Entrepreneurial Opportunity Evaluation Research Articles

Opportunity Attitude: Moving Beyond Cognitive-Centric Evaluation of Entrepreneurial Opportunities

Opportunity Attitude: Moving Beyond Cognitive-Centric Evaluation of Entrepreneurial Opportunities

Why Are There So Few Schumpeterian Entrepreneurs from China? Understanding the Factors That Influence Entrepreneurial Opportunity Evaluation from a Comparative Culture Perspective

Opportunity evaluation is a very important part of entrepreneurial activity; however, entrepreneurs’ individual differences in evaluating opportunities have been neglected in prior research. To address this gap, we apply institutional theory and stereotype threat theory to explain how some institutional factors differentiate entrepreneurs’ opportunity evaluation process. More specifically, we explore how external institutional factors, such as political and social factors, along with personal institutional factors, such as family influences, affect the opportunity evaluation of entrepreneurs under various cultural backgrounds, specifically China and the United States. The Schumpeterian entrepreneur, in which radical innovation and the desire to significantly upend market equilibria, frames our discussion. This paper contributes to the theoretical understanding of the factors influencing entrepreneurial opportunity evaluation from a comparative culture perspective and to the comparative international entrepreneurship field by building a comparative evaluation framework that summarizes institutional factors influencing Chinese and American entrepreneurs’ opportunity evaluation. We propose that policy, social value, and belief as well as family will have significant impacts on entrepreneurs’opportunity evaluation. We further propose several cultural constructs such as individualism vs. collectivism, uncertainty avoidance, and Confucian work dynamism will moderate the relationship with institutional factors in influencing an entrepreneur’s opportunity evaluation process. We discuss our implications with attention given to how our comparative evaluation framework provides insights into why China and the United States differ in terms of developing Schumpeterian entrepreneurs. We then discuss the framework’s limitations.

Individuating: how founder's social identities shape their evaluation of opportunities

PurposeThis paper adds to the ongoing debate on judgements, opportunity evaluation and founder identity theory and shows that founders vary in their prioritisation and combination of judgement criteria, linked to their respective social founder identity. It further reveals how this variation among founder identity types shapes their perception of distinct entrepreneurial opportunities and the forming of first-person opportunity beliefs.Design/methodology/approachThis study uses a qualitative approach by presenting three business scenarios to a sample of 34 first-time founders. It adopts a first-person perspective on their cognitive processes during the evaluation of entrepreneurial opportunities using verbal protocol and content analysis techniques.FindingsThe theorised model highlights the use of similar categories of judgement criteria by individual founders during opportunity evaluation that followed two distinct stages, namely search and validation. Yet, founders individualised their judgement process through the prioritisation of different judgement criteria.Originality/valueThe authors provide new insights into how individuals individuate entrepreneurial opportunities through the choice of different judgement criteria that enable them to develop opportunity confidence during opportunity evaluation. The study also shows that first-time founders depict variations in their cognitive frames that are based on their social identity types as they assess opportunity-related information and elicit variations in reciprocal relationships emerging between emotion and cognition. Exposing these subjective cognitive evaluative processes provides theoretical and practical implications that are discussed as well.

Entrepreneurial intention and the three stages of entrepreneurial action: a process approach.

The relationship between entrepreneurial intention (EI) and entrepreneurial action (EA) is a popular topic in entrepreneurship research, owing to the contribution of these constructs in the process leading to the entrepreneurial activity taking place. There are still countries that are recording high entrepreneurial intention levels in comparison to their corresponding entrepreneurial action levels that are low. This is a global concern to which South Africa (SA) is also not immune. Most of the research tests the relationship between two single constructs: EI and EA. Our study follows a process approach and investigates the effect of this relationship between EI and the three stages of EA. A quantitative method was employed and a survey utilized whereby data was collected among 597 entrepreneurs in South Africa. The data was analyzed through Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM). The EI construct is supported through the Theory of Planned Behavior, in conjunction with the Motivation Opportunity Ability theory. The Discovery Theory, together with the Creative Theory, supports each of the stages of EA, namely: entrepreneurial opportunity discovery (EODI); entrepreneurial opportunity evaluation (EOEV); and entrepreneurial opportunity exploitation (EOEX). Previous research regarding the relationship between EI and EA measured this relationship from a binary point of view. This study contributes to the entrepreneurship field by employing the process approach to determine the impact of EI on the stages of EA. This study reveals that EI is statistically significant in all three stages of EA. However, the strength of this relationship is found to be strong between EI and the EODI and EOEV stages and moderate between EI and the EOEX stage. Therefore, this study reveals that effective training interventions and development are necessary between EI and the EOEX stage of EA.

Distance makes the heart grow fonder: A construal-level perspective on entrepreneurial opportunity evaluation

Drawing on construal-level theory (CLT), this study observes that potential entrepreneurs perceive less risk and are more likely to evaluate an opportunity positively when the psychological distance is far rather than near. Two experimental studies are conducted using two samples. We further demonstrate the weaker influence of psychological distance on opportunity evaluation through risk perception when entrepreneurs are experienced and have longer prior start-up experience. We contribute by highlighting the value of integrating CLT into research on entrepreneurial opportunities and revealing the effect of the various dimensions of psychological distance on opportunity evaluation. Moreover, we uncover the interrelationships between psychological distance and risk perception and entrepreneurial experience.

What about my family? The role of negative family feedback in entrepreneurial opportunity evaluation

Scholars have discussed numerous potential explanations for why entrepreneurial opportunities ultimately go unexploited (Kirzner, 1997; Shane & Venkataraman, 2000). In particular, research on entrepreneurs' decisions to exploit opportunities has shown promise by examining the impact of entrepreneurs' life characteristics (Aldrich & Cliff, 2003), specifically as they relate to family demands (Hsu, Wiklund, Anderson, & Coffey, 2016). Representing a vital social institution within which entrepreneurs operate, the influence of family elements such as family structure and infrequent life events have been supported as playing crucial roles in the entrepreneurial process (Jaskiewicz, Combs, Shanine, & Kacmar). However, research into the impact of family characteristics has done little to consider how the frequent, dynamic feedback presented by the family unit might also affect resulting assessments of opportunities. As such, we draw insights from family systems theory (Bowen, 1978) to propose that entrepreneurs' assessments of new venture opportunities depend on relevant feedback from family members. Additionally, we implement moral foundations theory (Bavelas & Segal, 1982) to suggest that this relationship is moderated by the value placed by entrepreneurs on key facets of their moral foundations. Utilizing a sample of entrepreneurs from a Midwest-based entrepreneurial ecosystem, an initial study and potential implications are discussed.

The effect of online social interaction on entrepreneurial opportunity evaluation: A mediation approach

Increasingly, people communicate and build networks using online social interaction. According to Packard and Bylund (2017), the advances in technology have influenced communication and processes in organizations leading to improved marketing communication and the introduction of innovations. There is also evidence of the growing use of social media among entrepreneurs (Nambisan, Wright, & Feldman, 2019; Olanrewaju, Hossain, Whiteside, & Mercieca, 2020). Despite this, little is known on how the adoption of online social interaction affects entrepreneurial opportunity evaluation. Thus, there is a need to access how this medium can be used to promote entrepreneurial activities. This empirical study used a mixed-method approach to find out if resource availability mediates the relationship between online social interaction and opportunity evaluation. It used a survey and in-depth interviews to collect data from young entrepreneurs in Ghana. A sample of 383 and 13 entrepreneurs was selected through simple random sampling technique and snowballing technique for quantitative and qualitative components respectively. SPSS was used to evaluate the quantitative data and analyzed with STATA. Nvivo was used for the qualitative data analysis. The study found that online social interaction via social media was not just a source for needed resources to help entrepreneurs in better evaluation of entrepreneurial opportunities but also used as a resource itself. This study is vital as it provides entrepreneurs with knowledge on where to obtain the resources needed to be able to evaluate potential opportunities.

Opportunity Attitude: Moving Beyond Cognitive Evaluation of Entrepreneurial Opportunities

Opportunity belief is a central concept in entrepreneurship, yet our understanding is incomplete due to the cognitive centric approach taken within the extant literature. We develop a new construct, opportunity attitude, which moves beyond cognition to include affect and conation. We present opportunity attitude as a dynamic, multicomponent construct that represents all the three aspects of mind. Thus, opportunity attitude is a congruence of opportunity evaluation across cognitive, affective and conative faculties. We claim that our conceptualisation provides a more complete account of the way in which entrepreneurs evaluate entrepreneurial opportunities and form an attitude towards entrepreneurial opportunities. We discuss how the components interact with each other in both the formation of and change in opportunity attitude over time. Mechanisms underlying these change processes are identified and discussed.

When giving is good for encouraging social entrepreneurship

We develop a cognitive-affect model of social entrepreneurship that begins with empathy (i.e. perspective taking and empathic concern) and progresses through prosocial behavior to social entrepreneurship intention. We further propose two contingencies – namely entrepreneurial opportunity evaluation and exploitation - that moderate the proposed relationships. We verify theses effects with a sample of 537 respondents. Results suggest that prosocial behavior mediates the relationship between empathy (perspective taking and empathic concern) and social entrepreneurial intention. We also find that opportunity evaluation and opportunity exploitation moderate this mediating pathway.

Temporal Mediation of Uncertainty within Entrepreneurial Opportunity Evaluation

Limited research within entrepreneurship is available on how time affects entrepreneurs’ decision-making. We try to bridge this gap by understanding how temporal factors affect opportunity evaluati...

A time-based process model of international entrepreneurial opportunity evaluation

This article investigates two important research gaps in international business (IB): how entrepreneurs evaluate international entrepreneurial opportunities (IEOs) and the role of time in the evaluation process. Drawing on the literature on decision-making models and the philosophical foundation of opportunity, this study employs Gioia’s methodology and content analysis to examine how the founders of 15 early-internationalizing firms evaluated IEOs in the early- and late-stage of internationalization. The findings reveal that the interaction of time and three general rules of IEO evaluation that I coin ‘simple’, ‘revised’, and ‘complex’ influenced the entrepreneurs’ decisions. The findings show that the founders transitioned from simple to revised and to complex rules in the IEO evaluation process and that various contingent factors such as time pressure, resource availability, and type of stakeholders drove these transitions. The three general rules correspond to what I label as ‘opportunity actualization’, ‘revision’, and ‘development maximization’ processes, respectively. I propose a Time-based Process model that reconciles extant internationalization models’ (i.e., Process, Network, Economics, and Entrepreneurship) different explanations regarding why and how firms internationalize.

An Analogy Explanation for the Evaluation of Entrepreneurial Opportunities

Entrepreneurs evaluate opportunities under conditions of uncertainty; they make judgments. To understand these evaluations, I develop an analogical model that represents an entrepreneurial opportunity in the mind of an individual. The model proposes that an opportunity is an analogical knowledge transfer from a source business domain to a target business domain. According to the model, the cognitive distance between the domains influences the opportunity evaluation. Additionally, the inspiration behind the analogy construction influences the opportunity evaluation. The empirical design employs a hypothetical scenario experiment and the results show that the two analogical properties matter for evaluation.

Opportunity Evaluation as Future Focused Cognition: Identifying Conceptual Themes and Empirical Trends

The evaluation of opportunities to introduce new goods or services to one or more markets is an essential part of entrepreneurship, and the last decade ushered in a steady stream of studies on the topic. However, to date, this knowledge has not been systematically reviewed. The current article addresses this gap by synthesizing studies that speak to the evaluation of entrepreneurial opportunities. The review of 53 articles involves the development of a thematic framework used to organize the literature in terms of conceptual and empirical themes as well as patterns in publication trends. The insights derived culminate in an integrative framework that conceptually describes what goes on in the ‘mind in the middle’ as opportunity evaluation unfolds. The model illuminates a path for future research that guides improved understanding of the cognitive dynamics that lead some individuals to believe that a set of circumstances represents an attractive opportunity while others have little confidence that the same circumstances represent an opportunity at all.

Opportunity Evaluation as Rule‐Based Decision Making

AbstractWe draw from cognitive science literature on rule‐based thinking to develop and empirically test a theoretical framework of entrepreneurial opportunity evaluation. We argue that entrepreneurs make use of socially constructed rules to discern the attractiveness of an opportunity, for them, specifically. Using conjoint analysis data of 498 decisions made by 62 entrepreneurs, we find that entrepreneurs' use of rules regarding opportunity novelty, resource efficiency, and worst‐case scenario significantly influences entrepreneurs' evaluations of opportunities and that individual differences in opportunity market and technology knowledge augment the effect of the rules on opportunity attractiveness. Additionally, we document that the worst‐case scenario diminishes the positive effect of other rule criteria (e.g. novelty, resource efficiency) on opportunity evaluation and that market and technology knowledge further influence the negative effects of the worst‐case scenario.

Information Exposure, Opportunity Evaluation, and Entrepreneurial Action: An Investigation of an Online User Community

We study how an individual's exposure to external information regulates the evaluation of entrepreneurial opportunities and entrepreneurial action. Combining data from interviews, a survey, and a comprehensive web log of an online user community spanning eight years, we find that technical information shaped opportunity evaluation and that social information about user needs drove individuals to entrepreneurial action. Our empirical findings suggest that reducing demand uncertainty is a central factor regulating entrepreneurial action, an insight that received theories of entrepreneurial action have so far overlooked.

Information Exposure, Opportunity Evaluation and Entrepreneurial Action: An Investigation of an Online User Community

We study how an individual’s exposure to external information regulates the evaluation of entrepreneurial opportunities and entrepreneurial action. Combining data from interviews, a survey, and a comprehensive web log of an online user community spanning eight years, we find that technical information shaped opportunity evaluation, and social information about user needs drove individuals to entrepreneurial action. Our empirical findings suggest that reducing demand uncertainty is a central factor regulating of entrepreneurial action, an insight that received theories of entrepreneurial action have so far overlooked.

The importance of being emotional: How do emotions affect entrepreneurial opportunity evaluation and exploitation?

We examine the impact of positive (joy) and negative (fear) emotions on distinct phases of the entrepreneurial process. To analyze the effects of emotions on entrepreneurial opportunity evaluation and exploitation we use an experimental design completed by 146 participants from 40 young entrepreneurial firms. As predicted by the emotion-as-information theory and by the concept-priming theory, induced emotions change perception and decision-making of unrelated economic situations, namely entrepreneurial evaluation and exploitation. The results demonstrate that on the one hand, positive emotions affect opportunity evaluation positively and on the other hand, exploitation, negatively. Surprisingly, it is shown that negative emotions influence not only opportunity evaluation, but also opportunity exploitation negatively.

Emotions and Entrepreneurial Opportunity Evaluation

Emotions may affect opportunity evaluation yet emotions’ influence in entrepreneurship research has been neglected. Findings from the two studies in this paper indicate that appraisal dimensions of emotions influence risk perceptions and preferences. In Study 1 (n = 187), the participants’ scores on risk perception for a venture scenario were significantly lower for anger and happiness–induced participants (emotions associated with outcome certainty and control) than for fear– and hope–induced participants (emotions associated with outcome uncertainty and a lack of outcome control). In Study 2 (n = 66), the entrepreneurs’ preference for the higher value but uncertain outcome related positively to their scores on trait anger and trait happiness.

On the Ideal Duration of Entrepreneurial Resources Commitment

The paper proposes that the entrepreneur’s perception of time in the form of average ideal duration of entre-preneurial resources commitment is an important personal trait. The entrepreneur develops a particular checking filter for the entrepreneurial involvement on which the evaluation of entrepreneurial opportunities is based. The concept of ideal time dimension of entrepreneurial engagement is crucially related to the de-velopment of structural prototype prevailing in space and time. Three main influences have been located with respect to the formation of duration on entrepreneurial commitment: microeconomic influences, long-term macro-environmental influences and short-term macro-environmental influences.

The role of entrepreneurs in firm-level innovation: Joint effects of positive affect, creativity, and environmental dynamism

Innovation is often a crucial ingredient in new venture success but at present, we know relatively little about the role of individual entrepreneurs in encouraging its occurrence. The present research addressed this issue by investigating the joint effects, on firm-level innovation, of two variables pertaining to entrepreneurs (their creativity and positive affect) and a key environmental variable (environmental dynamism). Although it has been predicted that affect plays an important role in entrepreneurship [Baron, R. A., 2008. The role of affect in the entrepreneurial process. Academy of Management Review 33(2), 328–340.], relatively little empirical evidence on its effects has been obtained to date (e.g., [Foo, M.D. In press. Emotions and entrepreneurial opportunity evaluation. Entrepreneurship Theory and Practice.]). Further, although the link between creativity and innovation has been described in past literature [Amabile, T.M., 1988. A model or creativity and innovation in organizations. In B.M. Staw and L.L. Cummings (Ed.)., Research in organizational behavior 10, 123–167.], direct evidence for its existence is currently lacking. Findings of the present research indicate that positive affect among founding entrepreneurs is significantly related to their creativity and that creativity, in turn, is positively related to firm-level innovation. Both of these relationships are moderated by environmental dynamism, being stronger in highly dynamic than stable environments.