How Are Entrepreneurial Opportunities Novel? Hierarchical Analysis of New Venture Ideas

Abstract

Novelty is a distinctive quality of new venture ideas, which are core components of entrepreneurial opportunities. However, our understanding of novelty is unidimensional: a vague sense of degree. This paper offers a hierarchical model to unpack novelty in both kind and degree. The consequent framework dissects the novelty of the new venture idea into two components. The structural location of novelty has implications for the entire venture creation process including: upper level novelty will lead to more innovative ventures but encounter more uncertainty, a more complex creation process, more indirect and legal challenges, less direct competition, and less direct retaliation by the incumbents.