I've long been intrigued by how entrepreneurs (Im one my self) navigate uncertainty—not just through structured planning, but through adaptability, improvisation, and leveraging what’s at hand. The ongoing conversation around effectuation and causation continues to raise critical questions about how we understand entrepreneurial behaviour across contexts, stages, and cultures.
In this short conference paper from 2023, I explore some of those questions and attempt to outline where the field might go next. The focus is on bridging these two decision-making logics rather than treating them as opposites, with attention given to methodological approaches, boundary conditions, and cross-cultural dimensions. For those researching decision-making processes, opportunity development, or teaching entrepreneurship in uncertain environments, I hope this contribution sparks some reflection, or critique.
You can read the full paper here:
https://www.researchgate.net/publication/392589031_Charting_the_Future_of_Entrepreneurial_Process_Theory_Integrating_Effectuation_and_Causation_for_a_Dynamic_Research_Agenda
I'm genuinely curious to hear how others see this evolving. Are we moving toward a more integrated theory of the entrepreneurial process? Or are effectuation and causation better kept apart as distinct tools for different problems? Let me know your thoughts
comments, counterpoints, or extensions are more than welcome.
Best wishes Henrik
Your exploration of integrating effectuation and causation within entrepreneurial process theory touches on a vital and ongoing debate in the field. Here's an overview of some reflections, counterpoints, and potential directions based on current discourse and your framing:
1. Bridging Effectuation and Causation: Toward Integration or Distinction?
- Moving Toward Integration:
Many scholars and practitioners recognize that entrepreneurial decision-making is dynamic and context-dependent. An integrated approach could reflect that entrepreneurs often oscillate between causative (planning-driven) and effectual (adaptive, emergent) logics depending on the stage of opportunity development, resource availability, and environmental uncertainty. This perspective aligns with the idea of a hybrid or situational decision-making framework, offering a more holistic understanding of entrepreneurial behaviour.
- Maintaining Distinction:
Conversely, some argue that effectuation and causation represent fundamentally different logics suited to different problem types and environments. For example, causation might be more appropriate in predictable, established markets, while effectuation suits high-uncertainty contexts. Keeping them separate preserves their analytical clarity and practical utility.
2. Methodological Approaches for Integration
- Mixed-Methods and Longitudinal Studies:
Combining quantitative measures of decision patterns with qualitative insights can help illuminate how entrepreneurs switch or blend these logics over time and across contexts.
- Process-Orientated Analysis:
Emphasising process tracing or case-based approaches can reveal the temporal and situational factors influencing decision logic shifts.
- Cross-Cultural and Boundary Condition Studies:
Exploring how cultural norms, institutional environments, and industry sectors influence the propensity or ability to integrate these logics can deepen understanding.
3. Boundary Conditions and Contextual Factors
- Recognising that not all entrepreneurs or settings are equally capable or inclined to integrate these logics is crucial. Factors such as resource constraints, cultural attitudes toward risk, and institutional support may serve as boundary conditions.
- For instance, in cultures emphasising hierarchy and predictability, causation might dominate, whereas in more entrepreneurial or uncertain environments, effectuation could be more prevalent. An integrative theory needs to account for such variability.
4. Future Directions in the Field
- Developing a Theoretical Framework:
Creating models that specify when and how entrepreneurs transition between or combine effectuation and causation could advance both theory and practice.
- Educational Implications:
Teaching entrepreneurship as a flexible toolkit rather than a dichotomy could better prepare entrepreneurs to navigate complex environments.
- Policy and Ecosystem Design:
Supporting structures that foster adaptive decision-making might encourage more effective integration of these logics at the ecosystem level.
In summary:
Your question resonates with a broader movement toward understanding entrepreneurship as a nuanced, context-sensitive process. While some advocate for clear distinctions, others see significant value in integrating effectuation and causation into a flexible, dynamic framework. The future likely involves developing theories and methods that acknowledge the fluidity and complexity of entrepreneurial decision-making, tailored to specific environments and stages.
I have been involved with setting and launching new hospitality projects including but not limited to new hotel developments, launching of fine dining and luxurious venues, and touristic re-branding of sites based on valuing cultural heritage for the last 30 years of my professional and educational career in three continents (Asia, Europe and Oceania), And often I have noticed a dilemma appearing in most of the companies with whom I have had the honor to collaborate and building successful projects
Based on my experience, I have developed a framework of 10 strategies that I consider very functional to the purpose. In order to make their comprehension more practical I have use three steps. The name of the strategies, how to use them and why to use them.
Here are 10 strategies for effectively integrating Effectuation and Causation principles within business management processes, creating a dynamic and adaptive approach:
1. Stage-Gated Hybrid Process:
How: Structure innovation/new venture processes in stages.
l Early stages (idea generation, concept validation) prioritize. Effectuation (leveraging means, affordable loss experiments, building partnerships).
l Later stages (scaling, optimization) shift towards Causation (detailed forecasting, ROI analysis, formal planning).
Why: Matches logic to uncertainty level; prevents premature over-planning or unguided scaling.
2. Strategic Intent with Flexible Pathways:
How: Set a clear, ambitious Causation-inspired vision or goal (e.g., "Become leader in sustainable packaging in Region X").
l Achieve it using Effectuaton principles: leverage existing networks, affordable experiment with different materials/partners, co-create solutions with key stakeholders.
Why: Provides direction while allowing for emergent, resource-efficient strategies to reach the goal.
3. "Porfolio" Approach to Initiatives:
How: Allocate resources across a portfolio of projects.
l Explicitly designate some
n as Effectual (high uncertainty, exploratory, focused on leveraging contingencies) and
n others as Causal (lower uncertainty, execution-focused, based on predictions). Manage each with appropriate metrics.
Why: Balances exploitation (Causal) with exploration (Effectual), managing overall risk.
4. Affordable Loss as Investment Criteria:
How: Integrate the Effectual principle of "Affordable Loss" into traditional Causal investment/funding decisions.
l Before detailed ROI projections, ask: "What can we afford to lose if this fails?"
l Use this to scope initial experiments or pilot sizes, reducing downside risk.
Why: Forces realistic risk assessment early on, enabling bolder experimentation within safe boundaries.
5. Contingency Leveraging in Planning Cycles:
How: Embed mechanisms within Causal planning cycles (e.g., quarterly reviews, annual strategy) to explicitly identify and assess unexpected events or surprises ("Contingencies").
l Systematically ask: "How can we leverage this new development (Effectuation) towards our goals?"
l Adapt plans accordingly.
Why: Moves beyond mere plan adjustment to actively seeking opportunity in the unexpected.
6. Partnership-Driven Resource Acquisition:
How: Combine Causal resource planning (identifying what is needed) with Effectual partnership building (how to get it).
l Actively seek pre-commitments from potential customers, suppliers, or complementors early on (Effectuation) to reduce risk and validate assumptions before major Causal investments.
Why: Secures resources and market validation more efficiently, reducing reliance solely on prediction and capital.
7. Dynamic Budgeting & Resource Allocation:
How: Move beyond rigid annual budgets.
l Allocate a core budget based on Causal forecasts for known operations.
l Establish a separate, flexible "opportunity fund" managed with Effectual principles (affordable loss, triggered by contingencies, committed partners).
l Review allocations frequently.
Why: Ensures stability for core operations while enabling agile responses to emerging opportunities.
8.Metrics that Measure Both Control & Creation:
l How: Develop balanced performance metrics. Include
n traditional Causal metrics
u (ROI, Market Share,
u Efficiency Ratios)
n alongside Effectual ones
u (Number of New Partnerships Formed,
u Successful Leveraging of Contingencies,
u Experiment Success Rate,
u Reduction in Affordable Loss Thresholds).
Why: Tracks both the efficiency of executing known plans and the effectiveness of creating new opportunities.
8. Leadership & Decision-Making Context-Switching:
How: Train leaders and decision-makers to recognize the context and consciously switch logics.
l Ask: "Is this a situation of high predictability (favor Causation) or high uncertainty/novelty (favor Effectuation)?"
l Encourage using the appropriate tools and mindset for each decision type.
Why: Builds cognitive flexibility and prevents misapplying logic to the wrong situation.
9. "Effectual Sprint" within Causal Operations:
How: For specific challenges or opportunities within an established (Causal) business, run time-boxed "Effectual Sprints."
l Assemble a small team,
l define an affordable loss,
l leverage existing means,
l actively seek pre-commitments, and
l focus on creating something new within the constraint.
l Integrate successful outcomes back into the core business.
Why: Injects entrepreneurial creativity and agility into mature organizations without disrupting core operations.
Key to Successful Integration:
Context is King: The optimal blend depends heavily on the specific situation (industry volatility, project stage, resource availability, competitive landscape).
Mindset Shift: Requires moving beyond seeing the logics as opposites to viewing them as complementary tools in a manager's or entrepreneur's toolkit.
Organizational Culture: Foster a culture that tolerates intelligent experimentation (Effectuation) while valuing disciplined execution (Causation) and learning from both successes and failures.
By implementing these strategies, businesses can become more resilient, adaptable, and innovative, navigating both predictable and unpredictable environments effectively.
A integração entre os modelos de efetuação e causalidade no contexto do processo empreendedor tem sido objeto de crescente atenção na literatura acadêmica sobre empreendedorismo. Inicialmente, ambas as abordagens foram tratadas como paradigmas opostos: enquanto a **lógica causal** baseia-se na predição, no planejamento estratégico e em metas previamente definidas (SHANE, 2003), a **lógica da efetuação**, proposta por Sarasvathy (2001), enfatiza a flexibilidade, a experimentação e a construção de oportunidades a partir dos recursos disponíveis e das contingências do ambiente.
Contudo, estudos mais recentes apontam que essas duas abordagens não devem ser encaradas como mutuamente excludentes, mas sim como dimensões complementares de um processo dinâmico e não-linear de criação de novos empreendimentos. Chandler et al. (2011) e Reymen et al. (2015) demonstram empiricamente que empreendedores experientes transitam entre estratégias causais e efetuais conforme as circunstâncias do ambiente, o grau de incerteza e a fase de desenvolvimento do empreendimento.
No âmbito da Educação Empreendedora, essa integração teórica ganha especial relevância, pois prepara os discentes para atuarem em diferentes cenários de mercado. Formar empreendedores capazes de articular predição e ação contingencial amplia suas habilidades de tomada de decisão, resolução de problemas e gestão de incertezas (FISCHER; REUBER; MORRIS, 2013). Além disso, essa combinação metodológica permite uma formação mais alinhada aos desafios reais enfrentados pelos empreendedores, aproximando teoria e prática, conforme defendido por Neck e Greene (2011) ao tratarem da pedagogia experiencial no ensino de empreendedorismo.
Assim, ao reconhecer a complexidade do processo empreendedor, a integração entre efetuação e causalidade representa não apenas um avanço teórico, mas uma estratégia pedagógica essencial para o desenvolvimento de competências empreendedoras alinhadas às demandas da economia contemporânea.
Compartilhando meu livro digital que aborda A educação empreendedora e a economia criativa.
https://www.researchgate.net/publication/391276315_Entrepreneurship_Entrepreneurial_Education_and_the_Creative_Economy_4_Recommendations_for_Teachers_Working_in_Professional_and_Technological_Education_O_Empreendedorismo_a_Educacao_Empreendedora_e_a_E
Compartilhando meu produto educacional
Compartilhando meu livro digital que aborda Educação empreendedora e Economia criativa na EPT.
https://www.researchgate.net/publication/391276315_Entrepreneurship_Entrepreneurial_Education_and_the_Creative_Economy_4_Recommendations_for_Teachers_Working_in_Professional_and_Technological_Education_O_Empreendedorismo_a_Educacao_Empreendedora_e_a_E?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6ImxvZ2luIiwicGFnZSI6InF1ZXN0aW9uIiwicHJldmlvdXNQYWdlIjoicXVlc3Rpb25PdmVydmlldyIsInBvc2l0aW9uIjoicGFnZUNvbnRlbnQifX0
Henrik G.S. Arvidsson Thank you for sharing your paper, Henrik – it’s a valuable contribution to the ongoing dialogue.
As both a researcher and practitioner, I’ve seen how uncertainty forces entrepreneurs to shift between two distinct yet complementary decision-making logics: goal orientation (causation) and opportunity exploration (effectuation).
Goal orientation starts with a clear objective, then works backward to plan, strategize, and execute. In contrast, opportunity exploration asks: “What can I build with what I have?” – leveraging existing resources, networks, and insights.
In our work with the Entrepreneurial Profile Test (EPT), we observe these patterns clearly: Innovators, for example, often operate intuitively and flexibly, driven by frustration or creative impulse – a textbook case of effectuation. In contrast, more structured entrepreneurs lean into planning, analysis, and defined objectives – favoring causation. Both logics are not opposites, but tools to be used at different stages.
Perhaps the real challenge isn’t choosing one over the other, but developing the cognitive flexibility to move between them as context demands. Your paper rightfully brings attention to the need for integration – methodologically, culturally, and practically.
Looking forward to the continued discussion. Best, Stefan
Yes, integrating effectuation (flexible, opportunity-driven logic) and causation (goal-oriented, planning logic) in entrepreneurial process theory is increasingly recognized as beneficial, as it reflects the real-world dynamic nature of startups where entrepreneurs often switch between both approaches depending on uncertainty, available resources, and stage of venture development.
Henrik G.S. Arvidsson
Thank you, Henrik, for sharing your thoughtful inquiry and the 2023 conference paper—it’s a timely and valuable contribution to the evolving landscape of entrepreneurial theory. Your experience as an entrepreneur adds welcome depth to this conversation, especially as we increasingly recognize that the practice of entrepreneurship often resists strict theoretical compartmentalization.
The integration of effectuation and causation as complementary rather than opposing logics is, in my view, not only possible but necessary. Entrepreneurs do not operate in static environments—contexts shift, resources fluctuate, and markets evolve. A theory that rigidly prioritizes one logic over the other risks flattening the nuanced decision-making that occurs in real entrepreneurial journeys. Your call to explore boundary conditions and cross-cultural considerations is especially important. In some cultures, uncertainty is embraced as a creative force, while in others, structured planning is culturally expected—this variation suggests that integration might look different across ecosystems.
From a methodological standpoint, your paper opens the door to hybrid research designs that can better capture the temporal and situational fluidity of entrepreneurial behavior. Longitudinal case studies, experience sampling, or even process tracing could help reveal when and why entrepreneurs switch between—or blend—causal and effectual reasoning.
Ultimately, I believe we are moving toward a more dynamic and integrated process theory, one that acknowledges the complexity of human agency under uncertainty. Rather than viewing causation and effectuation as fixed camps, it may be more fruitful to treat them as interwoven heuristics that can be activated in response to specific challenges or stages. Your work helps nudge the field in this direction, and I hope it sparks further empirical and pedagogical innovation.
Looking forward to the ongoing dialogue this paper inspires.
Yes, integrating effectuation and causation in entrepreneurial process theory is both possible and beneficial, as these approaches represent complementary logics—causation involves predictive planning and goal-setting, while effectuation emphasizes adaptability and leveraging existing means; by blending both, entrepreneurs can navigate uncertainty more effectively and dynamically adjust to changing environments.
Very interesting question. Entrepreneurial theory is not my expert. But I think your question has some merit. In any organization, effectuation and causation somehow is extremely difficult to separate them apart as we can see in the real situation. But in the theoretical matter, I think there must be some exploring in these issues, as long as there are evidences to support, this can lead to an integrated approach in the research framework.
Yes, integrating effectuation and causation in entrepreneurial process theory is not only possible but beneficial, as entrepreneurs often move fluidly between predictive (causation) and adaptive (effectuation) logic depending on the stage, context, and uncertainty level of their ventures, making a hybrid approach more realistic and effective.
Yes, effectuation and causation can be integrated within entrepreneurial process theory, as entrepreneurs often alternate between predictive logic and adaptive improvisation depending on the venture phase, resource constraints, and uncertainty levels, suggesting a complementary and dynamic interplay that reflects real-world entrepreneurial behavior more accurately than viewing them as mutually exclusive.
You're raising a critical and timely question: can we truly integrate effectuation and causation in entrepreneurial process theory? And your 2023 conference paper seems like a thoughtful step in that direction. As both a researcher and an entrepreneur, your dual perspective brings depth to this inquiry. Here's an attempt to reflect, critique, and build on what you’ve outlined:
1. Bridging vs. Bifurcating: Are We Still Stuck in a Dichotomy?
Traditionally, effectuation (Sarasvathy, 2001) and causation (following Simonian rationality and classical planning logic) have been framed as fundamentally distinct. But this either-or framing increasingly feels limiting. Entrepreneurs rarely operate purely with one logic. Real-world entrepreneurship seems to involve a dynamic interplay of both, sometimes even within the same project phase or decision.
Your effort to bridge rather than bifurcate these logics aligns with emerging literature suggesting a contingent, hybrid model. Some scholars now argue that effectuation and causation should be seen as complementary strategic orientations that entrepreneurs switch between depending on:
- Stage of venture development (nascent vs. scaling)
- Type of uncertainty (Knightian vs. risk-based)
- Cultural and institutional contexts (e.g., high vs. low uncertainty avoidance cultures)
This opens the door to more nuanced theoretical integration.
2. Methodological Implications: Can We Observe Hybrid Logics in Action?
A major challenge in integrating the two lies in methodology. Many studies still treat effectuation and causation as categorical variables rather than fluid processes. Your attention to methodological approaches is well-placed.
Here are a few directions that could push the field forward:
- Process tracing or event system methodology to map when and why entrepreneurs switch logics.
- Longitudinal, ethnographic work to capture the evolution of decision-making over time.
- Behavioural experiments simulating uncertainty to observe how entrepreneurs mix planning and improvisation.
We need more than survey-based typologies; we need to see these logics unfold, interact, and morph.
3. Cultural and Contextual Layers: What’s "Rational" Depends on Where You Stand
Your inclusion of cross-cultural dimensions is vital. What might look like effectuation in one context could be interpreted as poor planning in another. For example:
- In collectivist cultures, co-creation and leveraging existing relationships may be the norm—thus, “effectual” behaviour might be culturally ingrained.
- In highly institutionalised environments, deviation from causally rational business planning might be penalised, pushing effectual entrepreneurs into the shadows.
Understanding how cultural values (e.g., uncertainty avoidance, time orientation) mediate entrepreneurial logic selection is a rich and relatively underexplored domain.
4. Toward an Integrated Theory? Or a Toolkit Approach?
We may not need to fully integrate effectuation and causation into a single unified theory; that might even be counterproductive. Instead, a toolkit perspective might be more practical and realistic:
- Entrepreneurs draw on different logics as tools, guided by contextual cues and personal experience.
- The focus then shifts from defining which logic is "better" to understanding how, when, and why entrepreneurs navigate between them.
This pragmatism could align both scholarly rigour and entrepreneurial intuition.
5. Where the Field Might Go Next: A Few Suggestions
- Boundary condition mapping: When does one logic outperform the other? When does the blend yield better outcomes?
- Cognitive mechanisms: What enables some entrepreneurs to fluidly shift between logics?
- Team-level dynamics: How do diverse teams negotiate or synthesise differing decision-making logics?
Final Thought: Navigating with Both Oars
Perhaps the future of entrepreneurial process theory isn't choosing between effectuation and causation but learning to row with both oars. Your work contributes meaningfully to this emerging consensus, and I’d encourage more scholars and educators to adopt this both/and mindset.
Yes, effectuation and causation can be integrated by recognizing when to pivot between experimentation and planning, particularly in dynamic environments where entrepreneurial logic must adapt.
Yes, integrating effectuation and causation reflects entrepreneurial reality better by combining flexible, goal-adaptive strategies with structured, goal-oriented planning in uncertain environments.
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