Academic journal article Journal of Applied Management and Entrepreneurship

Entrepreneurial Opportunity Identification: A Motivation-Based Cognitive Approach

Academic journal article Journal of Applied Management and Entrepreneurship

Entrepreneurial Opportunity Identification: A Motivation-Based Cognitive Approach

Article excerpt

Introduction

Entrepreneurial opportunity identification lies at the heart of entrepreneurship (Shane & Venkataraman, 2000). Before acting on opportunities, individuals must first identify these opportunities (Shane & Venkataraman, 2000). In recent years, there has been a vast theoretical and empirical literature that addresses the question of why some people and not others are able to identify entrepreneurial opportunities (Baron, 2004, 2006; Haynie, Shepherd, & Patzelt, 201 1; Hayton & Cholakova, 201 1; Mitchell et al., 2002, 2007; Siu & Lo, 201 1). These studies suggest that entrepreneurial cognition enables opportunity identification. However, a motivation-based cognitive approach, which could lead to a better understanding of what differentiates noveltyseekers from others, has received little attention in the entrepreneurship literature.

According to Cacioppo and Petty (1982), there are stable individual differences in people's intrinsic motivation to engage in and enjoy effortful cognitive activities. Individuals with high need for cognition tend to seek, acquire, think about, and reflect back on information to make sense of stimuli, relationships, and events in their world, whereas individuals low in need for cognition are more likely to rely on others (e.g., celebrities and experts), cognitive heuristics, or social comparison processes (Cacioppo, Petty, Feinstein, & Jarvis, 1996).

This conceptualization of need for cognition lays the foundation for the current study using a motivation-based cognitive approach. This study examines the relationships among need for cognition, alertness and entrepreneurial opportunity identification. It suggests that individuals with high need for cognition are likely to immerse themselves in cognitive activities, which in turn heighten the propensity of alertness, resulting in entrepreneurial opportunity identification.

This research contributes to current entrepreneurship literature by suggesting that the need for cognition and alertness are important in understanding entrepreneurial behavior. This line of work reemphasizes the profound influence that individual cognition exerts on entrepreneurial opportunity identification. An empirical examination of the mediating effect of alertness also advances existing theory by enhancing our understanding of the entrepreneurial opportunity identification process.

Following this introduction, section two describes the theory and relevant literature. Section three covers the research design to test hypotheses. Section four presents the findings. Section five discusses the results, and presents conclusion with implications for researchers and practitioners, limitations and suggestions for future research.

Theoretical Framework and Hypotheses Development

Entrepreneurial opportunity identification

To date, many definitions of entrepreneurship have increasingly focused on opportunity identification as central to understanding entrepreneurial behavior (Shane & Venkataraman, 2000). Entrepreneurial opportunity identification is considered as a core attribute of entrepreneurship (Shane & Venkataraman, 2000). Before acting on opportunities, individuals must first identify these opportunities (Shane & Venkataraman, 2000). Shane (2003) defines entrepreneurial opportunity as a situation in which individuals can create a completely new means-ends framework by reassembling resources that they believe will yield a profit.

Given the same set of situations and opportunities, not all people can identify a given entrepreneurial opportunity (Shane & Venkataraman, 2000). Some people are able to identify opportunities that others overlook (Kirzner, 1973). In addressing to why some people and not others are able to identify entrepreneurial opportunities, prior studies lend support to the view that possession of prior knowledge, social networks, and superior cognitive capabilities (Gaglio & Katz, 2001; Kaish & Gilad, 1991; Mitchell et al. …

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