When examining the above introduced factors influencing business opportunity recognition, it seems evident, that none of them could do the trick by themselves. None of them can alone explain why and how some people identify business opportunities and others do not even though Shane (2000) seemingly simply argued that all people are just not equally likely to recognize same opportunities regarding for example technological changes. Can opportunity recognition be influenced by multiple factors or variables with various moderating effects (Miao and Liu, 2011)? And if there are multiple variables, should they be organized into a framework to be able to explain and predict the set of this empirical phenomena (Shane and Venkataraman, 2000)?
Some authors have contributed to this need and have organized the factors around opportunity recognition into different sets or frameworks. Ardichvili et al. (2003) used Dublin’s theory for framework building and proposed a theory for opportunity recognition. They emphasized on entrepreneurial alertness, entrepreneur’s personal traits, social networks and prior knowledge being its antecedents. The personal traits useful in opportunity recognition were argued to include optimism, self-efficacy and creativity.
However, the most interesting notions of this theory are that as it considers also the type of the opportunity itself in the equation, it accepts that alertness is formed out of the mere coincidence of how other factors happen to take place. Later, in 2009 Garcia-Cabrera and Garcia-Soto published their version of a framework explaining opportunity recognition also leaning on entrepreneurial alertness. According to their notes, it was formed of an individual’s cognitive capabilities including personality traits, previous experience, specific search strategy, social networks and the environment. This shows how knowledge of opportunity recognition had expanded in few years to understand how
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cognition, search activities and surrounding environment influence perceiving and recognizing opportunities.
However, as these theorizations seem to describe some fractions of the phenomena, more comprehensive outlook was still needed. To produce more holistic view on why some individuals are better at recognizing (discovering or creating) opportunities, Mary George et al. (2016) developed a framework, which will serve as the theoretical framework of this study. Based on extensive literature review, they focused on six previously presented factors – prior knowledge, social capital, environmental conditions, cognition/personal traits, entrepreneurial alertness and systematic search – to provide more insight on opportunity recognition. These factors were chosen because they represent the key findings made in opportunity recognition domain. Also, research evidence has shown how these factors are interrelated and leaving even one of them out would provide us an incomplete understanding of the phenomena. For these same reasons also some interesting factors possibly influencing in opportunity recognition, such as emotions or genetics, are left out as their research is still sparse (Mary George et al., 2016).
Figure 2. presents how the factors considered influential operate in opportunity recognition process which develops to Analysis ja Exploitation phases as outcomes of other activities. The role of prior knowledge is one of the most traditional views in opportunity recognition suggesting it works as a moderator for entrepreneurial activities.
It is commonly understood as a cognitive foundation for information synthesizing in opportunity recognition as many studies have theorized. Social capital in turn has been mostly understood through empirical research proving quickly to be one of the most influential factors in opportunity recognition. Both opportunities and information are argued to be attained through the strong and weak ties of the entrepreneur’s social networks. Environmental conditions providing both positive and negative effects are fundamental in understanding how individuals engage in entrepreneurial activities as they are influenced by issues such as economic growth, geographic location, legislation and cultural values. As without an individual no innovations or opportunities could take place, research has focused highly on the operating individual. The cognition of an
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individual seems to explain his/her behavior and choices, but also characteristics such as self-efficacy, creativity, risk appetite, ambition and need for autonomy have argued to facilitate entrepreneurial activity. Entrepreneurial alertness is a factor closely related to cognition and as a complex construct difficult to measure or sufficiently explain.
Examining mental frameworks, schemas, has provided knowledge on how alert people are drawn to change and willing to alter their schemas accordingly in addition to being able to spot shifts in environment invisible to others. High alertness has proven to reduce the need for actively searching for opportunities. Even though some scholar argue that opportunities are not identified through search but rather identifying the value of information, others are convinced that systematic search helps in recognizing opportunities (Mary George et al., 2016).
Figure 2. The opportunity recognition framework as conceptualized in the literature (after Mary George et al., 2016)
As this construction presented in a process view serves as a starting point for future discussion and research, Mary George et al. (2016) encourage future empirical research to be done either with quantitative or qualitative methods in different contextual settings.
This framework is, like the authors emphasize, a result of literature review and therefore needs empirical exploring in real-life settings. To help with filling this gap in academia, I am interested in are the factors presented in the framework shown in business opportunity
Alertness Systematic search
Opportunity recognition Opportunity discovery Opportunity creation
Social capital Prior knowledge
Cognition/
personality traits
Environmental conditions
Analysis Exploitation
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recognition in CE context. More importantly, if they are shown, how do they show? The methodology of my study will be explained in detail in the following chapter.
42 3 METHODOLOGY