Mental Representation of Social and Commercial Entrepreneurial Opportunities

Abstract

Commercial and social entrepreneurial opportunities share some communalities, but also some differentiating aspects. In this study, we investigate how individuals mentally represent these entrepreneurial opportunities in their minds. Additionally, we test where cognitively individuals draw barriers between social and commercial entrepreneurial opportunities and how fuzzy or distinct this separation is. This is important because understanding how potential entrepreneurs think about different types of opportunities has clear practical implications on how to promote and support opportunity identification for individuals who are commercially or socially oriented in entrepreneurship. Moreover, we contribute to a better theoretical understanding of how individuals identify opportunities based on different motivations. Building up on categorization and prototype theory, we use an experimental design to analyze how potential entrepreneurs identify prototypical characteristics of opportunity viability and opportunity distinctiveness for commercial and social stimuli. We conclude that a higher level of abstractedness, the two types of opportunities share several characteristics, such as the perception of its ability to solve customers’ problems as part of the opportunities’ prototypical viability. Additionally, being a superior product and having the ability to change the industry are common features identified for prototypical distinctiveness for both opportunities. At a lower level of abstractedness (i.e., the aspects that differentiate the two opportunities), we observe that the social opportunity’s prototypical viability is characterized by its ability to address a social problem, while the commercial opportunity prototypical viability is characterized by generating cash flow. Additionally, the social opportunity prototypical distinctiveness is characterized by the perception of social value creation and generating community impact, while these are not relevant for a commercial opportunity.