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Effectuation and Causation In Entrepreneurship

Effectuation and Causation In Entrepreneurship

Causation is about selecting a particular method or product to make something successful such as making the business more profitable.

Effectuation, on the other hand, is selecting many products or services to offer and adopting many ideologies to make the business venture even more successful.

Examples of effectuation and causation in entrepreneurship:

#1. Sewing Machine and Money

Sewing Machine - photography
Money inside the wallet

The entrepreneur’s money will be used to buy the sewing machine, and there are different outcomes with each intention or choice to act.

First, as stated, the entrepreneur will use his money to buy the sewing machine, and he will use the equipment primarily to create dresses, some pants, and other valuable things to be able to get his money back and eventually more than that. This is an example of effectuation since he focuses on making many possible products and he aims to sell dresses.

The second possible option is to use the money to buy a sewing machine to sell it at a higher price to get his capital back with extra incentives. If he chose this option, this is considered causation since the entrepreneur focuses on selecting between many effective ways to make money by using the sewing machine, which is selling it at a higher price.

#2. Job and Work Output

For example, I am a writer, and I was tasked to create an informational blog about cooking fried chicken. In the first case, I chose to list the exact steps that the readers can follow to cook a fried chicken. This is an example of causation since I select one way between any other methods to give an informational blog.

In the second case, I wrote some facts, steps, and lists of different styles to cook fried chicken with pictures and links to online shops to get the needed ingredients. This is an example of effectuation since I made an informational blog, not just about the steps on how to cook fried chicken but also other related topics about it.

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