Abstract
There is a growing concern about the heterogeneity of the nature of small businesses in a given context. The difference between opportunity discovery and creation (mode of opportunity identification) may explain this heterogeneity. Then the wealth creating ability also may vary with the mode of opportunity identification although entrepreneurship literature is silent in this regard. Then the purpose of this study is to explore the wealth creating potential (innovativeness) of small businesses with regard to the mode of opportunity identification. Entrepreneurship literature informs that opportunity discovery under risk is different from opportunity creation under uncertainty although these terms has been used interchangeably. Few studies show that context may have influence over the opportunity identification. Few studies show that entrepreneurs who create opportunities are ordinary and attempt to avoid uncertainty while those who discover opportunities are unique in ability of discovering opportunities and bear some risk. However studies which explore the relationship between the wealth creating potential and mode of opportunity identification are rare. Exploring gaps in research knowledge base on the nature of businesses emerged under opportunity discovery and opportunity creation with regard to research question ‘How the mode of opportunity identification influences the innovativeness of small businesses’. In consistent with entrepreneurship literature, the nature of business viewed in this study as wealth creating potential.This study builds on theories and assumptions pertinent to opportunity discovery and creation and employs case study method to explore the behaviour of small business owners in rural and urban settings. The rationale of selecting rural setting is that rural entrepreneur has no prior business experience to understand the probability of outcomes while urban entrepreneurs have prior business experience to understand the probability of outcomes to take calculated risk. This study has selected six cases after screening 178 cases in the rural setting and 111 cases in the urban settings in the North Western Province of Sri Lanka in 2010. Analysing within cases and cross cases employing pattern matching technique, this study shows that businesses created in the rural context are comparatively non-innovative than those small businesses discovered under opportunity risk.The Kelaniya Journal of Management, Vol. 4(1); 2015: 65-89
Highlights
Heterogeneity of innovativeness of small business is universal
The, context, in turn, either conducive for uncertainty avoidance or mitigate risk according to the institutions introduced or informal institutions evolve over time (North, 1990, 1991)
This study attempts to address this gap by raising research question ‘how does the mode of opportunity identification influence the innovativeness of small businesses’
Summary
Heterogeneity of innovativeness of small business is universal. Variation of capabilities of among entrepreneurs may explain this heterogeneity to some extent. Variation of mode of exploitation may explain this heterogeneity further. Mode of opportunity identification and wealth creating capacity, according entrepreneurship literature, may influence by the context (Zahra, 2007; Welter, 2010). Researches who examine relationship between opportunity discovery or creation and the innovativeness of businesses are rare creating a major gap in entrepreneurship knowledge base. This study attempts to address this gap by raising research question ‘how does the mode of opportunity identification influence the innovativeness of small businesses’. The innovativeness of small business referred in this study is proxy to wealth creating ability (Ucbasaran et al, 2009)
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