Entrepreneurial opportunity identification and exploitation

Introduction

The topic of entrepreneurial opportunity identification has been subjected to thorough scrutiny by entrepreneurial scholars. They are keen to find out the circumstances under which opportunities are recognized by entrepreneurs and its overall importance in the process of entrepreneurial development. New venture start-ups need to be anchored in opportunities that have been properly identified. Failure to identify and recognize opportunities in the right way is likely to hinder new venture success.

In literature on opportunity identification, efforts are normally made to examine the character traits that enable specific entrepreneurs identify and make proper use of the opportunities that come their way. In some cases, different issues tend to be examined in isolation, thereby leading to lack of coherence in entrepreneurship discourse. In efforts to deal with this problem, different theoretical approaches have been suggested with a view to analyze the nature of entrepreneurial opportunity identification, its theoretical underpinnings, and how it can be exploited for new venture start-up and success. The aim of this paper is to outline a theoretical foundation for opportunity identification. The paper also examines the importance of identifying and exploiting opportunities in terms of contribution to the success of new venture start-ups. The paper ends with an elaborate personal reflection statement outlining the things that I have learnt from writing this paper.

Entrepreneurial opportunity identification and exploitation: Theoretical background

There is abundant literature on entrepreneurial opportunity identification. However, not many researchers have examined the ways in which these numerous opportunities can be exploited in the best possible way. The process model has become a dominant theoretical framework for opportunity identification (Bhave, 2004). Bhave (2004) uses the term “venture creation”. This raises a very crucial question of whether opportunities are created or recognized. To answer this question, Singh (2001), states that opportunities are socially constructed. In contrast,  Kolvereid (2006) adopts the view that opportunities are recognized. In this case, disagreements have arisen regarding the best way of explaining the phenomenon of opportunity identification.

According to Bhave (2004), an entrepreneur must be committed to different aspects of venture creation such as setting up of production technology, creating physical entities necessary for facilitating entrepreneurial activities, product creation, establishing market links, and receiving customer feedback. This creates the impression that the entrepreneur must be willing to go through the rigorous process of ensuring that all “pieces” fall into the right place before he can claim to have achieved entrepreneurial success. Bhave (2004) suggests that for purposes of convenience, the entrepreneur may divide the process into three stages. In the first stage, an opportunity is identified. The second stage involves technology set-up.

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