創業者如何識別機會【蘇筠】

Summary of recent debates in entrepreneurial opportunity

Prepared by Millie Su


Recently, the topic of opportunity has rekindled discussions and debates in entrepreneurship literature. Ramoglou and Tsang (2016) wrote an article, “A realist perspective of entrepreneurship opportunities as propensities,” with an intention to bridge the debate between the creation versus discovery views of entrepreneurial opportunities. However, their proposal triggered criticism among the entrepreneurship scholars who then wrote a series of dialogue papers to challenge Ramoglou and Tsang’s proposal.

As a result, the topic of entrepreneurial opportunity is brought to the forefront for discussion among scholars. Three key issues are revisited in terms of entrepreneurial opportunities, 1) what is opportunity, 2) where opportunities come from, 3) how does the opportunity concept help entrepreneurial strategy. I will summarize the essence of the debate and suggest how our theory about power relativity brings values to the debate. 

What is opportunity?

Entrepreneurial opportunities could be seen from two angles, one is that opportunity as situations giving rise to new productions of goods and services, new markets or organization (Eckhard and Shane 2003). Situations leading to opportunities are the ones that contain information asymmetry, where people do not have the same information, same amount of resources, or same quality of relationships. The other angle is that opportunities being seen as expectations about the future (Foss and Kliein 2017). There is uncertainty and different expectation about the future, and entrepreneurs are taking actions to resolve the uncertainties. For example, ambiguous market boundaries prompt entrepreneurs to reconstruct market boundaries, or two competing logics of English cricket prompt institutional entrepreneurs to introduce a new business model (Wright and Zammuto 2013).

Both views suggest that information asymmetry and uncertainty drive entrepreneurial actions (i.e., opportunity take place when entrepreneurs exploit price differences or take advantage of market uncertainties). However, the most pressing need for entrepreneurs is not primarily exploiting information asymmetry or uncertainty, but rather to survive. Entrepreneurs face a lot of constraints that put their survival in danger; such as resource constraints, competitive constraints, technological constraints and many more. Although opportunities drive entrepreneurship, survival is actually the priority of entrepreneurial strategy. Therefore, the two definitions of opportunity don’t consider pressing need that entrepreneurs face, which is survival.

Because entrepreneurs need to survive, they need a clear examination of the environment. In our study, low-power actors find opportunities for survival by looking into the constraints they face, which could be imposed by high-power actors. In other words, constraints provide a lens to opportunities. For example, although G-tech monopolized the local dealers prohibiting them from selling products from other manufacturers, local dealers were unhappy with G-tech and their businesses were declining. Although G-tech's technology is superior, many companies find them unaffordable and inflexible. These constraints come from the dominance of high-power actors. Moreover, the dominance of the high-power actor shed lights into their weak spots. By tracing the patterns of constraints and dominance of high-power actors enable low-power actors to find opportunities. High-power actors are not entirely powerful and low-power actors are not necessarily weak. Therefore, competitive constraints imposed by high-power actors can also be seen as opportunities. 

Where does opportunity come from?

A central debate about entrepreneurial opportunity sits on two competing views about where opportunities come from, whether opportunities are created or discovered. Scholars from the creation view see that entrepreneurs construct situations to their favors, like The Old Man and the Sea, where the fisherman using whatever at hand to ensure his survival. From this view, opportunities are embedded in a social or cultural context, and successful opportunity creation involves a process of resource mobilization and narrative construction. On the other hand, scholars from the discovery view see that entrepreneurs have unique traits to discern or discover opportunities. For example, entrepreneurial actors being alert, and prone to risks are more likely to discover opportunities. Individuals’ sensitivity to market needs or problems also attribute to their recognition to entrepreneurial opportunities. Scholars of this view believe that opportunity is a 'thing' and 'object' happens in a given environment (like Newton discovering gravity from a fallen tree).

On the one hand, discovery view sees that opportunity happens in an environment, and on the other hand, creation view sees that opportunity happens through entrepreneurs’ active construction of the environment. However, both views overlook the possibility that the environment and the entrepreneurs could shape each other for opportunities to take place (Suddaby, Bruton, and Si 2015). There are factors in the environment that allow opportunities to happen, and entrepreneurs can also be highly aware and observant of the environment. Two forces can be at play simultaneously for opportunities to happen.

Our theory on relative effect of power intends to bridge the disparate views. We find that opportunities are both discovered and created because it is about entrepreneurs’ alertness to power dynamics between high-power and low-power actors, as well as the constraints in the competitive landscape. Moreover, opportunities are also created, because entrepreneurs need to create situations to reconfigure resources and to change the power dynamics. 

T-tech was in a low-power position in comparison with local dealers who have exclusive partnership with G-tech. T-tech  engineers were alert to the competitive structure in China and observant to the power dynamics between the local dealers and G-tech (discovering opportunity in constraints). In addition, T-tech  engineers further created situations to reconfigure its resources, by proposing to form subsidiary partnership and transferring technological knowledge to the local dealers, which then advanced T-tech's  power position with the local dealers (changing power dynamics). Our story shows that just by discovering opportunity is not enough, but without changing the power dynamics and resource configuration, opportunities may not be realized. 

How may opportunity recognition be useful?

Several critiques against Ramoglou and Tsang’s paper raise the concern about whether opportunity is a useful concept to study entrepreneurial strategy. Some propose that opportunity needs to be empirically examined through social mechanisms and social actions (Berglund and Korsgaard 2017; Alvarez, Barney, McBride and Wuebker 2017). On the other hand, some criticize that opportunity is a rather redundant and misleading concept, because pursuing opportunity begins with entrepreneurs having expectations about the future and embarking a process of creating new firms, products or markets. Researchers actually do not need a concept like opportunity to guide their observation when the creation of a firm, market, or product (Foss and Klein 2017). Therefore, entrepreneurial research doesn’t need a concept like opportunity.

We argue that opportunity remains to be important concept in strategy because it encapsulates how context and entrepreneurs shaping each other for innovation. However, we propose that opportunity needs to be conceptualized in terms of transforming constraints. The most pressing situation that entrepreneurs face is primarily overcoming constraints (in size, resources, market share etc.) in order to survive. Since entrepreneurial strategy is about transforming circumstances in favorable to the entrepreneurs, research needs to consider how to transform constraints into opportunities in order to advance research in opportunity. 

References

Alvarez, Sharon, et al. "On Opportunities: Philosophical and Empirical Implications." Academy of Management Review (2017): amr-2016.

Berglund, Henrik, and Steffen Korsgaard. "Opportunities, Time, and Mechanisms in Entrepreneurship: On the Practical Irrelevance of Propensities." Academy of Management Review (2017): amr-2016.

Eckhardt, Jonathan T., and Scott A. Shane. "Opportunities and entrepreneurship." Journal of management 29.3 (2003): 333-349

Foss, Nicolai J., and Peter G. Klein. "Entrepreneurial Discovery or Creation? In Search of the Middle Ground." Academy of Management Review (2016).

Ramoglou, Stratos, and Eric WK Tsang. "A realist perspective of entrepreneurship: Opportunities as propensities." Academy of Management Review 41.3 (2016): 410-434.

Suddaby, Roy, Garry D. Bruton, and Steven X. Si. "Entrepreneurship through a qualitative lens: Insights on the construction and/or discovery of entrepreneurial opportunity." Journal of Business Venturing 30.1 (2015): 1-10.

Wright, April L., and Raymond F. Zammuto. "Creating opportunities for institutional entrepreneurship: The Colonel and the Cup in English County Cricket." Journal of Business Venturing 28.1 (2013): 51-68.