Article review on "New Venture Ideas and Entrepreneurial Opportunities: Understanding the process of Opportunity Recognition"

New Venture Ideas and Entrepreneurial Opportunities: Understanding the process of Opportunity Recognition

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New Venture Ideas and Entrepreneurial Opportunities: Understanding the process of Opportunity Recognition

Robert P. Singh

Gerald E. Hills

G.T. Lumpkin

Review:

A major step in any entrepreneurial venture process is the recognition of the opportunity by the entrepreneur. The process of identifying ideas and then developing them into bona fide business opportunities is the key element of the new venture creation process. The findings support the notion that ideas and opportunities are distinct constructs and that different activities take place at different times within the opportunity recognition process. Opportunity recognition is therefore a process rather than a one-time "eureka" experience.

Long and McMullan (1984) call an 'aha' experience when the opportunity is recognized. Afterwards, the opportunity is elaborated and evaluated before deciding whether or not to proceed. During this strategic elaboration stage the opportunity may be honed and modified to better fit the market and to maximize the profit potential. The study also proposes that the processes of opportunity recognition and firm founding can be extended, and that an entrepreneur's social network can play a vital role in the recognition process. Timmons proposed a model of successful venture creation based on the three crucial driving forces of entrepreneurship:-

a)      the founders (entrepreneurs)

b)      the resources needed to found the firm

c)      the recognition of the opportunity

The challenge for the entrepreneur is to manipulate and influence the surrounding factors in real time to improve the chances for the success of a venture. When studying opportunity recognition, researchers should carefully frame ideas and opportunities for their study sample. The model of opportunity recognition can be presented below:-

Initial New Venture ideas                Potential New Venture                Decision to start a New

                                                               Opportunities                                    venture

The model can be important tool in the study of opportunity recognition because it offers a theoretical framework that can easily be understood by surveys subjects or interviewees. Using this model, the researcher can validate that research subjects perceive the difference between ideas and opportunities. Those theorists who disagree with the model proposed in this paper, more advanced research methods are needed, specifically, more fine grained studies and ideally longitudinal studies that collect both quantitative and qualitative data.

Future research can enhance our understanding of the social network-opportunity recognition relationship by asking entrepreneurs and other practitioners how their social contacts affected their pre- startups activities.

Conclusion:-

Opportunity recognition is a vital feature of the new venture creation process. The research conducted has explored several aspects of the opportunity recognition process, including the proposition that ideas differ from opportunities and that an entrepreneur's social network contributes to the recognition process. The research also indicates that an entrepreneur's social network and prior experience enhance his/her ability to recognize opportunities.