Entrepreneurship as a Science of the Artificial

Posted: 24 Nov 2009

See all articles by Saras D. Sarasvathy

Saras D. Sarasvathy

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: 2003


A theory of entrepreneurship is developed based on the concepts of effectuation and near-decomposability to explain the creation of high growth firms. Entrepreneurship is seen as a "science of the artificial." Key ideas are developed from Herbert Simon's book "The Sciences of the Artificial." Effectuation is defined as a process of generating alternatives in a situation and simultaneously discovering and assessing desirable and undesirable qualities of several possible ends. It involves design, not just choice. As opposed to a causal approach, in which the entrepreneur begins with a defined market, the effectual model suggests the entrepreneur should seek out customers and partners. Near-decomposability, a term adopted from Simon, is a feature of a complex system that is comprised of a number of interconnected subsystems in way that any subsystem elements interact more with each other than to elements belonging to different subsystems. Nearly-decomposable systems contain failure as local events. In "Sciences of the Artificial," Simon shows that the artificial is local and contingent in both structure and movement; artifacts are usually only locally adaptive. Hence, both effectuation and near-decomposability exploit locality and contingency in the evolution of the artifact. Together they explain the creation and growth of real-world firms. Entrepreneurship is thus a science of the artificial.Implications of four key ideas from the "Sciences of the Artificial" are offered. (1) Entrepreneurs can build effectual artifacts by focusing on what one can, not ought to, do. (2) Entrepreneurs should design without final goals in mind. (3) Contingencies (misfortunes) should be viewed as opportunities. (4) Enduring firms are likely to result from effectual processes that exploit locality and contingency through interdependence and independence of parts.(TNM)

Keywords: Locality, Cognition, Contingency management, Decision models, Decision theory, Effectuation, Firm growth, Systems design

Suggested Citation

Sarasvathy, Saras D., Entrepreneurship as a Science of the Artificial (2003). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1512332

Saras D. Sarasvathy (Contact Author)

University of Virginia - Darden School of Business ( email )

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

HOME PAGE: http://www.effectuation.org

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