Saras D. Sarasvathy

Three Views of Entrepreneurial Opportunity

For almost 50 years now, following the trail of issues raised by economists such as Hayek, Schumpeter, Kirzner, and Arrow, researchers have studied the economics of technological change and the problem of allocation of resources for invention (invention being the production of information). The bulk of this literature simply assumes that new technical information will either be traded as a commodity or become embodied in products and services (hereafter called “economic goods”), without addressing any specific mechanisms or processes for the transformation of new information into new economic goods or new economic entities (such as new firms and new markets). It is inside this gap that we begin our quest for the concept of an “entrepreneurial opportunity.”

Entrepreneurship as Method: Open Questions for an Entrepreneurial Future

In this essay, we outline the provocative argument that in the realm of human affairs there exists an “entrepreneurial method” analogous to the scientific method spelled out by Francis Bacon and others with regard to the natural realm. We then suggest a series of open questions that we believe will help future scholars spell out the contents of such a method and ways in which it can be put to work in the design and achievement of socioeconomic ends. At least one normative implication of accepting the argument would be to teach entrepreneurship not only to entrepreneurs but to everyone, as a necessary and useful skill and an important way of reasoning about the world.

Making It Happen: Beyond Theories of the Firm to Theories of Firm Design

Current theories of the firm provide no explanation for entrepreneurial success except in terms of firm success. Even when the focus is on the entrepreneur, s/he is entirely cast as a bundle of traits/behaviors or heuristics/biases that serves to explain firm performance. In this article, I suggest putting the entrepreneur center stage, adopting an instrumental view of the firm. Drawing upon the work of Simon in symbolic cognition and Lakoff in semantic cognition, I explore how we can go beyond explanations based on economic forces and evolutionary adaptation to entrepreneurial effectuation; I end with specific research questions pertaining to firm design.

Knowing What to Do and Doing What You Know: Effectuation as a Form of Entrepreneurial Expertise

Entrepreneurship has traditionally been studied either as a set of psychological characteristics or as a residual of environmental structures such as social networks. In line with more recent process views, the authors propose the study of entrepreneurship as a form of expertise—a set of skills, models, and processes that can be acquired with time and deliberate practice. This article delineates the domain of entrepreneurial expertise and demarcates the role of deliberate practice within it, demonstrates the efficacy of effectuation as a theory about entrepreneurial expertise, and develops testable propositions about effectual action in the development of entrepreneurial expertise and firm growth.

The Coevolution of Institutional Entrepreneurship: A Tale of Two Theories

This article provides a review and analysis of institutional entrepreneurship research with a focus on the emergence of this literature within two largely divergent streams: sociology-based institutional theory and economics-based institutional economics. The authors completed a review of 141 articles from these concurrent, but unlinked, research streams to understand how their integration might contribute to the further understanding of institutional entrepreneurship. Each stream is reviewed on its respective approaches to the following topics: the nature of the institutional entrepreneur, the types of institutions addressed, the determinants of institutional entrepreneurship, the mechanisms used in the process, and the empirical focus of each stream. The article recommends greater assimilation of the two streams and discusses specific opportunities for conceptual integration. Finally, the article offers an agenda for incorporating entrepreneurship research into the study of institutional entrepreneurshi...

The Economic Implications of Exaptation

Abstract.Accounts of economic change recognize that markets create selective pressures for the adaptation of technologies in the direction of customer needs and production efficiencies. However, non-adaptational bases for technological change are rarely highlighted, despite their pervasiveness in the history of technical and economic change. In this paper the concept of exaptation -a feature co-opted for its present role from some other origin - is proposed as a characteristic element of technological change, and an important mechanism by which new markets for products and services are created by entrepreneurs. Exaptation is a missing but central concept linking the evolution of technology with the entrepreneurial creation of new markets and the concept of Knightian uncertainty.

An Effectual Approach to International Entrepreneurship: Overlaps, Challenges, and Provocative Possibilities:

In this paper, we outline several interesting observations about international entrepreneurship (IE) research through the theoretical lens of effectuation. In doing so, we show how an effectual approach can help resolve four central conflicts and knowledge gaps identified in two recent comprehensive reviews of IE. We then present an illustrative case study from India that provides an intriguing comparison with the most recent modification of the Uppsala model to integrate with effectuation theory. Finally, we offer four provocative possibilities for future research at the intersection of IE and effectuation research.

Effectuation and Over-Trust: Debating Goel and Karri

In their article on entrepreneurship, effectuation, and over–trust, Goel and Karri suggest relationships between effectuation, over–trust, and certain psychological characteristics of entrepreneurs. In this response we debate their article. Goel and Karri are correct in claiming that effectuation supposes over–trust. However, we argue that effectual logic works in a different way than they presented because it neither predicts nor assumes trust. Goel and Karris article also draws attention to the behavioral assumptions underlying constructs such as over–(under) trust. Our suggestion is that effectuation is based on alternative behavioral assumptions that open up interesting avenues for future research in entrepreneurship.

Integrating Evolution, Cognition and Design: Extending Simonian Perspectives to Strategic Organization

Several streams of research in strategic management and organizational theory build upon the early work of Herbert Simon.Yet, as content analyses of articles published in leading management journals show, key ideas from his later years are for the most part either neglected or misinterpreted. We bring to strategic organization three constructs from Simon’s later work and make a case for their use in future research in strategic organization in general and entrepreneurship in particular: docility, a fundamental behavioral assumption in lieu of opportunism or embedded networks of trust; near-decomposability, an evolutionarily robust structural feature that permeates nature’s designs; and artifacts, products of human design that reshape local environments and/or help select between them to create and achieve human purposes. Each of these constructs embodies a uniquely Simonian integration of evolution, cognition and design.Together they enable us to conceptualize empirical phenomena as thick three-dimensional reality rather than abstractions entailed by any one of these perspectives alone.

Immortal firms in mortal markets?: An entrepreneurial perspective on the “innovator's dilemma”

Purpose – The “innovators dilemma” suggests that by listening to current customers leading firms often lose their markets to upstart newcomers as a result. The purpose of this paper is to understand how entrepreneurs successfully create such upstart firms and new markets, since this ought to have direct implications for theorizing about the innovators dilemma.Design/methodology/approach – The paper examines implications of recent studies in entrepreneurial expertise that show expert entrepreneurs use an effectual logic of non‐predictive control. It then connects these ideas to notions of firms and markets as artifacts of entrepreneurial action. Finally, it describes the implications of these concepts for the innovation strategies of large corporations, and specifically for firms periodically facing the innovators dilemma.Findings – The findings suggest that the practical answer to the innovators dilemma is not to predict technology trajectories more accurately, or otherwise strive to build immortal fi...