Opportunity identification competence : explaining individual and exploring team opportunity identification by employees

Abstract

Opportunities and their identification are of significant importance for competitiveness in today’s complex and turbulent business environment because they serve as a key influencing factor for new value-creation. Opportunity identification (OI) is interesting not only from the perspective of new business start-ups, but also from the perspective of employees in existing organisations. Each entrepreneurial process starts with an imagined, rudimentary idea in the mind of an individual. The further exploration and development of such opportunities by employees can lead to the realisation of all kinds of corporate entrepreneurship outcomes, such as innovation, strategic renewal, and internal or external venturing. This dissertation reports on the capability of employees to identify opportunities, referred to as opportunity identification competence (OIC). The importance of OI by employees is widely recognised in practice, and scholars have contributed significantly to understanding what opportunities are, how opportunities come into being, and how OIC can be measured. Nevertheless, substantial research challenges still need to be addressed. More specifically, based on both entrepreneurship literature and literature on organisational learning and entrepreneurship education, three overarching research issues have been identified: The OI process has not been fully mapped out, including the role of individuals and teams. Defining and explaining OIC is problematic because scholars tend not to agree whether opportunities are discovered in the economic environment or created by individuals. Existing measurements of OIC have been criticised, because most of them include self-perceptions or the recall of earlier identified opportunities. The main goal of this thesis was to contribute to the literature by addressing these three overarching research issues. Accordingly, the central research question was: What characterises opportunity identification by employees on the individual and team level? In the dissertation, OIC is both conceptually mapped and empirically explored. A performance instrument to measure OIC is developed and tested in higher education. As well, 12 businesses, including 234 employees in 51 teams, participated in this research project. Most companies were in the category known as small and medium-sized enterprise (SME). The participating companies have in common that they felt an urgent need for entrepreneurship as a driver of competitiveness. Furthermore, they aimed to commit and stimulate their employees to contribute to the entrepreneurial process, without having formal mechanisms or structures for doing so. Main conclusions In light of the central research question of this dissertation, What characterises opportunity identification by employees on the individual and team level?, the results suggest that OI deserves attention in existing businesses, both as a meaningful process leading towards new value-creation and as a relevant capability of employees. OIC is a multi-phased phenomenon consisting of two main competencies, namely business idea generation and business idea evaluation. In business idea generation, individuals generate all kinds of (business) ideas that may have the potential to become a real opportunity. In business idea evaluation, those ideas are selected that actually have potential success. Employees can have one of the competencies (business idea generation or business idea evaluation) to a greater extent, or both of them. Organisations need employees that are able to generate business ideas and employees that are able to evaluate the potential success of business ideas. The results of this thesis suggest that, just like independent entrepreneurs, employees mainly acquire such competencies by a process of learning by doing; this means that employees should become involved in entrepreneurial activities on the shop floor. Creating teams can be a solution, bringing together the competencies needed for the successful identification of opportunities. Moreover, the results suggest that the commitment of teams in the early stages of the entrepreneurial process is highly relevant, because the team cognitive framework for identifying opportunities seems more effective than the individual cognitive framework. Taken together, at the defining, initial stage of the entrepreneurial process opportunities are identified by individuals or, preferably, by teams – in a process by which business ideas are generated and evaluated for their potential success. When studying opportunities and their identification, scholars should take into account the differences in OIC between SMEs, employees, and even within OIC itself (i.e., between business idea generation and business idea evaluation). In practice as well, these differences should be considered in the selection and management of employees, in assessing OIC and in composing teams, because teams need both business idea generators and business idea evaluators.