Report on Sarasvathy Effectuation Theory

Living the Entrepreneurial Challenge

Flávia Suguimoto da Rocha

Personal Report on Sarasvathy Text

        The causation and effectuation are quite interesting decision-making processes and, in my overall understanding of the text, both are usually overlapping when talking about creating a new business. Many businesses are created based on the causation, restaurants, shops and lot of different franchises models. Franchising is a rather logical methodology when developing a business with calculated risks and already established and studied market competition.

While causation is a safer way to try to control the elements and direct it through a defined future goal, effectuation is a rather uncertain way to proceed given limited initial resources. What I have found interesting is that the effectuation demands a high degree of self-knowledge, creativity to create new opportunities and a bold attitude to turn the initial resources in something uncertain in the future.

Starting a business with limited resources and a high degree of uncertainty towards the future is not a common aspect of people in general. As pointed by the author, it is rather logical that people prefer certain predictable aspects and control over the possible outcomes, which is why from the 6 million existing business in Brazil most businesses owners are not entrepreneurs. In a scenario full of possibilities and uncertainties, being an entrepreneur requires a good amount of faith that their decisions, based on the few controllable aspects of their endeavor of creating a new business, will eventually be enough to generate positive results.