environments that are not only essentially uncontroll...
Published on Nov 2, 2018in European Planning Studies2.10
Lisa Nieth1
Estimated H-index: 1
,
Paul Stephen Benneworth21
Estimated H-index: 21
+ 4 AuthorsMartin R. Stienstra1
Estimated H-index: 1
(UT: University of Twente)
Collaboration between regional stakeholders is increasingly emphasized in innovation policy as a way to activate the inherent agency in a regional innovation system. Partnerships of diverse stakeholders have been identified as critical, being able to envisage and implement future pathways that in turn bring change to a region. Thus, the knowledge of various stakeholders is supposed to be combined in novel ways in order to define regional assets and possible future pathways. Nevertheless, it has ...