The Entrepreneurial Method: How Expert Entrepreneurs Create New Markets

8 Pages Posted: 21 Oct 2008

See all articles by Nicholas Dew

Nicholas Dew

Naval Postgraduate School

Saras D. Sarasvathy

University of Virginia - Darden School of Business


This note reflects a new focus on "effectuation," the logic behind entrepreneurial expertise, which consists of tacit as well as learnable and teachable aspects of experience that are related to high performance in specific domains. Instead of taking either traits or circumstances as inputs and trying to explain variance in performance, the expertise lens focuses on understanding commonalties across a variety of experts in a single domain, given high levels of performance. Effectuation matters, not merely because expert entrepreneurs prefer an effectual logic over a causal one, but because of the details it offers of a comprehensive alternative frame for tackling entrepreneurial problems. Which frame entrepreneurs use influences how they formulate problems; what alternatives they perceive and generate; which constraints they accept, reject, and/or manipulate and how; and why they heed certain criteria over others in fabricating and implementing new solutions. Logical framing matters because it makes a real difference in the world and makes a world of difference in the reality entrepreneurs perceive and make possible or impossible.





For several centuries, people “did” science without explicitly understanding the scientific method. Prevalent explanations for discoveries consisted either in some kind of magical, mystical abilities possessed by certain individuals and not others, or were based on chance, fate, and circumstance. Some people were said to be able to “read the signs” of nature; or were geniuses who leapt out of bathtubs shouting “Eureka!” It was only when Roger Bacon and later Francis Bacon and others began spelling out elements of the scientific method—observing, hypothesizing, testing, revising the hypothesis, reaching valuable conclusions—that science came out of the realm of personality and into the modern age of science education. Today we believe that the scientific method is both teachable and learnable for the most part. That does not mean that we can produce an Einstein on demand. But we know that scientific genius is neither a necessary nor a sufficient condition for doing good science.

We can make a similar case for entrepreneurship. Although well-known feats of entrepreneurship such as Apple, eBay, and Starbucks might still be a matter of luck and/or genius, we can still teach and learn the entrepreneurial method. And just as the scientific method helps us to harness the potential of nature, the entrepreneurial method enables us to unleash the potential of human nature.

Furthermore, just as the scientific method is fueled by the logic of experimentation, the entrepreneurial method operates through the logic of effectuation.

. . .

Keywords: Entrepreneurship, effectuation, decision making, stakeholders, dynamic networks, new market creation, design logic, innovation

Suggested Citation

Dew, Nicholas and Sarasvathy, Saras D., The Entrepreneurial Method: How Expert Entrepreneurs Create New Markets. Darden Case No. UVA-ENT-0073, Available at SSRN: or

Nicholas Dew (Contact Author)

Naval Postgraduate School ( email )

1522 Cunningham Road
Monterey, CA 93943-5201
United States

Saras D. Sarasvathy

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States


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