Part Four of Indian Startup Ecosystem and Effectuation


Indian Startup Ecosystem is still very much vested on using the old model when it comes to entrepreneurship. Saras Sarasvathy discusses the importance of incorporating the effectuation and causation method for growing startups. She also makes a few examples of Indian companies that are effectual.

Most startups in India are tech startups learning from mentors and what is being done in Silicon Valley. Silicon Valley is the global centre for technology, innovation and social media. Her advice is for entrepreneurs to also include effectuation in their business dealings. Of course, it doesn’t mean to do away with the old methods that have worked thus far. It only means to approach entrepreneurship using different methods to get effective results.

There are two companies in India she talks of that are progressing in effectuation. The first company is Husk Power System which provide electricity in rural areas from renewable material. Their biggest innovation is using prepaid metres to make it affordable for the rural areas. As the company expanded, they got partnering from other companies and innovators. This is the case of bird in hand principle.

The second example is Kiran Mazumdar-Shaw founder of Biocon Limited, a biotechnology company. She studied to be the best brewmaster and when she couldn’t be that she was disappointed. However, a favour to a friend who wanted her to make yeast gave her a breakthrough into entrepreneurship.

Saras Sarasvathy research on effectuation is both highly effective and efficient. According to, the principle of effectuation and causation differ vastly. Causation is following a set of principles whether goals or using certain types of resources to attain the goal. With effectuation, one uses the resources within their control and work on accumulating more as the enterprise grows. Both principles can benefit the Indian Startup Ecosystem.

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