Causation And Effectuation Entrepreneurial Decision Making

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1. Causation and effectuation entrepreneurial decision making is the style of decision making made by a manager or other higher power in a business. Choosing the style your business needs is based on if you have or do not have a goal. Causation has a goal and will discover the means as they progress while the effectuation decision making has the means but does not have a designated goal and will discover the goal as they progress. Both of these types of thinking do have disadvantages. Causation thinking is not good at spotting potential surprises. The causal thinker tends to assume that all possible contingencies have been covered in the planning process and that no unforeseen events are possible. If unexpected events happen, the causal…show more content…
Now to the question at hand, when should an entrepreneur choose to use effectual instead of causal to start their venture? Effectual should be used if the future of the venture is extremely uncertain. Causal is better suited when the future is predictable and you have a set goal. If in a market that fluctuates, effectual is best to use as it makes the company/venture ready to adapt to the situation. It is also better used when you know exactly what resources and abilities you have, this way when opportunities present themselves the entrepreneur can decide which opportunity is best suited to their strengths and capitalize on the best one. To summarize, causal and effectual are equal when weighing their advantages and disadvantages, but if the venture/company that is started is in an unstable or unpredictable market effectual is best used. It keeps the company nimble and better prepared to respond to unexpected situations which would be likely in a new business. Causal is better suited for larger companies that are expanding or in situations where outcomes will be predictable and the goal clearly set. Today’s entrepreneurs are more likely to use effectual logic which includes experimenting with a product or service, remaining flexible, and then changing as necessary. The increase in use of effectual logic is due to how quickly the world and innovations move. The world is
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