Effectuation: Elements of Entrepreneurial Expertise

Citation

Matlay, H. (2008), "Effectuation: Elements of Entrepreneurial Expertise", Journal of Small Business and Enterprise Development, Vol. 15 No. 3. https://doi.org/10.1108/jsbed.2008.27115cae.004

Effectuation: Elements of Entrepreneurial Expertise

Article Type: Bookshelf From: Journal of Small Business and Enterprise Development, Volume 15, Issue 3

Saras D. Sarasvathy,Edward Elgar Publishing,2008,xxii +367 pp.,ISBN: 978 1 84376 680 3,

Keywords: Performance, Expertise, Opportunity costs, Entrpreneurship

From the outset, the title of this volume intrigued me: since my undergraduate days I linked entrepreneurship - in its many forms and manifestations - to “achieving” a great deal in terms of lifestyle, output and reward. To “effectuate” (transitive verb) means to do, cause, or accomplish something. As an academic, researcher, journal editor, entrepreneur and small business consultant I am directly involved, on a daily basis, with entrepreneurs, entrepreneurship and enterprises of various sizes and economic activities. Most theory touches, sometimes no more than tangentially, on entrepreneurial success and failure or ambitions and achievements. Personally, I tend to view both the theory and the practice of entrepreneurship as a specialist and very complex body of knowledge, relating to specific sets of behavioural patterns and human activities. In this context, effectuation - defining and comprising various elements of entrepreneurial expertise - represents a new and innovative perspective on a well-researched topic of academic endeavour.

The book contains four distinct parts. In part one, the author sets out in detail the empirical journey, motivation and construct of her “baseline model” of entrepreneurial expertise, which she aptly labels effectuation. This term signifies and denotes the inverse causation of the entrepreneurial process, undertaken and perceived as a personal journey. In fact the whole book is written as the author’s own journey of understanding entrepreneurship as a form of expertise. Many aspects of entrepreneurship are investigated in the opening part of the book, including personality, environment, evolution and competitive dynamics. There is nothing new to be said about these well rehearsed and much described components of entrepreneurial theory. Interestingly, however, the author focuses on entrepreneurial expertise as learnable and teachable components of high levels of performance in specialised domains. The reader is provided with a comprehensive list of elements and principles of entrepreneurial expertise and guided through the logics of entrepreneurial strategies. Next the author outlines her comprehensive research methods and design. Although this aspect of the books reads like a well-rehearsed chapter of a doctoral thesis, I feel that it could be useful for anyone who might like to emulate or indeed challenge the views and results of the author. The interpretation of results is based not only on the positivist perspective but it also incorporates a pragmatist approach involving four well-defined premises that leave very little to imagination. In terms of honesty and empirical rigorousness, one can fault neither the researcher nor her research and analytical approach. It is almost as if the author is challenging the reader to decide on the validity of emergent result based on his/her own knowledge and experience.

The second part of this book is dedicated to the theoretical journey that informs the concept of entrepreneurial effectuation. As a way to conceptualise and contextualise as well as understand the principles of effectuation I found this part both enjoyable and enlightening. As an Editor and referee of journal articles, I am required to read journal submissions and books sent for review, and this goes a long way towards enlarging and enriching my knowledge base. Typically, however, the theory aspects tend to be dry and repetitive - but this is not the case with in this book. Issues and problems surrounding entrepreneurial space, time, isotropy and creativity are summed up and explained with a fluid and knowledgeable ease. A number of the principles of, and approaches to, markets and networks are dynamically linked and grounded into opportunism and the opportunity costs of entrepreneurship. Finally, entrepreneurial effectuation is linked to performance in terms of the success and failure of the firm, and more importantly, that of the entrepreneur. I was intrigued by the way that Sarasvathy conceives entrepreneurship as a “temporal” portfolio and why she sets out to model serial entrepreneurship as a “contagion” process. All this leads, as one could have reasonably expected, to a debate that places entrepreneurial expertise and performance within the limitations and opportunism of the life cycle of the firm. Interestingly, however, the defining factors surrounding the effectual logic versus the resource theory of the firm rest on another paradox, namely the probability of entrepreneurial failure versus the cost of it - a debate rarely encountered in the domain of refereed theory building. Perhaps this is due to the complexity and increasing dogmatism of the ongoing debate on entrepreneurship and entrepreneurial (both personal and socio-economic) outcomes.

It is not difficult to see why the author chose to entitle part three of her book “waypoint”. The reader is introduced to the concept of entrepreneurship as a “science” of the artificial (i.e. a human made universe). This is a very intriguing point, even if, on this occasion, the conceptual link is not altogether convincing. Indeed, if it were than one might have to agree with Sarasvathy’s deductive reasoning that effectual entrepreneurship is also a science of the artificial, an “artifactual science”. Nevertheless, her quantitative approach goes a long way towards convincing us that even though it is artificial, entrepreneurship is still a science, and therefore could be studied with a significant degree of accuracy. It is difficult to do justice to this concept within the limitations imposed by a brief book review and readers are encouraged to take their time and dig deep into the conceptual and contextual subtleties outlined for their benefit. I found the last chapter in this part refreshingly different and new, and occasionally puzzling: is it really possible for effectual entrepreneurship to build markets in “human hope” and can the outcomes be sold and purchased like real goods and services - and with real money? With the rapid development of internet based markets, perhaps we could soon enough find a realistic answer to this puzzle…

The next part of the book charts the way ahead, outlining possibilities in teaching and researching entrepreneurial expertise. The author’s effectuation teaching method involves the notion of two toolboxes: causal and effectual. Based on case studies, exercises, interactive lectures, video clips and guest speakers, this approach can be effectively used to facilitate the creation of new ventures. Apparently, the most important challenge in teaching effectuation relates to the fact that all Sarasvathy’s course materials, pedagogical devices and class discussions focus on the students’ new ventures rather than on entrepreneurial theory or best practice. In this context, one might argue that her method tends to be more “consultative” than pedagogical, but it is difficult to decide on the basis of a few paragraphs in a book. The reader is reminded here about what effectuation is (and what it is not), and how it could be applied and used in the context of entrepreneurial expertise and practice. Interestingly, chapter twelve is written by three of the author’s earliest research partners. This innovative approach affords an interesting insight into academic collaboration that is undertaken in order to further pioneering research projects. Such collaboration not only supplements research but also complements it beyond a single individual’s capacity, resources and opportunities. The final chapter is dedicated to a number of interesting and challenging “unanswered questions” and new research ventures. I look forward to reading Sarasvathy’s next book, in which she will hopefully outline some of her pertinent answers and enlighten us with the relevance of her new findings.

I would recommend this innovative and well researched book to all those who are actively searching for new and interesting ways to approach entrepreneurship and its many manifestations in the real world.

Harry MatlayBirmingham City University, Birmingham, UK