Academic journal article Journal of Global Business and Technology

An Entrepreneurial Entity's Experience with Opportunity Realisation

Academic journal article Journal of Global Business and Technology

An Entrepreneurial Entity's Experience with Opportunity Realisation

Article excerpt

INTRODUCTION AND BACKGROUND

This paper aims to understand how entrepreneurial entities engage and grapple with new opportunities that emerge over time. Successful pursuit of emergent opportunities has become an important issue for business to deal with as competitive and environmental pressure and challenges have had a marked impact on business ventures' sustainability.

This is particularly prevalent in the insurance industry, as it has been subject to extreme losses due to dual exposure in both underwriting and investments exposure (Araichi & Belkacem, 2014; Hong, Min-Ming, Chuanhou & Mulong, 2012). The insurance industry suffered a loss of $40 billion due to the 9/11 terrorist attack (Ragin & Halek, 2015; Chen, Doerpinghaus, Lin & Yu, 2008; Booth, 2010). The industry had to bear further losses amounting to $280 billion due to hurricanes Katrina, Rita and William, and most recently the global financial crises with failing bank systems and shortage in credit (Ragin & Halek, 2015; Booth, 2010). Financial survival was the number one priority for many insurance firms in the wake of these disasters (Hagendorf, Hagendorf & Keasey, 2015; Ellenburger & Trussell, 2012). Financial survival was the number one priority for many insurance firms in the wake of these disasters (Hagendorf, Hagendorf & Keasey, 2015; Ellenburger & Trussell, 2012). Multinational European and North American insurance firms have been forced to focus on core business activities, which necessitated improvements in holistic risk and capital management of global and regional operations (Marovic, Njegomir & Maksimovic, 2010). Multinational insurance firms where therefore forced to withdraw from the South African insurance market in an attempt to improve financial performance through recapitalisation of funds to their core operations in Europe and America, thereby mitigating their international risk exposure in developing countries.

The South African insurance community has been presented with significant risk and opportunity over the past two decades with the withdrawal of multinational insurance firms. This has paved the way for increased entrepreneurial behaviour. The Saxum Group of Companies was one such company which was able to exploit prevailing market opportunities, particularly with the withdrawal from the South African market of German insurance company Gerling Global. The Saxum Group became the first re-insurance firm in South Africa to be privately owned by a group of entrepreneurs.

Entrepreneurs are repeatedly confronted with uncertainty and risk, and use their cognitive decisionmaking processes based on experience, education and knowledge to make decisions with limited information to take advantage of opportunities (Jaiyeoba, Marandu, & Kealesitse, 2015; Brockman, 2014; Park, 2005). Opportunity is a central concept within the field of entrepreneurial activity (Brockman 2014; Wang, Ellinger & Jim Wu, 2013; Short, Ketchen, Shook & Ireland, 2010). The interaction between the entrepreneur and opportunities plays a key role in the identification, exploration and pursuit of opportunities by means of actions designed to create value. (Brockman, 2014; Wang, Ellinger & Wu, 2013; Cha & Bae, 2010). The increased emphasis on opportunity recognition and realisation necessitates further research on the issue. Furthermore, as entrepreneurial endeavour is a central tenet of promoting economic growth in South Africa, the successful pursuit of new opportunities is even more relevant to grow SMME's in South Africa and inquiry into opportunity realisation in SMME's has a vital role to play in helping to stimulate entrepreneurial endeavours.

RATIONALE AND RESEARCH SETTING

The formation of the Saxum Group was an opportunity that presented itself with the withdrawal of some multinational insurance firms from South Africa (most notably, in this case, Gerling Global). Despite entrepreneurial activity in the South African insurance market surfacing due to changing market conditions following the withdrawal of multinational firms, there is little information that describes opportunity realisation within the context of the South African insurance industry. …

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