Effectuation Theory

True or False

Effectuation theory emphasizes starting with available resources rather than following a strict business plan.

• True

• False

Which of the following best describes the Affordable Loss Principle in Effectuation Theory?

• Investing all available funds for maximum return

• Focusing on small, manageable risks rather than large investments

• Predicting market trends before taking action

• Avoiding partnerships to reduce risk

What is the main difference between causal reasoning and effectual reasoning?

• Causal reasoning focuses on flexibility, while effectual reasoning follows a rigid plan

• Causal reasoning starts with a goal, while effectual reasoning starts with available resources

• Causal reasoning focuses on small risks, while effectual reasoning requires large investments

• Causal reasoning relies on partnerships, while effectual reasoning avoids them

True or False

The Crazy Quilt Principle in Effectuation Theory suggests that entrepreneurs should work alone rather than build partnerships.

• True

• False

Which of the following companies applied effectuation principles by starting with available resources and adapting based on feedback?

• Airbnb

• Google

• Google

• All of the above