Academic journal article Academy of Entrepreneurship Journal

Entrepreneurial Alertness and Entrepreneurial Awareness-Are They the Same?

Academic journal article Academy of Entrepreneurship Journal

Entrepreneurial Alertness and Entrepreneurial Awareness-Are They the Same?

Article excerpt

INTRODUCTION

Definitions

As in other fields, the answers to questions depend on the way that the variables tested are defined. In this field of research there are different definitions for each variable, and the choice among them is somewhat arbitrary. For example, we have chosen the definition of Shane and Venkataraman, (2000) of entrepreneurship as an activity that involves the discovery, evaluation, and exploitation of opportunities to introduce new goods and services, ways of organizing, marketing, process, and raw materials by organizing efforts that had previously not existed. The same authors define entrepreneurial opportunities as "those situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than their cost of production." (Shane and Venkataraman 2000, p. 220).

The second definition is somewhat problematic, since it defines the entrepreneurial opportunity as a situation, and does not include, for example, social fields of entrepreneurship or causes such as innovation or prior knowledge. On the other hand, it was chosen because of its economic aspects, by which most theories of opportunity identification are driven.

The first scholar to try to understand this phenomenon (although not the first to use the term) was Kirzner (1979). His idea of entrepreneurship is based on what he calls spontaneous learning (p.145) which grows with the awareness of the entrepreneurial vision. Kirzner based his theory on the presumption that every market is in a state of disequilibrium, and is looking for ways to minimize this disequilibrium and move toward some kind of balance. This is a situation that creates a favorable climate for entrepreneurship by pushing toward solutions that might produce this balance. He saw this vision as something that arises from a Crusoe situation. Crusoe had a hunch that he needed to build a boat, and only then did he understand that he possessed the kind of information resources needed to transform his hunch into action (p. 168). Kirzner called the state of mind that enables the hunch, or the spontaneous learning, alertness. Kirzner (1985) emphasized the aspect of spontaneity in discovery (p11). This approach found more support from Harper (2003), who contends that entrepreneurship is spontaneously learnt or acquired by the entrepreneur, without deliberately searching for the information gaps that lead to the emergence of opportunities.

The term 'alertness' was adopted by the community of scholars, who did not always pay attention to the fact that, for Kirzner, this term is attributed only to the part that is spontaneous (the hunch) and cannot be produced or improved upon (p. 152), and not to the second part, which includes the transformation of alertness into a resource. In this study, we will call this resource awareness.

Regarding the question of why this kind of activity is carried out by only a limited number of people, Kirzner explains that it is a process built on cognitive elements, such as learning from previous direct or indirect experiences. He argues that some people (i.e., entrepreneurs) possess a special alertness that predisposes them to be extremely sagacious about change: they are quicker to detect its signals; more accurate in sizing up its true significance; quicker to infer the full scope of its implications; and, most importantly, more accurate in uncovering its commercial potential.

Gaglio (2000) promotes Kirzner's theory by maintaining that this alertness is a matter of the ability to perceive correctly the signals of change, and that this ability will determine the quality of the decision made. On this perception depends the fate of the enterprise. But, at the same time, Gaglio says that perception is not enough and it needs a basis of interpretation, which includes the ability to analyze this perception and decide on the means needed to achieve the desired end. …

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