Opportunity Recognition Process Research Articles

Influence from entrepreneurship in marketing theory

PurposeThe purpose of this paper is to point at some examples where entrepreneurship theory can influence the developments within marketing theory.Design/methodology/approachThe authors present conceptual arguments for an increased attention to findings within entrepreneurship theory in the future research and education of marketing.FindingsPresent mainstream marketing theory can be criticized for emphasizing managerial marketing behavior. Entrepreneurial activities are an important part of today's business world and this should be reflected in how we teach and research marketing. The research interface between entrepreneurship and marketing can, therefore, create fruitful developments for marketing. Some examples are: opportunity recognition processes; how marketing decisions are made and implemented; and strategic marketing.Originality/valueThe paper reflects the authors' opinion and provides some arguments for an increased focus on entrepreneurial aspects in future marketing education and research.

The entrepreneurial growth of firms located in clusters: a cross-case study

The notion of regional clusters of firms has been the subject of research for over a century. Recent research has increasingly reported evidence of cluster firms’ growth, contrasting with the general assumption that being embedded in a cluster restrains the possibility for firm growth in terms of attitude, opportunities and resources. However, despite the recent research interest on those firms that have experienced growth, detaching from the cluster cliche of being small, local and homogeneous, little is known on the antecedents of such growth. In this paper, we use the lenses of firm-level entrepreneurship as a framework for analysing, comparing and generalising the empirical results of four case studies (Alessi, Illycaffe, Luxottica and Geox). We argue that local and non-local resources and competencies, together with firm capabilities of acquisition and recombination, are the main antecedents of the continuous process of opportunity recognition and exploitation, i.e., growth of cluster firms.

An Integrative Model of Individual Predisposition and Contextual Factors of High-Tech Entrepreneurial Oppurtunity Recognition.

This paper presents a conceptual model of the relationships between individuals’ dispositional and contextual factors in opportunity recognition. It argues that most literatures on entrepreneurial opportunity recognition focus on one or two contextual domains, thus ignoring the nature and dynamics of high-tech opportunity recognition. We propose therefore that full understanding of opportunity recognition process requires individual’s idiosyncratic nature.Specifically, our integrative model makes connection between individuals’ personality factor of openness and the contextual factors. The contextual factors reflect human capital of education and experience, motivational resources representing self-efficacy and initiative and networking behaviour influencing opportunity recognition. This model has implications for research in high-tech entrepreneurial opportunity recognition and for policies designed to increase entrepreneurial behaviour.Keywords: Opportunity recognition, networking behaviour, human capital, entrepreneur, self-efficacy

A HEURISTIC-INDUCING METHOD FOR GENERATING INITIAL IDEAS FOR OPPORTUNITIES: AN APPLICATION TO THE AUSTRALASIAN DATING MARKET

This paper presents a heuristics-inducing method for generating initial ideas for opportunities. It consists of the presentation of snippets of theory and research, selected for their inspirational value and relevance to a particular industry, to business owners in that industry to brainstorm about applications in products and services. In this approach, the researcher bridges the worlds of academia and business, and actively contributes to the opportunity recognition process by selecting, presenting and discussing information. The method is applied to the dating market: searching, matching and/or interacting services, whether internet based or real-life. Participants were ten Australians or New Zealanders dating service owners. The presented information concerns social psychological research outcomes on factors that contribute to attraction and forming bonds, and specific issues relevant to the dating market, e.g., gender imbalances in enrollment. A range of initial ideas for future possibilities in the dating market are presented.

Opportunity Recognition in High Tech and Regulatory Environment: A Study of Product Based Indian Telecom Start-Ups

Opportunity recognition forms the first step of entrepreneurship. Off late entrepreneurship research has looked at opportunity recognition from varied lenses with entrepreneurial learning forming the core of most scholarly work. However opportunity recognition in high tech sectors is slightly different due to a high component of knowledge intensiveness inherent in such sectors and has been largely ignored in most work. So, we explore a specific high tech sector in the paper to understand and further the existing concepts within opportunity recognition process. We choose the Indian telecom sector as the context of the study and using an inductive case based approach arrive at conceptual combination as the dominant form of idea generation. The regulatory environment was found to acts as an enabler for the new ideas to flourish. We also bring in the idea of dynamic customization as the driving force behind the venture akin to symbiotic relationship present between organisms in the nature.

Entrepreneurship and the Opportunity-Knowledge Nexus

This paper is premised on the underlying notion that knowledge is crucial to the opportunity recognition and development process. In particular we draw on the insights of Atkinson and Stiglitz (1969) on the localised nature of knowledge accumulation. We then extend this analysis to portray and define the solution space and examine the implications of entrepreneurial knowledge in the recognition and development of opportunity within this space. Distinguishing between two forms of entrepreneurial knowledge, namely context dependent idiosyncratic knowledge or tacit knowledge, and codified knowledge, the primary aim of this article is to propose a knowledge-based model of opportunity within a bounded solution space. Our discussion of this model includes elaboration on how the composition of entrepreneurial knowledge predicts major path differences for the expansion and development of opportunities.

The Opportunity Recognition Process, New Business Start-Up Motivators and Outcomes: The Real Options Approach - Executive Summary

This study utilizes the Panel Study of Entrepreneurial Dynamics (PSED) to examine the decision making process of nascent entrepreneurs (NEs). Drawing on the real options theory, I examine the reactive and proactive NEs' motivators behind two choices: 1) Occupational choice (i.e., whether to actively pursue a business opportunity or to work for others) and 2) What path to take once an opportunity is pursued (i.e., terminate the start-up, have a dormant start-up, continue with the active start-up, or launch an operating business). By means of the multinomial regression analyses and chi-square tests, the study found that, on average, proactive NEs are more likely than the reactive NEs to start an NBV because of their somewhat inferior present options. Although there appear to be no striking differences between the reactive and the proactive NEs in regards of their NBV outcomes, number of business ideas, industry experience as the source of the business idea, previous start-up experience, and change of the idea were found to be correlated with the NBV outcomes. Higher chances of launching an operating business or having a shorter NBV start-up gestation times appear to be positively correlated with the business idea resulting from the NE's industry experience, having fewer business ideas, experiencing no change of the original idea, and having previous start-up experience. Further, since proactive NEs were found to be more entrepreneurially intense, it is plausible that they may be prone to the escalation of commitment and refuse to terminate their NBV start-up even when that would be the optimal decision. More nuanced data collections are needed to research this question thoroughly. Meanwhile, one can conclude that policy makers, loan officers, and venture capitalist would be wise to scrutinize the NEs' motivators and the above outlined opportunity recognition (OpR) variables before providing the NEs with initial or continued financial assistance. Lastly, one can conclude that reactive and proactive OpR is not likely to be a psychological trait since the attractiveness of other options appears to influence the OpR type.

The recognition of first time international entrepreneurial opportunities

PurposeThis paper aims to complement existing theories of internationalization by studying an important aspect which has been neglected in previous studies: the process of international entrepreneurial opportunity recognition. International market entry is conceptualized as an entrepreneurial, innovative act; and opportunity recognition consists of both discovery as well as deliberate and systematic search.Design/methodology/approachThe methodology employed involves eight case studies of small and medium‐sized enterprises (SMEs) operating in knowledge‐based industries in Australia. The unit of analysis is the “opportunity‐firm” nexus.FindingsThe paper finds that firms with little or no prior international knowledge tend to make use of opportunity discovery rather than deliberate/systematic search. In contrast, firms with extensive prior international experience and knowledge were found to deliberately search and discover their first international opportunity. International opportunity discovery did not occur simply through serendipitous encounters with new information from networks or referrals but involved interpreting possible matches between pre‐existing means (resources, skills, new technologies) and new ends (international markets) in a problem solving process. It favours those with the requisite prior knowledge and entrepreneurial orientation.Practical implicationsThe paper offers guidelines on what business practitioners and export promotion agencies can and cannot do to influence opportunity recognition process. Particular attention was paid to strategies to avoid costly deliberate search among resource‐stricken SMEs.Originality/valueThis study introduces Knightian uncertainty and Kirznerian discovery as the conceptual cornerstones of internationalization that can help account for the lack of incrementalism and optimizing logic in internationalization among smaller firms.

Profiling the Growth Oriented Nascent Entrepreneur in the US - Evidence from Representative Samples

High growth new firms are of considerable interest, in no small part due to their disproportionate contribution to overall job growth; among the 13 million nascent present in the US in 2001, the 675,000 that aspire to provide 50 or more jobs five years after the firm birth would account for 40% of all new firm jobs. Estimating the impact of demographic (entrepreneur-related) and organizational variables that influence firm growth expectations at the time of business start-up is a major step toward understanding the unique features of high growth new firms. This assessment makes use of two publicly available, harmonized data sets, namely GEM 2001 data from the US and the first PSED data set, assembled from 1998-2003. Gender, start-up team size, and features of the opportunity recognition process are statistically significant factors affecting projected job growth in the first five years of new firm operation; educational attainment, age, and a focus on manufacturing did not have a significant impact. Comparison of answering patterns to opportunity recognition items in GEM vs. PSED suggests that extreme caution is needed when wording questionnaire items; individuals would rather describe themselves as planning entrepreneurs instead of necessity entrepreneurs.

The Recognition of First Time International Entrepreneurial Opportunities: Evidence from Firms in Knowledge-Based Industries

Purpose: This paper aims to complement existing theories of internationalization by studying an important aspect which has been neglected in previous studies: the process of international entrepreneurial opportunity recognition. International market entry is conceptualized as an entrepreneurial, innovative act; and opportunity recognition consists of both discovery as well as deliberate and systematic search. Methodology: The methodology employed involves eight case studies of small and medium-sized enterprises (SMEs) operating in knowledge-based industries in Australia. The unit of analysis is the “opportunity-firm” nexus. Findings: Firms with little or no prior international knowledge tend to make use of opportunity discovery rather than deliberate/systematic search. In contrast, firms with extensive prior international experience and knowledge were found to deliberately search and discover their first international opportunity. International opportunity discovery did not occur simply through serendipitous encounters with new information from networks or referrals but involved interpreting possible matches between pre-existing means (resources, skills, new technologies) and new ends (international markets) in a problem solving process. It favours those with the requisite prior knowledge and entrepreneurial orientation. Practical Implications: The study offers guidelines on what business practitioners and export promotion agencies can and cannot do to influence opportunity recognition process. Particular attention was paid to strategies to avoid costly deliberate search among resource-stricken SMEs. Originality/Value: This study introduces Knightian uncertainty and Kirznerian discovery as the conceptual cornerstones of internationalization that can help account for the lack of incrementalism and optimizing logic in internationalization among smaller firms.

OPPORTUNITY RECOGNITION DIFFERENCES BETWEEN BLACK AND WHITE NASCENT ENTREPRENEURS: A TEST OF BHAVE'S MODEL

Examining the opportunity recognition processes of black and white entrepreneurs may help improve the lagging rate of black entrepreneurship. Based on the framework provided by Bhave's (1994) model of new venture creation, and using data collected through the Panel Study of Entrepreneurial Dynamics, we found significant differences between the percentage of black and white nascent entrepreneurs who recognized externally-stimulated versus internally-stimulated opportunities and their projected firm revenues. As predicted, black nascent entrepreneurs were more likely to pursue externally-stimulated opportunities with significantly lower expected revenues than their white counterparts. Academic and practical implications are discussed and future research directions are offered.

The Impact of `Incubator' Organizations on Opportunity Recognition and Technology Innovation in New, Entrepreneurial High-technology Ventures

The increasingly important role of SMEs in both regional and national economic development has been widely acknowledged in the economic and entrepreneurship literature.The development of an economic and policy environment supporting new, high-growth, high-technology ventures has become common strategy adopted by many policy makers, as a critical means of promoting future economic growth and job creation. Many of these high-technology, economic development programmes embrace enabling technologies, such as micro- and nanotechnology- based firms.Although nascent entrepreneurs have numerous sources of advice and support as they embark on the venture creation pathway, aspects of an entrepreneur's past and present experience exert a central and often pivotal influence on their ability to engage effectively in opportunity recognition and exploitation of innovative new product technologies.This article argues that the professional/social environment in which an entrepreneur lives and works has a fundamental impact upon their ability to recognize and exploit opportunities.The work explores the innovation process in young high-technology firms and focuses upon the long-term impact of previous employment, in `incubator' organizations, in influencing opportunity recognition and product innovation processes. Findings suggests that incubator organizations fundamentally shape entrepreneurs' technical and commercial experience of markets, strongly influence their attitudes to risk and personal achievement, help develop an intricate network of social capital and resources and, finally, provide critical knowledge of the existence, availability and applicability of technology solutions in new and emerging markets. Issues are explored through in-depth interviews in 31 companies in Aberdeen, Scotland, and Ottawa, Canada, cities with established strengths in technology development in academic, commercial and government research organizations, and a history of successful high-technology firm creation. Implications for theory and policy are discussed, with particular reference to the lessons to be learned to assist the development of sectors based upon newly emerging technologies.

Opportunity recognition of social entrepreneurs: an application of the creativity model

Social entrepreneurship has only recently been studied and a comprehensive model of how it works is unknown. This paper presents a case analysis of various international social entrepreneurs to understand how social entrepreneurship opportunity recognition can be mapped and differentiated from commercial entrepreneurship by applying the creativity model of opportunity recognition. The study reveals that social entrepreneurs follow the creative opportunity recognition process, although some stages may include different activities. This paper hopes to begin the discussion of how to bring developed theory into the new realm of social entrepreneurship. Research propositions are provided in order to highlight future research opportunities.

EFFECTS OF SOCIAL CAPITAL ON THE OPPORTUNITY RECOGNITION PROCESS

The study hypothesizes that social capital of entrepreneurs enhances their opportunity recognition process. The study investigated metal- and ICT-ventures established in 1998 in three different regions of Finland. The results showed that entrepreneurs when recognizing opportunities have (1) active social interaction to acquire knowledge, to forecast future trends, and to evaluate information and decisions, (2) personal contacts to acquire knowledge and to analyze markets, and (3) cognitively committed relationships to evaluate and understand the information and to enact proactively future trends.

A new tool for strategy analysis: the opportunity model

Purpose – To streamline the process of opportunity recognition and make it more effective by clarifying the meaning of opportunity and making its elements explicit.Design/methodology/approach – Clarifying opportunity is effected by providing a model and illustrating its effectiveness through application to examples and to SWOT (strengths, weaknesses, opportunities and threats) analysis.Findings – Provides support for the practical benefits of applying an explicit model for recognizing opportunity.Originality/value – The model facilitates opportunity recognition by encouraging avoidance of common dead ends, including mistaking catalysts for opportunities, associating opportunities with negative conditions, equating options with opportunities and the circular process of defining opportunities in terms of strengths and weaknesses.

An entrepreneurial decision process model describing opportunity recognition

PurposeThe purpose of this paper is to expand upon existing theories of entrepreneurial cognitions. It constructs an information‐processing framework of entrepreneurship (I‐Pe) that holistically maps out the entrepreneurial opportunity recognition process. This framework demonstrates how various entrepreneurial needs and attitudes, as well as entrepreneurial motivators, impact on the diagnosis and assessment of informational cues. It describes how opportunity‐related information is processed by entrepreneurs in order to reach a decision of acceptance or rejection of potential business opportunities.Design/methodology/approachThe paper commences with a case study of New Zealand's winner of the Entrepreneur of the Year Award, Bill Day and his company Seaworks, a marine contracting firm. The case content is based on personal interviews by the authors as well as secondary data. The case describes how Seaworks achieved its current level of success. A number of Bill Day's uniquely entrepreneurial behaviours are then mapped into a cognitive framework describing influential elements of the entrepreneurial decision processes. This framework is derived from interdisciplinary research encompassing the study of entrepreneurship, psychology and cognitive neuroscience.FindingsEntrepreneurs have a heightened ability and awareness for recognising and audaciously exploiting business opportunities. They persistently and continually seek opportunity‐laden information in order to satisfy internal motivators such as need for achievement and the fulfilment of competitive urges. The case study describes an entrepreneurial mind that is attracted and stimulated by elements of excitement and fun. This entrepreneur is driven by business challenges that match and stretch his skills, knowledge, and abilities. Business related informational cues are sought and processed to calculate profit potential, the level of risk, and the cost of enactment. Final calculations are filtered. Benefits and potentially positive outcomes are amplified in the calculation process, while potential complications are regarded as challenges to be overcome rather than obstacles to be avoided.Practical implicationsThe I‐Pe framework derived from this research clearly demonstrates uniquely entrepreneurial decision processes. It advances our understanding of entrepreneurial cognitions and entrepreneurial decision behaviours, which has applications for the teaching of business skills as well as increasing our understanding of the phenomenon that has been termed “entrepreneurship”.Originality/valueThis paper is based on an original case study written by the authors and integrates cognitive theory within the context of entrepreneurial behaviour in order to explain why entrepreneurs are so successful at recognising and exploiting opportunities.

A longitudinal study of entrepreneurial firms opportunity recognition and product development management strategies

PurposeThe purpose of this article is to analyze both the opportunity recognition and product development management processes not only among technology firms, but among non‐technology firms as well at two points in time, 1998 and 2003.Design/methodology/approachThe current study included two data sets: a 1998 survey of technology‐based and non‐technology firms located in US incubators; and a new 2003 study of technology and non‐technology based firms in the Inland Northwest. All respondents indicated they considered themselves entrepreneurs.FindingsFindings suggest that the opportunity recognition process changed between 1998 and 2003. Some of the authors' prior work suggested that the process, at least for technology‐based firms, had been similar between 1989 and 1998. Industry changes over time, perhaps different firm types, and insufficient data could be rational reasons for the changes. Thus, as far as the opportunity recognition process then, there is evidence that suggests that the process is different for manufacturing and non‐manufacturing firms.Practical implicationsThe study of management and marketing processes should be performed by industry or business type over time. The researcher should consider that if the opportunity recognition or product development management processes reflect the changing nature of entrepreneurship over time, then characterizing those processes as constant models is inappropriate.Originality/valueThe overall results are consistent with other research studies and serve to further substantiate the use of single industry data. An “equation of state” for an opportunity recognition model or a product development management model is suggested by the empirical results reported on in the current paper as well as the diversity of other researchers' work.

The Role of Organizational Learning in the Opportunity–Recognition Process

Firms engage in entrepreneurship to increase performance through both strategic renewal and the creation of new venture opportunities. Organizational learning (OL) has become an effective avenue for strategic renewal. But what of creating venture opportunities—can OL enhance the process of recognizing and pursuing new ventures? This article argues that OL can strengthen a firm's ability to recognize opportunities and help equip them to effectively pursue new ventures. First, we identify three approaches to OL—behavioral, cognitive, and action. Then, we introduce a creativity–based model of opportunity recognition (OpR) that includes two phases—discovery and formation. Next, we show how each of the three types of learning is linked to the two phases of OpR. We suggest propositions that support our claim that OL enhances OpR and offer examples of firms that have used these organizational–learning approaches to more effectively recognize and pursue venture opportunities. These insights have important implications for entrepreneurial firms seeking to advance the venture–creation process.

A new tool for strategy analysis: the opportunity model

PurposeTo streamline the process of opportunity recognition and make it more effective by clarifying the meaning of opportunity and making its elements explicit.Design/methodology/approachClarifying opportunity is effected by providing a model and illustrating its effectiveness through application to examples and to SWOT (strengths, weaknesses, opportunities and threats) analysis.FindingsProvides support for the practical benefits of applying an explicit model for recognizing opportunity.Originality/valueThe model facilitates opportunity recognition by encouraging avoidance of common dead ends, including mistaking catalysts for opportunities, associating opportunities with negative conditions, equating options with opportunities and the circular process of defining opportunities in terms of strengths and weaknesses.

A value creation view of opportunity recognition processes

Opportunity recognition is an important part of value creation processes and vice-versa. A qualitative study, involving in-depth, semi-structured interviews of 59 firm-owners/founders in the USA and Sweden was conducted to better understand how entrepreneurs and SME owners engage in opportunity recognition and marketing practices. The findings revealed evidence of: planning to be opportunistic, a propensity to take action, opportunities perceived incrementally over years, instantaneous opportunity evaluation, first customer testing rather than formal market research, both Kirznerian alertness and Schumpeterian new combinations, job dissatisfaction and industry experience preceding opportunity recognition, support for the Bhave model, variations in the level of search, entrepreneurs taking ownership of ideas that were not originally theirs, use of supply and demand in recognising opportunities and contingent opportunity recognition.