Design in Effectuation: Novice Entrepreneurs Designing New Ventures

Abstract

Effectuation has become widely accepted in the lexicon of entrepreneurship as a model for understanding the logic of entrepreneurial action, particularly apposite for expert entrepreneurs. Successive studies have endorsed and developed the theory conceptually and empirically, often comparing the difference between expert and novice entrepreneurs. This paper explores an important, and as yet underdeveloped, aspect of effectuation, namely the role of design in venture creation. Based on a contemporaneous, longitudinal study of an ideas-based and design-led ‘Sandpit’ which produced 19 funded ventures, the qualitative research draws on 53 interviews with 31 novice entrepreneurs during the early stages of venture creation. In contrast to previous research, findings are that novice entrepreneurs fulfil the principles of effectuation as a result of exposure to ‘design thinking’ during venture formation. Design principles are similar to those of effectuation in that they focus on the present, on problem-solving with the means at hand, contingency and non-linear thinking, and we suggest that design is an interlocutor between the business idea and venture formation, that encourages this effectuating logic in novice entrepreneurs. These findings offer insights for research in venture creation, and supplement the literature on effectuation.