Elements of Entrepreneurial Expertise

New Horizons in Entrepreneurship series

Saras D. Sarasvathy

To effectuate is to engage in a specific type of entrepreneurial action. It has special importance for situations where the future is truly unknowable or human agency is of primary importance. In Effectuation, Saras Sarasvathy explores the theory and techniques of non-predictive control for creating new firms, markets and economic opportunities.

Chapter 9: Philosophy and Methodology of Effectual Economics

Saras D. Sarasvathy

Subjects: business and management, entrepreneurship


9. Philosophy and methodology of effectual economics Effectuation is a logic for practicing entrepreneurship as a method and studying it as a science of the artificial. In Chapter 3, I defined a logic as an internally consistent set of criteria that forms a clear basis for action upon the world. Of course, that is not the only possible definition of logic. There are as many mathematical and other types of logics today as there are algebras and geometries and philosophies. But that was not always the case. In 1914, flushed with the completion of the monumental Principia Mathematica four years earlier, Russell proclaimed, ‘Logic is the essence of philosophy’. At the time, it appeared as though some things had been resolved for all time to come. As Barrett (1978) points out, mathematical logic became a sort of pons asinorum, a bridge one had to cross to get to real estate of any value at all in areas of intellectual development. However, in one of those twists in the history of ideas, that seemingly solid bridge dissolved in the later work (Philosophical Investigations) of Russell’s most brilliant student Wittgenstein, who, in his earlier work, Tractatus LogicoPhilosophicus, actually tried to cross it to reach the promised land. Russell himself reversed his position to conclude that logic is always insufficient and that every logic needs a philosophy. In his dedication to Models of Discovery, Simon quoted Carnap to argue for science what Barrett argues for logic: that...

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