What Makes Entrepreneurs Entrepreneurial? (Subzero Blue)

What Makes Entrepreneurs Entrepreneurial?

Posted on January 8, 2008 12:31 PM under: Here & There

I just came across a really interesting study by Saras D. Sarasvathy from University of Washington's School of Business on "What Makes Entrepreneurs Entrepreneurial?".

She examined the reasoning of 30 founders of companies, ranging in size from $200 Million to $6.5 Billion. What Sarasvathy found was that these founders shared a distinct form of rationality that we have all long recognized intuitively as "Entrepreneurial". She termed this type of rationality "Effectual Reasoning".

Here is a bit from her study that basically explains this "Effectual Reasoning":

"Effectual reasoning […] does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world)."

And on the process entrepreneurs follow:

"All entrepreneurs begin with three categories of means: (1) Who they are – their traits, tastes and abilities; (2) What they know – their education, training, expertise, and experience; and, (3) Whom they know – their social and professional networks. Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them."

It's a very interesting study that I really recommend reading: What Makes Entrepreneurs Entrepreneurial? (Saras D. Sarasvathy)