Effectuation

Effectuation

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 10: Markets in Human Hope

Saras D. Sarasvathy

Subjects: business and management, entrepreneurship

Extract

The topic for this chapter is a puzzle that I have struggled with. The puzzle is this: why can’t we buy futures contracts in Rwandan prosperity? Or options in environmental conservation in Brazil? Or equity in the emancipation of Afghan women? If we want to participate in the upside potential of biotechnology, we can buy Genzyme stock or shares in a biotech mutual fund with a couple of clicks of the mouse. But if we want to participate in the upside potential of literacy in the Congo delta, or even youth development in South Central Los Angeles, we have to research obscure charities, mail out checks, maybe fill out tax exemption forms, then cross our fingers and hope that our money will be put to some good use. We have no way of analysing and selecting among competing models, monitoring investments, trading them for liquidity, or cashing in on positive results. Are there reasons for believing that investments in biotechnology can be profitable but investments in the eradication of human misery cannot? In fact, the latter are not even categorized as investments but are deemed a matter for charity, something to be financed through sacrifice without expectation of a positive return. The irrepressibly cornucopian economist Julian Simon spent his life arguing that human beings are the ultimate resource (Simon, J, 1981). His data run deep and long, and his analyses are compellingly careful and explicit. Yet it is easier to invest in the future of pork bellies than...

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