Entrepreneurship Project: Literature Review on Opportunity Recognition

This report presents a literature review focusing on the critical role of opportunity recognition in entrepreneurship. It begins by highlighting the importance of opportunity recognition as a key element of the entrepreneurial process, essential for discovering new ventures and expansion ideas. The review analyzes seminal articles and leadership tips from a guest entrepreneur, exploring various methods such as brainstorming techniques, cognitive frameworks, and the impact of experience and social networks on opportunity identification. The report examines different perspectives, including the influence of prior knowledge, individual traits, and the use of causation and effectuation approaches. It also discusses the concept of serendipity in entrepreneurship and the role of cognitive processes in recognizing opportunities. The analysis confirms the guest entrepreneur's leadership tips, emphasizing their relevance to the opportunity recognition process, drawing from various research papers and studies. The review concludes that opportunity recognition is a systematic process influenced by multiple factors, including skills, education, circumstances, and personal traits. The report provides valuable insights into how entrepreneurs can identify and assess new business opportunities, drawing from diverse research findings and perspectives on the subject.

Entrepreneur Project- Literature
Review Component

TABLE OF CONTENTS
introduction....................................................................................................................................1
Main Body.......................................................................................................................................1
conclusion........................................................................................................................................4
references.........................................................................................................................................5

INTRODUCTION
For getting success, entrepreneur needs to focus on three pieces of entrepreneurship and
these are opportunity recognition, assessment and realization. In which opportunity recognition
can be considered as important element of the entrepreneurial process which helps in discovering
new venture or expansion idea. The current research project is based on importance of
opportunity recognition for entrepreneur (Alvarez and et al, 2013). It focuses on the presentation
of guest entrepreneur which was based on leadership tips for recognising opportunity. Research
will review the number of seminal articles based on the current subject. Afterwards, researcher
will analyse that whether leadership tips of guest entrepreneur confirmed or disproved the theory
of opportunity recognition.
MAIN BODY
Klemn, 2013 has concluded that “Entrepreneurs actually recognise opportunities using
different brainstorming methods” (Klemn, 2013). These methods are group ideation, mind map,
SWOT analysis, Role storming, Brain writing, think of solution, edge storming and nominal
group, etc. All these methods contributes in initiating innovation in existing business operation
or starting a new business. Therefore, these are the major methods which are used by
entrepreneurs for recognising opportunities.
Guest entrepreneur has been focused on some leadership tips for recognising
opportunities and these are as follows:
1. Show your first followers how to follow
2. Think of failure as your own innovation
3. Create your path by “walking”
4. Do the little things right
5. Be patients and wait for it
6. Don’t wish it were easier, wish you were better.
Author has chosen some seminal articles for analyzing the actual concepts of opportunity
recognition. In which, study of Alvarez and et al, 2013 has reflected that opportunity recognition
is a process instead of an activity (Alvarez and et al, 2013). On the other hand, Ardichvili and
et.al, 2003 has concluded that “Dubin’s theory of opportunity identification process focuses
helps in identifying new opportunities for business” (Ardichvili and et.al, 2003). As per this
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theory personality traits, social networks, and prior knowledge, backgrounds and entrepreneurial
alertness help in identifying business opportunities. In contrast, Arenius, Pia, and Clercq, 2005
has stated that “nature of individual’s residential area influence the perception of entrepreneurial
opportunities” (Arenius, Pia, and Clercq, 2005). Along with this, study has reflected that study
and education have positive effect of opportunity identification process. Further this study has
also concluded that individuals with higher education lever are more capable enough to
identifying the opportunities as compare to those with a lower level of education (Arenius, Pia,
and Clercq, 2005).
Literature review has also focused on article of Baron and Robert 2006 which has stated
that “Cognitive frameworks focuses on the pattern recognition for identifying opportunities”
(Baron and Robert 2006). As per this statement using “connect the dots” method entrepreneur
can make patent between changes in markets, technology, demographic, government policies and
other factors. These pattern can helps in identifying the new opportunities between these changes
(Baron and Robert 2006).
Similarly, Baron, Robert and Ensley, 2006 has also conducted study on opportunity
recognition as the detection of meaningful pattern but it has been focused on comparison
between Novice and Experience of entrepreneur. It has concluded that “Individuals experience
help in recognizing pattern which provides positive contribution in determining opportunities”
(Baron, Robert and Ensley, 2006). Overall, it has concluded that experience of entrepreneur
plays very important role in success of the business as well as getting best opportunity.
Moreover, Chandler and et al, 2011 has conducted study on causation and effectuation
approaches of creating new venture. As per the findings of the study “Both approaches can be
used by entrepreneurs for stating a new venture but they need to focus on situation because these
play important role in selection of favorable approach” (Chandler and et al, 2011). As per the
study causation approach has inverse relation with uncertainty so in this approach entrepreneur
needs to follow the entire plan step by step. But on the other hand effectuation is positively
correlated with the uncertainty, losses and flexibility. So, selection of these approaches for
opportunity recognition is also based on situations also (Chandler and et al, 2011).
As per the above discussion there are number of researchers who have disclosed that
entrepreneurs need to use appropriate model, process and approach for recognizing
opportunities. But on the other hand, Dew and Nicholas, 2009 has reflected that “There is a
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strong serendipity of unintended discovery of opportunities” (Dew and Nicholas, 2009). As per
this research serendipity is a quite prevalent feature of entrepreneurship so, it has implications
for research and practice as well.
On the other hand, Fiet, 2007 has conducted a perspective analysis of search and
discovery and it has included different stages for disclosing new opportunities which focus on
prior knowledge and interpretation of feedback based on prior knowledge of social cognitive
factors. Therefore, prior knowledge also play important role in opportunity recognition (Fiet,
2007).
In contrast, Fisher, 2012 has conducted study on different theories which play important
role in influencing individual’s behavior. It has stated that “Causation, effectuation and bricolage
are important theoretical perspective which can affect the individual’s behavior at the time of
creating and developing new venture” (Fisher, 2012). Therefore, these are important aspects for
understanding the different theoretical concepts and their impact on opportunity recognition
process.
Gregoire and et.al, 2010 has been focused on developing a model of opportunity
recognition as a cognitive process of structural alignment which helps in recognizing chances for
new technologies. Along with this, study has disclosed that “Mental connection play different
roles in opportunity discovery process with distinct consequences” (Gregoire and et.al, 2010).
Along with this, study has reflected that prior knowledge may facilitated this process also.
Therefore, cognitive framework, mental connection, consequences and prior knowledge are
important attributes for recognizing opportunities.
Along with this, Ozgen, Eren and Robert, 2007 has conducted study on different social
sources of information which may also influence the opportunity recognition process. As per this
study major sources of information are mentor, industry networks and professional forums, etc.
Result of this study has stated that all these social sources of information have positive and direct
effect on this process (Ozgen, Eren and Robert, 2007).
On the other hand, Ronstadt, 1989 has conducted study on a different model of
opportunity recognition which is The Corridor Principle. Findings of this research papers has
reflected that “mere act of starting a venture enables entrepreneurs to see other venture
opportunities they could neither see nor take advantage of until they had started their initial
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venture” (Ronstadt,1989). Therefore, it has reflected that many entrepreneurs create multiple
ventures but it depends on lengthen the duration of their entrepreneurial career.
Likewise, Renko, Maija, Rodney and Mark, 2012 has conducted study on perception of
entrepreneurial opportunity and it has discovered that “all entrepreneurial opportunities possess
both objective and subjective qualities, thus helping reconcile both perspectives at the time of
recognizing opportunities” (Renko, Maija, Rodney and Mark, 2012).
On the other hand, Shane, 2000 has stated that “individual differences, their efforts and
government affect the opportunities that are discover by people (Shane, 2000). In contrats, Tang,
Jintong, Kacmar and Lowell, 2012 has asserted that “scanning and search, association and
connection, and evaluation and judgment are three basic dimension of the model which can be
used by entrepreneur for recognizing opportunities” (Tang, Jintong, Kacmar and Lowell, 2012).
Review of literature has reflected that different models of the opportunity recognition
have concluded the same thing which have stated by the guest entrepreneur. So, current research
and seminal articles approve all leadership tips which were suggested by guest entrepreneur for
recognising opportunities.
CONCLUSION
The current literature review has concluded that opportunity recognition is a system
process which focuses on prior knowledge, skills, education level, circumstances, consequences
and different other dimensions. Along with this, personal traits, skills, behaviour and other
factors may influence this process in positive or negative manner.
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REFERENCES
Books and journals
Alvarez, Sharon A., Jay B. Barney, and Philip Anderson. "Forming and exploiting opportunities:
The implications of discovery and creation processes for entrepreneurial and
organizational research." Organization Science 24, no. 1 (2013): 301-317.
Ardichvili, Alexander, Richard Cardozo, and Sourav Ray. "A theory of entrepreneurial
opportunity identification and development." Journal of Business venturing 18, no. 1
(2003): 105-123.
Arenius, Pia, and Dirk De Clercq. "A network-based approach on opportunity
recognition." Small Business Economics 24, no. 3 (2005): 249-265.
Baron, Robert A. "Opportunity recognition as pattern recognition: How entrepreneurs “connect
the dots” to identify new business opportunities." The Academy of Management
Perspectives 20, no. 1 (2006): 104-119.
Baron, Robert A., and Michael D. Ensley. "Opportunity recognition as the detection of
meaningful patterns: Evidence from comparisons of novice and experienced
entrepreneurs." Management science 52, no. 9 (2006): 1331-1344.
Chandler, Gaylen N., Dawn R. DeTienne, Alexander McKelvie, and Troy V. Mumford.
"Causation and effectuation processes: A validation study."Journal of business
venturing 26, no. 3 (2011): 375-390.
Dew, Nicholas. "Serendipity in entrepreneurship." Organization Studies 30, no. 7 (2009): 735-
753.
Fiet, James O. "A prescriptive analysis of search and discovery." Journal of Management
Studies 44, no. 4 (2007): 592-611.
Fisher, Greg. "Effectuation, causation, and bricolage: a behavioral comparison of emerging
theories in entrepreneurship research."Entrepreneurship theory and practice 36, no. 5
(2012): 1019-1051.
Grégoire, Denis A., Pamela S. Barr, and Dean A. Shepherd. "Cognitive processes of opportunity
recognition: The role of structural alignment."Organization Science 21, no. 2 (2010):
413-431.
Ozgen, Eren, and Robert A. Baron. "Social sources of information in opportunity recognition:
Effects of mentors, industry networks, and professional forums." Journal of business
venturing 22, no. 2 (2007): 174-192.
Renko, Maija, Rodney C. Shrader, and Mark Simon. "Perception of entrepreneurial opportunity:
a general framework." Management Decision 50, no. 7 (2012): 1233-1251.
Ronstadt, Robert. "The corridor principle." Journal of Business Venturing 3, no. 1 (1989): 31-40.
Shane, Scott. "Prior knowledge and the discovery of entrepreneurial
opportunities." Organization science 11, no. 4 (2000): 448-469.
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Tang, Jintong, K. Michele Micki Kacmar, and Lowell Busenitz. "Entrepreneurial alertness in the
pursuit of new opportunities." Journal of Business Venturing 27, no. 1 (2012): 77-94.
Online
Klemn, P., 2013. The three pieces of entrepreneurship: opportunity recognition, opportunity
assessment, and opportunity realization. [Online]. Available through: <
http://berkeleysciencereview.com/3pieces_of_entrepreneurship/>. [Accessed on 7th
September 2016].
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