Effectuation Theory

Dr Saras D. Sarasvathy depicted literature on the entrepreneurial venture creation and entrepreneurial decision-making logic; the casual and effectuation theory, and the effectuation process in (Sarasvathy 2001, 2008), which will represent the foundation framework from the entrepreneurship discipline along with the aid of the tools (to be listed) from the strategic and marketing disciplines. Along with Sarasvathy (2001, 2008), the empirical research of Berends et al. (2013), Nielsen and Lassen (2011), Reymen et al. (2015) that examine her casual and effectuation theory, and effectuation process. They advocate the pivotal influence of uncertainty and risks on which strategic thinking logic “effectuation or causal logic” would the entrepreneur

(2015, p.374) have concluded that “The overall pattern that emerged from our analysis lends support to the expectation that flexible decision making is more prominent in the earlier stages of venture creation, with a transition to more planning-based decision making over time as both the new venture and its market mature (Alvarez and Barney, 2005; Sarasvathy, 2001). Yet, we also qualify this expectation: effectual decision making can reappear in later venture creation phases. Thus, effectuation and causation not only co-occur but also reoccur in different patterns over the venture creation process.”

Moreover, Reymen et al. (2015) devised a dynamic model for strategic decision making in the venture creation processes based on the effectuation and causal theory and the effectuation process for (Sarasvathy 2001, 2008), where they debriefed that the strategic decisions can be based on hybrid logic and not mutual exclusive effectuation or causation logic, which is imputed to the high uncertainty at the time of venture creation, especially with new products and no authenticated statistics to rely

The Ansoff matrix articulates deliberate strategies in matured organisations to analyse the potential growth and the associated risks in the context of the market situation. The matrix consists of four quadrants to study the correlation between products and markets. The diversification quadrant resembles the riskiest among the others, where matured organisations are using planning, and prediction to achieve economies of scale to sell new products to new customers, where economies of scale are implicitly attributed to the organisation high performance. Contrarily, startups rely on emergent strategies with high surrounding