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Recognition and development of the entrepreneurial opportunity by novice entrepreneurs: Influenced by their background?

Faassen, Wim (2010) Recognition and development of the entrepreneurial opportunity by novice entrepreneurs: Influenced by their background?

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Abstract:Introduction Opportunity recognition and development is the first and therefore the key step within the entrepreneurial process before an entrepreneur starts exploiting the entrepreneurial opportunity. The type of background of an entrepreneur can influence this process. Most of the literature focuses on experienced entrepreneurs which consequently means that, novice (first time) entrepreneurs are less taken into account. However, many differences can be identified between these novice entrepreneurs many differences can be identified. Therefore, the aim in the this study is to: Theoretical framework To begin with, a framework has been build from the existing literature. This theoretical framework identified different background variables and dimensions within the process of recognition and development of the entrepreneurial opportunity. The dimensions within this process describe the approach of the novice entrepreneurs. The background variables may influence these dimensions. An outline of the theoretical framework is presented below. Methodology In order to identify the influence of the background variable and the dimensions case study research has been executed with five different case studies. These novice entrepreneurs are participants of Venture Lab Twente (VLT), a support program for entrepreneurs. The novice entrepreneurs were selected on their differences in background. Within the five case studies, the background variables of the novice entrepreneurs were identified and consecutively, their influence on the process of recognition and development of the entrepreneurial opportunity was analysed. Case study data was collected by semi-structured interviews, the Curriculum Vitae’s (CV’s) of the novice entrepreneurs, the ‘big five’ factor model collected by VLT and a network tool to construct the social networks of the entrepreneurs. In the semi-structured interviews, the processes of the novice entrepreneurs could be analysed while the entrepreneurs reported on their process themselves. With these thorough descriptions of the process the influence of the background variables was analysed. Results The case studies identified a direct influence between prior knowledge and the dimensions: scope, intensity, time spent and the nature of the potential opportunities. An indirect influence was recognised between prior knowledge and social networks and the judgment of the opportunities. The case studies identified a direct influence between personal traits and the dimensions: scope, time spent and the nature of the potential opportunities. An indirect influence was recognised as well between personal traits and social networks and Identify the influence of differences in backgrounds of novice entrepreneurs on the process of recognition and development of the entrepreneurial opportunity. 6 the judgment of the opportunities. Social networks influence the scope of the potential opportunities. Furthermore, in relation with prior knowledge and personal traits, social networks influence the judgment of the potential opportunities as well. There are three types of prior knowledge, including ‘fascination & fun’, ‘varied business and working experience’ and ‘educational activities’. Prior knowledge has the biggest influence on the process of recognition and development. Varied business and working experience creates the cognitive framework by which novice entrepreneurs recognise and develop their entrepreneurial opportunity. Novice entrepreneurs without extensive varied business and working experience base their cognitive framework on educational activities. These educational activities are often less specialised, which leads to a broader scope and a higher intensity of potential opportunities. For novice entrepreneurs with extensive varied business and working experience, it is difficult to move away from the branch of industry in which they are already working. This causes a lower intensity of potential opportunities as well. In addition, the richness of a cognitive framework that is based on educational activities is lower. As a result, the novice entrepreneurs with less varied business and working experience spent more time on different potential opportunities. Furthermore, fascination is a very important driver and it becomes stronger as novice entrepreneurs collect more life experience. It limits their scope and can influence the nature of the potential opportunities within the process of recognition and development. Personal traits are measured by the ‘big-five factors’: extraversion, neuroticism, agreeableness, conscientiousness and openness to experience (Goldberg, 1990). As there are many different personal traits that may be influencing the dimensions, the relations between the personal traits and the dimensions were more difficult to analyse. This has resulted in less significant relations compared with the other background variables. Derived from openness, creativity is likely to broaden the scope of potential opportunities of novice entrepreneurs. The virtuous cycle (Zahra, 2008) can be activated, which increases the chance of finding the entrepreneurial opportunity. Furthermore, novice entrepreneurs who score low on agreeableness are mainly focussed on their own interest. Consequently, their focus may be less on solving a customer’s problem, which is one of the attributes of the dimension nature of the opportunity. Finally, insecurity can increase the time spent on one potential opportunity, which postpones the decision whether or not to continue with the opportunity. The social networks were constructed by the novice entrepreneurs themselves. Diversity and trustworthy of the networks were the focus of the analyses. For novice entrepreneurs with extensive varied business and working experience it is difficult to build a diverse network outside their branches of industry. Younger entrepreneurs with limited varied business and working experience have more diverse social networks. This diversity creates possibilities to collect information and develop the opportunity within a broad network. Therefore it enlarges the scope of recognition and development of the entrepreneurial opportunity. Social networks are influenced by prior knowledge and personal traits as well. Novice entrepreneurs use their social network more as a sounding board because of their insecurity and limited experience. A positive assessment or advice from others is important to these novice entrepreneurs, which is an attribute of the dimension judgment of the potential opportunity. The novice entrepreneurs who are more secure or those having an extensive varied business and working experience use their social networks more to find potential partners in the development of their business. Conclusion The background variables influence the process of recognition and development of the entrepreneurial opportunity of a novice entrepreneur in many different ways as described above. Prior knowledge has the biggest influence within the process and its dimensions followed by social networks and personal traits.
Item Type:Essay (Master)
Clients:
Venture Lab Twente (VLT)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/59937
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