Entrepreneurship — Opportunity recognition Essay Example
Title : Opportunity Recognition based question
An opportunity is a rare chance that is at ones disposal which is worthy ones pursuit while recognition is about the ability to indentify a chance or an opening when it comes by. Kirzner (1973; P: 7) defines an opportunity as special knowledge an entrepreneur might acquire about products sold in new markets at a profit. Hulbert, Brown et al (1997; P: 5) state that a business opportunity is the chance to meet an unsatisfied need that is potentially
Thus opportunity recognition can be defined as informed cognitive awareness of a means of producing economic value and in this case profit. It should be an unexploited or partially so ground so as to minimize competition, create a new business, or radically improve an existing business. In either case it results in a new profit potential. A number of theories of recognition and perception have been proposed which have various inputs on understanding opportunity recognition. Opportunities originate from a multifaceted pattern of ever evolving circumstances. These circumstances or conditions include changes in economy, technological changes, political lapses, social, market and demographic conditions.
These opportunities come into being as a result of a coincidence or convergence of the fore mentioned conditions which did not exist before but have found their existence (Baron Robert A., 2005; P:2-5).
An example is online purchasing of products which was not previously embraced until the advanced technology was put in place worldwide. This gives business entrepreneurs a chance to market their products even in the remotest of places that were not penetretable before. It also makes it possible to make arrangement, accurate orders and reach a wide range of clients that were inaccessible before. Thus all these changes came as a result of technological progress, change in market trend whereby internet is readily available even to common man as well as society embracing utilization of internet
(Cherkas Lynn, et al, 2008;P:15).
The other theory suggests opportunity recognition is partially individual centered in that it is dependent on cognitive structures that an individual possesses. These structures are as a result of ones past experiences, level of knowledge and enlightment. They make it possible for one to perceive an opportunity that may not be distinguished by others. As a result the theory suggests that these constitution makings of every individual are unique as shaped by every day life experiences and they form a lock and key in which the ever appearing changes are required to fit in order to indentify a valuable economic opportunity (Maltin, 2002; P:4).
Opportunity recognition undergoes three subsequent stages which include detection of an opportunity, How much convincing or clear is the opportunity to be further contemplated as a potential and legitimate business opportunity ( opportunity verification) and which are the individual’s mental predisposition influence ones perception in the midst of various conditions and changes (Cherkas Lynn, et al,2008;P: 17-20).
Models of opportunity recognition have been proposed and they suggest that opportunities pose as complex perceptible or notable patterns. Thus individuals develop pattern recognition from past experiences whereby similar class or category (prototype) of stimuli trigger opportunity recognition. A category in this case refers to group of things or events that seem to belong together as per ones prior experience (Hills Gerald E., et al, 2002; P: 1-6).
Ability of an entrepreneur to be open enough to enquire new information and critically analysis enhances understanding thereby also contributing to opportunity recognition. This is because of mutual exchange of ideas from others that sharpens ones thinking capacity. Again, socially networking entrepreneurs make informed business choices than their counterparts (Bhave, Mahesh, 1994; P: 8).
On the other hand, others develop mental pattern recognition from a mental framework picture a of category (concept) while in others it is a combination of both. Research finds out that past experience prototypes seem to play a bigger role. However, as one advances in knowledge one is able to compare opportunities he/ she has come across without relying heavily on prototypes thus spend less time and energy to draw their conclusions (Ardichvili, et al 2003; P:3-4).
Creating customer value also boosts opportunity level. This is because one will be attentive and alert to not the demands of the clients and hearken to them as son as possible. This makes the clients to be satisfied thereby making more purchase as a result of the built up confidence. To achieve customer value, it calls for the entrepreneur to be flexible enough and able to adapt to the needs of the clients (Baron Robert A., 2006; P: 5).
Another model goes further to suggest that opportunities are sometimes clear almost to everybody to recognize them. However most of the times they are blurred. As a result the clear ones may leave lesser room for err while the less distinct maybe prone to the influence of underlying biological processes since individual perception sensitivity changes with time, so that a specific individual may perceive a given stimulus at one time but fail to perceive it another time. Consequently four outcomes are realized. They entail an opportunity being available and one perceives it, secondly an opportunity being available but one misses on it due failure to recognize it, an opportunity being absent but one mistakenly concludes its available, and lastly an opportunity being absent and one makes correct decision that it is non existing (Baron Robert A., 2006; P: 5-6).
In this case ones decisions are influenced by the entrepreneur’s state of mind like whether tired or not, motivation level, intensity of the stimuli, subjective criterion like starting capital required, time at ones disposal. Signal detection theory further says that ones personality has also influence on ones decision that is people who are tolerant have a higher tenacity to give an opportunity a higher chance to pursue it. Signal detection theory portrays ways in which individuals decide that a recognized pattern of events or stimuli is close enough to their concept of “business opportunity” to deserve further consideration (Ardichvili, et al 2003; P: 9).
On the other side, the Cognitive Perspective and Contrasting Abilities theory urgues that some individuals are better placed in recognition of opportunities than others and such variations can influence the success or otherwise of new ventures).The theory also stresses that working memory relates variety of stimuli so as to come up with a comprehensive conclusion which differs on daily bases depending on ones mental state (Bhave, Mahesh, 1994; P: 15).
Lastly the size of a business has also an impact on opportunity recognition. Large firms with ample network since they able to access information. At the same time they offer trainings that keep their employees with up to date skills and knowledge. This makes them exploit new ways and be ahead of their smaller competitors due to this level of exposure (Hills Gerald E., et al, 2002; P: 10-12).
Entrepreneurs’ ability to recognize an opportunity is dependent of diverse factors. Consequently it is a compounded component that cannot be singled out as being influenced by a solitary element.
Ardichvili, Alexander, Richard Cardozo, and Sourav Ray, 2003, «A Theory of Entrepreneurial, Business Journal,
, Lally School of Management & Technology Rensselaer Polytechnic Institute, USA. sBaron Robert A. , 2006, Opportunity Recognition as Pattern Recognition: How Entrepreneurs “Connect the Dots” to Identify New Business Opportunities, Academy of Management Perspective
Baron Robert A., 2005, Opportunity recognition: a cognitive perspective. Lally School of Management & Technology,Rensselaer Polytechnic Institute,USA.
Bhave, Mahesh, 1994, «A Process Model of Entrepreneurial Venture Creation,» Journal of Business Venturing, 9, 223.
Cherkas Lynn, Nicolaou Nicos, Shane Scott and Spector Tim, 2008, Openness to experience and opportunity recognition: evidence of a common genetic etiology.Twin Research and Genetic Epidemiology Unit, King´s College London, St Thomas’ Hospital Campus, London, UK.
Hills Gerald E. , David J. Hansen, and Hultman Claes , 2002, Opportunity Recognition Processes: A Value Creation Context
Kirzner, Isreal, 1973, Competition and Entrepreneurship. Chicago, IL: University of Chicago Press.
Matlin, M.W., 2002, Cognition, 5th ed. Fort Worth, TX: Harcourt College Publishers.
Opportunity Identification and Development,» Journal of Business Venturing, 18 (1).
More Important Things