Academic journal article Journal of Small Business Management

Differences in Entrepreneurial Opportunities: The Role of Tacitness and Codification in Opportunity Identification

Academic journal article Journal of Small Business Management

Differences in Entrepreneurial Opportunities: The Role of Tacitness and Codification in Opportunity Identification

Article excerpt

The role of opportunities in the entrepreneurial process remains relatively underdeveloped. To address this issue, we develop a definition of an entrepreneurial opportunity and draw upon a distinction from the domain of knowledge management to suggest a continuum of entrepreneurial opportunities ranging from codified to tacit. Though both traditional and contemporary research has examined how individual differences relate to the identification of opportunities, we focus instead on the importance of differences in the opportunities themselves. Specifically, we examine how relative differences in the degree of opportunity tacitness relate to the process of opportunity identification. We find that relatively more codified opportunities are more likely to be discovered through systematic search, whereas more tacit opportunities are more likely to be identified due to prior experience. These findings contribute to an increased understanding of the role of the opportunity in entrepreneurship research and have important implications for economic theories of entrepreneurship, entrepreneurial learning, entrepreneurial networks, and entrepreneurial education.

Introduction

How are opportunities identified? One of the central questions in the field of entrepreneurship has focused on the identification of opportunities. The identification of opportunities is important in part because it is often the first step in the entrepreneurial process (Baron and Shane 2005). Historically, this line of inquiry has sought to understand why some people, and not others, identify entrepreneurial opportunities (Shane and Venkataraman 2000). This approach has led to a great deal of research attempting to specify how individual differences allow certain people to identify entrepreneurial opportunities- For example, early research in the field sought to address this question partly through a trait-based approach (e.g., McClelland 1961). More recently, the resurgence of an individual difference approach to entrepreneurship research has taken on a more cognitive approach, highlighting the role of cognitive decision-making (Busenitz and Barney 1997) and pattern matching (Baron and Ensley 2006) used by entrepreneurs to identify opportunities.

Whereas person-centric approaches have contributed much to the field of entrepreneurship, the domain of the field has been respecified to include two phenomena: the aforementioned presence of enterprising individuals and the presence of entrepreneurial opportunities (Venkataraman 1997). The reconceptualization of the field of entrepreneurship as an individual-opportunity (I-O) nexus calls for increasing attention of the role of entrepreneurial opportunities and how these entrepreneurial opportunities may affect the entrepreneurial process. Responding to this call, research related to entrepreneurial opportunities and opportunity identification is increasing. For example, recent research suggests opportunity insights are directly related to opportunity identification experiences (Corbett 2005) and the match of learning style demanded by a given situation (Dimov 2007). Studies also suggest that though women and men utilize their unique stocks of human capital to identify opportunities, they use fundamentally different processes of opportunity identification (DeTienne and Chandler 2007).

While research is continuing to develop, much of this work in the area of opportunity identification remains focused on the importance of individual differences with respect to opportunities. By contrast, we focus on the importance of relative differences in opportunities, not individuals. This distinction is important because "variation in opportunities themselves can account for at least some of the observed patterns in entrepreneurial activity" (Shane 2003, p. 18).

The idea that opportunities may differ on various dimensions is not entirely new. A comparison of early research draws attention to the idea that opportunities may differ on such important dimensions as their expected value and innovativeness. …

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