Review of The Book - Effectual Entrepreneurship
Review of The Book - Effectual Entrepreneurship
Review of The Book - Effectual Entrepreneurship
live better lives? The answer will surely not be in the possession of a single
discipline.
A. MacMillan
Effectual Entrepreneurship
Read, S., Sarasvathy, S., Dew, N., Wiltbank, R. and Ohlsson, A.-V. (2011),
Effectual Entrepreneurship, paperback, Routledge, pp. 228.
‘Success in investing doesn’t correlate with IQ – once you’re above the level of
125. Once you have ordinary intelligence, what you need is the temperament
to control the urges that get other people into trouble in investing.
Warren Buffett
Introduction
The promotion of entrepreneurship has been a major worldwide policy target,
as it is thought to be associated with the creation of wealth, technological
innovation and increased social welfare. The literature has suggested that
entrepreneurial entry is the outcome of ability to identify and exploit
opportunities and motivation (Shane, 2004). Both elements are important
in the decision to start a business. In this exciting new book, RSDWO
effectively address issues which are ultimately related to entrepreneurial
motivation, by presenting the main principles of effective entrepreneurship.
The authors challenge some of the stylised facts of the entrepreneurship
literature which often attribute mythical proportions to the figure of the
entrepreneur and conclude by presenting principles of action and control
based on sets of facts stemming from the behaviour of expert entrepreneurs.
Pivotal to the discussion is the key distinction between effectual entrepre-
neurs, who work with means, as opposed to causal entrepreneurs who tend to
work with goals, in the spirit of a search and select approach in business
venturing. This reminds of the famous exploration versus exploitation dis-
tinction in organisational science (March, 1991). In the often conflicting
processes of organisations, exploration deals with dynamic efficiency (search-
ing for new options, experimenting and conducting research), while exploita-
tion deals with static efficiency (refining existing procedures, doing the same
things only better and reaping value from what is already known). RSDWO’s
effectual entrepreneurs engage in creative processes based on: (a) Who they
are (traits, tastes, abilities); (b) What they know (education, training, expert-
ise, experience) and (c) Who they know (social and professional networks).
Based on these principles, the main aim of expert (effectual) entrepreneurs is
to control and shape the future rather than try to predict, in contrast to novice
(causal) entrepreneurs who perceive their ability to control the future, based
on the extent that they can predict it. Based on these notions, the authors
promise and depart on an exciting journey that intends to build on the
motivation of latent and existing entrepreneurs by reviewing most founda-
tional research and establishing patterns described as common practice
among expert entrepreneurs across industries, regions and time. The first
part of the book (Chapters 1–8) sets the background stage by challenging some
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Conclusion
Overall, I have found this book to be the most motivating toolkit in the shelf of
prospective and current entrepreneurs. It recommends a proactive attitude to
8
For a review, the reader is referred to Shane (2008).
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Book reviews
business and life, based on exploitation of the environment, starting with the
facts, one’s own means, knowledge and networks. It views entrepreneurship as
an effectual venture based on someone’s own current facts. According to the
authors, this book teaches that one need not wait for the right technology or
the proper resources or the massive machinery of governments or the feeble
hope of the next election to rebuild one’s life and the world in which that life
seeks to thrive. One can start today – with who they are, what they know and
who they know – and invest nothing but what they can afford to lose, to begin
building corridors through which their stakeholders can self-select into their
valuable new venture. And together they can co-create value and societal
welfare that neither could fully imagine at this point in time. The book
addresses large audiences of students, scholars, latent and current (both
denovo and family) entrepreneurs, offering an insightful new perspective
on the study of entrepreneurship. This is achieved via the overview and critical
evaluation of large bodies of recent literature from entrepreneurship, eco-
nomics, management, finance and other related disciplines. This synthesis is
presented in a unique non-technical way that makes the book a valuable
handbook for individuals from all backgrounds with an interest in entrepre-
neurship as a discipline or as practice. The authors envisage the role of
entrepreneurial education based on the view that entrepreneurship is not
necessarily innate and this is exactly what they achieve: the production of a
first class entrepreneurship education tool. Importantly, the authors hope that
their explication of effectuation will become part of the mundane toolbox of
entrepreneurial education (p. 203); and that entrepreneurship itself should
become part of all basic education in the near future. This is the most desirable
outcome for every entrepreneurship scholar, and the book’s efforts in making
all this foundational literature and effectual principles easily accessible are the
most effective way of starting with teaching rather than preaching. The book
promises a journey, a trip and ultimately this is what it will achieve, building
on the motivational underpinnings of entrepreneurial action.
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