Effectuation and Hypothetical Scenarios Quiz
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Questions and Answers

Which theory emphasizes the use of pre-existing knowledge and resources to create new opportunities?

  • Contingency theory
  • Cognitive theory
  • Effectuation theory (correct)
  • Causation theory

    • According to the text, what does effectuation theory emphasize for entrepreneurs?

  • Leveraging existing resources and constraints to create opportunities (correct)
  • Focusing on predicting and controlling the future
  • Taking calculated risks based on market analysis
  • Following a linear and predictable approach to decision-making

    • What is the primary focus of causation theory, as discussed in the text?

  • Creating new opportunities through pre-existing knowledge
  • Adapting to changing market conditions
  • Leveraging existing resources and constraints
  • Predicting and controlling the future (correct)

    • Which theory is more aligned with a flexible approach to entrepreneurial decision-making?

    <p>Effectuation theory</p> Signup and view all the answers

    In the context of entrepreneurial decision-making, what does contingency theory emphasize?

    <p>Adapting to changing market conditions</p> Signup and view all the answers

    Which theory advocates for entrepreneurs making decisions based on available means rather than trying to predict and control the future?

    <p>Effectuation theory</p> Signup and view all the answers

    What does the author argue for in the given text?

    <p>The author argues for the notion of effectuation as an explanation for the creation of artifacts.</p> Signup and view all the answers

    In what way does causation differ from effectuation?

    <p>Causation relies on the logic of control, while effectuation relies on the logic of prediction.</p> Signup and view all the answers

    What is the central topic of discussion in MBA classrooms, according to the text?

    <p>The decision-making process and examples from business.</p> Signup and view all the answers

    What do classes with a more psychological bent typically discuss, according to the text?

    <p>Personnel decisions and managing/leading a team.</p> Signup and view all the answers

    What is the underlying assumption for almost every decision in economics and management, according to the text?

    <p>The creation of central artifacts and contexts.</p> Signup and view all the answers

    How does the author illustrate effectuation in the given text?

    <p>Through business examples and realistic thought experiments.</p> Signup and view all the answers

    What does the author suggest should be an important part of our review?

    <p>&quot;Questions such as how to make pricing decisions when the firm does not yet exist.&quot;</p> Signup and view all the answers

    "How do we value firms in an industry that did not exist five years ago..." reflects a concern about:

    <p>&quot;Valuing firms in nascent or newly forming industries.&quot;</p> Signup and view all the answers

    "Almost half the companies on the Fortune 500 list did not exist fifteen years ago." implies:

    <p>&quot;Business all over the world is becoming more free-market oriented and entrepreneurial.&quot;</p> Signup and view all the answers

    "If we clearly knew which particular market to capture, we could presumably use techniques of market research and formulate strategies to penetrate it." suggests a concern about:

    <p>&quot;Using techniques of market research to capture a particular market.&quot;</p> Signup and view all the answers

    "In areas such as e-commerce, most markets are nascent or simply nonexistent." implies:

    <p>&quot;Rapid change is being driven by emerging technologies like those on the internet.&quot;</p> Signup and view all the answers

    What does the author thank the Ewing Marion Kauffman Foundation for?

    <p>Funding empirical work that led to the development of ideas in this article.</p> Signup and view all the answers

    What does the term 'effectuation' refer to in the context of the text?

    <p>The process of building a business using contingencies and serendipitous events</p> Signup and view all the answers

    What concept is associated with the phrase 'a process of satisficing'?

    <p>Decision-making under uncertainty</p> Signup and view all the answers

    What is meant by 'exploration of cultural aspects' in the context of the text?

    <p>Offering lectures and classes on Indian cooking and culture</p> Signup and view all the answers

    What does the example of Browning Ferris Industries (BFI) illustrate?

    <p>The potential for serendipitous events to lead to successful businesses</p> Signup and view all the answers

    What is the primary implication of the statement, 'the process of effectuation allows the entrepreneur to create one or more possible effects'?

    <p>Entrepreneurs can adapt and shape their goals over time based on contingencies</p> Signup and view all the answers

    What is suggested by the description of the entrepreneur deciding to write a book, go on the lecture circuit, and build a business in the motivational consulting industry?

    <p>Entrepreneurs may change their career paths based on unforeseen circumstances</p> Signup and view all the answers

    How does the example of U-Haul relate to the concept of effectuation?

    <p>U-Haul began without any conscious initial intention on the part of the founders</p> Signup and view all the answers

    What is illustrated by the example of Tom Fatjo and the creation of Browning Ferris Industries (BFI)?

    <p>The potential for unexpected events to lead to new business opportunities</p> Signup and view all the answers

    What does the term 'satisficing' refer to in the context of entrepreneurship?

    <p>Making decisions based on available options under uncertainty</p> Signup and view all the answers

    How does the concept of 'effectuation' differ from traditional business planning?

    <p>Effectuation allows entrepreneurs to shape their goals over time, while traditional planning requires adherence to fixed goals</p> Signup and view all the answers

    What is suggested by the statement, 'even great companies have begun without any conscious initial intention on the part of the founders'?

    <p>Successful businesses are often founded through accidental or unexpected events</p> Signup and view all the answers

    How does the entrepreneur use customer feedback to shape her business according to effectuation principles?

    <p>By continuously listening to customers and building a network of strategic partners</p> Signup and view all the answers

    What is the distinguishing characteristic between causation and effectuation processes?

    <p>The number of possible effects using a particular set of means</p> Signup and view all the answers

    According to the text, what does March express optimism about in the context of changing goals?

    <p>The intractability of changing goals in a normative theory of choice</p> Signup and view all the answers

    What is the main focus of the article's special theory of effectuation?

    <p>Explaining the creation of new firms</p> Signup and view all the answers

    What is the primary challenge faced by entrepreneurs as discussed in the text?

    <p>Choosing particular effects that may not implement intentional goals</p> Signup and view all the answers

    What does the author hope to contribute toward in the article?

    <p>Developing a rudimentary theory of effectuation</p> Signup and view all the answers

    Which justification for ignoring phenomena involving ambiguous, changing, and constructed goals and values does the author express skepticism about?

    <p>The first justification</p> Signup and view all the answers

    What does the author identify as the main element of the general theory of effectual reasoning?

    <p>Multiple interacting levels of phenomena</p> Signup and view all the answers

    What is the distinguishing characteristic between causation and effectuation models?

    <p>Choosing between possible effects using a particular set of means in effectuation models, versus choosing between means to create a particular effect in causation models</p> Signup and view all the answers

    What is the operationalization of an abstract human aspiration?

    <p>An effect</p> Signup and view all the answers

    What does the author emphasize about both causation and effectuation processes?

    <p>They occur simultaneously, overlapping and intertwining over different contexts of decisions and actions.</p> Signup and view all the answers

    What does March express skepticism about regarding changing goals?

    <p>Goal development and choice being independent processes, conceptually and behaviorally.</p> Signup and view all the answers

    What is the distinguishing characteristic between causation and effectuation models?

    <p>Choosing between means to create a particular effect in causation models, versus choosing between possible effects using a particular set of means in effectuation models.</p> Signup and view all the answers

    What was the visionary approach of U-Haul that led to its creation?

    <p>Recognizing the need for do-it-yourself moving equipment after World War II</p> Signup and view all the answers

    What did L. S. Shoen use to create U-Haul with minimal financial outlay?

    <p>Processes of effectuation involving seizing and exploiting contingencies through an expanding network of human alliances</p> Signup and view all the answers

    What did U-Haul do to establish its market presence?

    <p>Painted trailers bright orange and imaged them with a sales message</p> Signup and view all the answers

    How did U-Haul initially finance the acquisition of trucks and use of the trucks?

    <p>Individual down payments from friends, family members, and customers</p> Signup and view all the answers

    What is emphasized by the process of effectuation used by L. S. Shoen in creating U-Haul?

    <p>Seizing and exploiting contingencies through an expanding network of human alliances</p> Signup and view all the answers

    What did U-Haul offer early customers to establish a commission structure for dealers?

    <p>A discount on their trailer rental for establishing a U-Haul rental agent at their destination</p> Signup and view all the answers

    What allowed U-Haul to come into being with hardly any employees and a small outlay of funds?

    <p>The use of processes of effectuation involving seizing and exploiting contingencies through human alliances</p> Signup and view all the answers

    How did U-Haul eliminate the need for buying space in cities across the country and recruiting employees to man the spaces?

    <p>Contracting with service station outlets to merchandise trailer rentals</p> Signup and view all the answers

    What was the name imaged on U-Haul trailers to establish brand identity?

    <p>'U-Haul Co.'</p> Signup and view all the answers

    What was imaged on the sides and back of U-Haul trailers to promote sales?

    <p>'U-Haul Co., Rental Trailers, $2.00 Per Day'</p> Signup and view all the answers

    What color were U-Haul trailers painted to establish brand recognition?

    <p>Orange</p> Signup and view all the answers

    What financial resources did L. S. Shoen use to create U-Haul with minimal outlay?

    <p>$5,000 and an expanding network of human alliances.</p> Signup and view all the answers

    What did L. S. Shoen do instead of trying to raise money to buy a large number of trucks or start the company with very few locations?

    <p>He established an identity by painting trailers bright orange and imaged them with a sales message.</p> Signup and view all the answers

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