MGT2321 - A New Understanding of Entrepreneurship: Effectuation - Essay Writing - Entrepreneurship Assignment Help

Assignment Task

Themes

• The traditional view of entrepreneurship
• A new understanding of entrepreneurship: ‘effectuation’
• What is effectuation?
• Principles of effectuation
• What does it mean for the way entrepreneurship is done?

The traditional view of entrepreneurship…

• is based on ‘causal reasoning'
• Invest time & resources in info. gathering
• Make a prediction about type of business that will be successful
• Pre-determined targets and goals
• Entrepreneur is superior being able to predict future and spot opportunities
• Careful avoidance of failure at all costs

Effectuation

Very different logic:

• Recognises that no man (or woman) is an island
• Entrepreneurship is a team game
• No large up front investments
• Stakeholders commit only what willing to lose
• Surprises are opportunities!
• Control achieved through adaptation
• Transforming current realities into new and unforeseen possibilities

Traditional v Effectuation view

• Traditional ‘prediction logic’:
• ‘To the extent that we can predict the future, we can control it’
• Effectuation ‘control logic’:
• ‘To the extent that we can control the future, we don’t need to predict it’

Implementing effectuation

• NOT a process of trial-and-error based on luck
• It is a cyclical, iterative process of arriving at a successful business through adaptation
• The ‘iterative’ aspect should be strongly emphasised

Summary

• Effectuation is a very different way of looking at entrepreneurship compared to traditional view
• Entrepreneurs feel their way into an opaque and highly uncertain future
• Entrepreneurs don’t know whether they’ll be successful or fail
• They use heuristics in the form of five principles to make entrepreneurial decisions
• Harness randomness and stakeholders

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