Abstract
This paper summarizes the results of a multiple-case study conducted to shed light into the question of how business opportunities are recognized by examining two theoretical propositions related to two topics: 1) the role of prior knowledge in the discovery of opportunities, and 2) whether opportunities are noticed without deliberate search or can be the object of a constrained, systematic search. We studied five Spanish companies and eight business opportunities. All the opportunities of the multiple-case study were recognized thanks to the prior knowledge of the entrepreneurs. In addition, the entrepreneurs only discovered opportunities related to their prior knowledge. None of the opportunities was discovered by noticing without search, as the alertness perspective contends. Some of them were the result of a systematic search constrained to the entrepreneur’s prior knowledge, but most of them were discovered by searching passively and non-systematically within the knowledge domain of the entrepreneur. This result suggests the passive, non-systematic search as an alternative to the systematic search.
Highlights
Business opportunities, defined as the match between an unfulfilled market need and a solution that satisfies the need (O’Connor & Rice, 2001), are identified by specific persons and not others
In line with the alertness perspective, Shane (2000) and Baron (2006) say that entrepreneurs recognize opportunities without actively searching for them, but they differ with entrepreneurial alertness in the role of prior knowledge: entrepreneurs only discover opportunities related to their idiosyncratic prior knowledge (Shane, 2000) and they use cognitive frameworks developed through their previous life and work experience (Baron, 2006)
Relevant prior knowledge seems to determine the recognition of the opportunities and to be a precondition for the recognition
Summary
Business opportunities, defined as the match between an unfulfilled market need and a solution that satisfies the need (O’Connor & Rice, 2001), are identified by specific persons and not others. The reason why some persons and not others recognize particular opportunities (Baron, 2004) has to do with the fact that information is not evenly distributed (Shane & Venkataraman, 2000; Minniti, 2004). According to these authors, opportunities exist because there are asymmetries of information. In line with the alertness perspective, Shane (2000) and Baron (2006) say that entrepreneurs recognize opportunities without actively searching for them, but they differ with entrepreneurial alertness in the role of prior knowledge: entrepreneurs only discover opportunities related to their idiosyncratic prior knowledge (Shane, 2000) and they use cognitive frameworks developed through their previous life and work experience (Baron, 2006)
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