EFFECTUATION AND OPPORTUNITY RECOGNITION IN THE RENEWABLE ENERGY SECTOR IN SOUTH AFRICA: A FOCUS ON ENVIRONMENTAL DYNAMISM AND HOSTILITY

Abstract

Effectuation is well suited to broaden our understanding of opportunity recognition because effectual processes are related to recognizing and exploiting opportunities in new markets under conditions of uncertainty. This article investigates the relationship between effectuation and opportunity recognition, while at the same time, accounting for the influence of environmental dynamism and hostility in an African emerging market context — South Africa. In so doing, the paper responds directly to calls for research to emphasize the importance of environmental conditions while placing more attention on quantifying its influences on the opportunity recognition process. Following a survey of 302 enterprises in the renewable energy sector in South Africa, results indicate that entrepreneurs apply effectual principles to recognize and exploit more opportunities while operating in dynamic and hostile surroundings. By explaining the relationships and interactions between effectuation, the environment and opportunity recognition in an African market context, the study provides a more theoretically comprehensive configuration than any of these factors would show in isolation.