The Journey of Business Opportunity Evaluation: When and Why Does Opportunity Novelty Promote Vs. Inhibit Opportunity Adoption?

Song Lin,Yanan Lin,Lin Lin

doi:10.3389/fpsyg.2021.732565

Abstract

As a typical characteristic of entrepreneurial opportunities, novelty is essential for firms to establish and maintain a sustainable competitive advantage under the current complex and dynamic business environment. However, why is it that some entrepreneurs adopt novel opportunities but others do not. Little is known about the precise nature of cognitive evaluation for opportunity novelty. Drawing upon information processing theory and construal level theory (CLT), we propose that the effects of opportunity novelty on adoption decisions depend on entrepreneurs' construal level through which information is processed. We design an experiment and find partial support for our hypotheses. Results indicate that entrepreneurs using a low-level construal perceive more risk for opportunity novelty, which in turn decreases the possibility of opportunity adoption. Meanwhile, opportunity novelty also positively influences entrepreneurs' creativity perception, which in turn increases the possibility of opportunity adoption. But construal level does not play any role in this evaluation path. Taken together, the findings improve our understanding of “how entrepreneurs evaluate an opportunity based on its objective characteristics” by providing empirical insights into the cognitive information processing process from opportunity novelty to adoption. Additionally, we discuss implications for entrepreneurial practice and future research.

Highlights

Novelty is always viewed as a typical characteristic of entrepreneurial opportunities (Wood and Williams, 2014; Hilmersson et al, 2021) as entrepreneurship is a process associated with novelty and value creation in economic activities (Davidsson and Wiklund, 2001)
The results show that opportunity novelty has a positive relation with creativity perception (r = 0.51, p < 0.01) and risk perception (r = 0.38, p < 0.01), respectively
There is a positive relation between creativity perception and opportunity adoption (r = 0.46, p < 0.01) but a negative relation between risk perception and opportunity adoption (r = −0.20, p < 0.01)

Summary

Introduction

Novelty is always viewed as a typical characteristic of entrepreneurial opportunities (Wood and Williams, 2014; Hilmersson et al, 2021) as entrepreneurship is a process associated with novelty and value creation in economic activities (Davidsson and Wiklund, 2001). Kodak, a firm that invented the first digital camera, gave up a novel opportunity to fully enter the digital industry. Why is it that some entrepreneurs adopt novel opportunities but others do not? The evaluation process from opportunity novelty to opportunity adoption decisions that refer to the result of entrepreneurs rely on different criteria in deciding whether to adopt an opportunity for further development and implementation (Škerlavaj et al, 2014; Chan et al, 2018) remains largely unanswered in entrepreneurship but are central to understanding the process of business creation (Haynie et al, 2009) Why is it that some entrepreneurs adopt novel opportunities but others do not? the evaluation process from opportunity novelty to opportunity adoption decisions that refer to the result of entrepreneurs rely on different criteria in deciding whether to adopt an opportunity for further development and implementation (Škerlavaj et al, 2014; Chan et al, 2018) remains largely unanswered in entrepreneurship but are central to understanding the process of business creation (Haynie et al, 2009)

Objectives

Methods

Results

Conclusion