Venture Creation Programmes: Causation or Effectuation?

According to Edelman and Yli-Renko (2010) “creating a new firm is a complex, idiosyncratic process that starts with an aspiration by the entrepreneur and involves bringing together resources that the entrepreneurs does not necessarily control to pursue an opportunity” (ibid:833/4). Drawing on Sarasvathy (2001) and Stevenson & Jarillo (1990), they go on to argue that, “the entrepreneur needs to garner support, obtain the required resources and generate enough commitment from organisational stakeholders to take the idea from vision to reality” (Edelman and Yli-Renko, 2010: 834). Firms take time to establish and emerge through a series of actions. The route may be causally driven or the result of effectuation (Sarasvathy, 2001a, 2001b); one being the inverse of the other (ibid: 2001a:2). From a causal perspective there is a predetermined goal and a set of means; the aim being to seek the most efficient way possible to achieve the goal. Effectual reasoning begins with the means and allows the goals to emerge over time (ibid). Sarasvathy argues that entrepreneurs prefer effectual reasoning over causal reasoning in the early stages of venture creation. As the venture becomes established, the transition from causal to effectual must be managed and this poses a problem for some entrepreneurs. Causal thinking, (aligned with traditional managerialist thinking), is based on the extent to which it is believed that we can predict the future and control it (ibid: 6). Predictive tools and business management models support and encourage this logic. Effectual thinking on the other hand, is emergent and can accommodate multiple potential outcomes for a given range of means; this approach is more associated with entrepreneurial thinking. Reality, however, is often more complex than predictive tools are able to deal with (Obolensky, 2010). Managers, leaders and entrepreneurs have to be reactive or adaptive and responsive to complexity. Entrepreneurship, if effectively managed, should be able to reconcile the need for a vision and expectation of the future, whilst at the same time being able to adapt to the deeper uncertainty manifest in a changing dynamic environment. While rule based systems, such as universities, like the certainty of causal thinking, they also understand that effectual thinking, with its inbuilt serendipity, has the potential to create more impactful entrepreneurial outcomes. Drawing upon two case studies, this paper will explore the challenges and opportunities faced by effectual and causal thinking in the design of Venture Creation Programmes (VCPs) for undergraduate students. In both cases the programmes were intended to be effectual in spirit, but one is unintentionally causal by design. Interest in VCP development is likely to follow a similar trajectory to the growing interest in enterprise and entrepreneurship education. This paper could help to inform thinking about the nature of VCP development and where such programmes should be sited (or positioned) within universities.