THE LESSON LEARNT FROM Ardichvili, A., et al. 2003. A theory of entrepreneurial opportunity identification and development

The entrepreneurial activity is not one time thing. The creation of successful businesses follows a successful opportunity development process which is cyclical and iterative (p. 106). In this paper, the authors discusses how entrepreneur's personality traits, social networks, and prior knowledge as antecedents of entrepreneurial alertness to business opportunity; and entrepreneurial alertness is the condition for the success of the opportunity identification triad: recognition, development, and evaluation.

What is opportunity? It appears as an "imprecisely-defined market need" or so-called value thought, or "un- or under-employed resources or capabilities" or so-called value creation capability (p. 108). The latter may include basic technologies, inventions, or ideas for products and services.

As this opportunity progresses from its elemental form and a business concept begins to emerge, the core notions of how the market need might be served or the resources deployed will be contained. And, as this more precise and differentiated business concept matures, it grows into a business model, which juxtaposes market needs and resources. A complete business model will also include a financial model. Finally, as an opportunity develops into its most elaborated form, the business concept will ultimately metamorphose into a full business plan.

What is opportunity development and recognition? They include perception, discovery, and creation - not simply "recognition." Business concept creation involves redirecting or recombining sources in order to create and deliver value superior to that currently available.

What is opportunity evaluation? Opportunities are evaluated at each stage of their development, although the evaluation might be informal or even unarticulated. If a business concept has yet to be developed, a feasibility analysis can specify it; or the "stage-gate" procedure can explicitly call for evaluation at each of several levels of development. As the result, the number of opportunity perceived will greatly exceed the number of successful businesses formed.

There are six major factors influencing this opportunity development process. First, entrepreneurial alertness or awareness, which might be high or low (p. 114); Second, information asymmetry and prior knowledge, which included two domain (special interest and industry knowledge); Third, accidental discovery versus systematic search, where accidental discovery may result from heightened entrepreneurial alertness while the entrepreneur is in a mode of "passive search" (p. 115); Fourth, social networks where casual acquaintance is more likely to provide unique information than are close friends because most people have more weak ties; Fifth, personality traits (optimism and creativity); Sixth, types of opportunities including four types which accord to different level of value sought and value creation capability (p. 117).

This theory was expected to hold in the domain of new business creation and development, both as independent businesses and as new businesses created within existing corporations.