THE LESSON LEARNT FROM Shane. 2000. Prior knowledge and the discovery of entrepreneurial opportunities

Here, the author followed the logic that entrepreneurial opportunity discovery is a function of the distribution of information in society. For the information asymmetry and different experience, people usually discover different opportunities in a given technological change.

Thus, through investigating eight different new venture businesses based on the invention of 3DP, the author showed that " (1) any given technological change will generate a range of entrepreneurial opportunities that are not obvious to all potential entrepreneurs;" (2) entrepreneurs can and will discover these opportunities without searching for them; and (3) any given entrepreneur will discover only those opportunities related to his or her prior knowledge (p. 449).

Different from Neoclassical equilibrium theories and Psychological theories of entrepreneurship where the fundamental attributes of people were considered to determine who becomes an entrepreneur, Austrian theories which the author clearly followed emphasized that the information about opportunity was crucial. As the result of this difference, the Austrian theories showed a different explanation of the discovery, exploitation, and organization of entrepreneurial opportunities: (1) they did not view the process of opportunity discovery as mechanical; (2) the possession of information leads to opportunity discovery; and (3) opportunity exploitation is endogenous to opportunity discovery.

Basing on the same technological invention, since "each person's idiosyncratic prior knowledge creates a 'knowledge corridor'," people would discovery and exploit the opportunity in different ways. First, their prior knowledge about markets will influence people's discovery of which markets to enter to exploit a new technology; second, their prior knowledge about how to serve markets will influence the discovery of how to use a new technology to serve a market; third, their prior knowledge of customer problems will influence the discovery of products and services to exploit a new technology. Namely, the prior knowledge people got from work places or education and from roles of user or supplier, moderates (1) the relationship between technological invention and opportunity recognition and (2) the relationship between recognized opportunity and the approach of exploiting it.

It is important to notice that neither a technological change nor the search of opportunities will directly lead to the opportunity discovery, people's prior knowledge in market and recognition helps discover the opportunities (p. 465). "A large amount of technological change might generate a small amount of economic output, because it generates a small number of entrepreneurial opportunities" (p. 466). None of the new venture businesses were started by the inventor of 3DP.

THE LESSON LEARNT FROM Casson & Wadeson. 2007. The discovery of opportunities: Extending the economic theory of the entrepreneur

The entrepreneurship is considered as the choice under conditions of scarcity and entrepreneurs were the people who specialized in making choices that require intensive use of judgement. In this paper, the authors demonstrated that an entrepreneurial opportunity is best conceived as a potentially profitable but hitherto unexploited project. The reason why people did not notice the project could be rooted in the costs of discovery, since the information is often costly for potential entrepreneurs to obtain.

Entrepreneurs are the people who believe they have lower information costs than other people, believe that they had better theories, and advantage in collecting and processing information. The ends pursued by entrepreneurs might be non-materialistic or purely financial rewards.

As the result of changes in the environment and the opportunity recognition stimulated by the prospect of profit, entrepreneurs will search different opportunities. And, the success or failure is decided by their search strategy.

On the set of projects, entrepreneurship is objective and exogenous whilst on the set of opportunities, it is often subjective and endogenous. Much of the confusion over opportunity has arisen because of the failure to distinguish properly between the project set and the opportunity set (p. 290). By subjective, it is because it reflects individual entrepreneurs' perceptions of prospective profits; by endogenous, it is because some of the unexplored projects which formed the basis for the opportunity set since entrepreneurs decided not to exploit them previously.

To make this transparent, the authors illustrated three stages involved in a project: discovery, investment, and operation.

At the first stage, Coordination in a project-based economy is necessary to understand entrepreneurial opportunity. In a volatile economy, the project portfolio needs to be continually updated; and there is always the competition with each project for scarce resources. Also, existing projects are competing with new projects to retain the resources already under their control (p. 290). Thus, there are always Complements and substitutes between projects. It is reasonable to allocate resources to the most promising projects. When there is conflicting projects, the provision that only one project could be undertaken is the most direct solution. Then, Infrastructure and knowledge is necessary to any type of project. The knowledge spill-overs could bring the opportunity in the future.

At the second stage, since Evaluating new projects is costly, it is important to find a strategy for economizing on the costs of entrepreneurial discovery. Here are two stages: one is to locate the fields where entrepreneurs intend to focus his search; and two is to examine a set of potential projects. The characteristics of each project would be the "symptoms of the projects' underlying profitability" (p. 293), since at this stage how profitable the project will be is unknown to anyone (p. 296). When evaluating, there are two approaches to do this. One is An inward-looking approach, where it focuses on the preferences and capabilities of the entrepreneur such as the lifestyle. Another is An outward-looking approach where the change in the trends in the long run were taken into entrepreneurs' consideration, such as technological change. Also in this approach, the performance of current projects will also be treated as the criteria for opportunity evaluation. Here, more projects of the best performing types will remained; or the projects whose significance was not appreciated by the previous investments will be emphasized.

At the third stage, different entrepreneurs might look different part of an opportunity and they tend to have different pools of information. This makes the Sequential screening different from each other. Essentially, the project which is felt uncertain would be put "on hold." Owing to their limited information and resources, entrepreneurs will carry one project at one time and terminate the project ASAP so that he can proceed to investigate others. Entrepreneurs are not working along, but they will have to take account of the choices of the field made by other entrepreneurs. Sophisticated entrepreneurs may be able to gain further advantage through the strategic exploitation of the social processes such as starting a rumor.

THE LESSON LEARNT FROM Klevorick et al., 1995. On the sources and significance of interindustry differences in technological opportunities

In this paper, the authors argued why the R&D intensity is high in some industries and low in others. In previous researches, it was demonstrated that (1) firm size and market structure or (2) market size and growth in demand is the reason. But here, they argued that the technological opportunity and the ability to appropriate returns from new developments are crucial reasons.

By technological opportunities, they comprise the set of possibilities for technological advance which could be measured in terms of the distribution of values of improved production-function or production-attribute parameters, or of the distribution of returns to R&D (p. 188). These opportunities illustrated that the R&D at the level of the firm or industry is subject to diminishing returns. "As resources are devoted to R&D and projects are completed, technological opportunities are depleted and the pool of opportunities can be exhausted" (p. 188). Thus, an industry which was thought rich in technological opportunities was the one where high R&D intensities and high rates of technical advance tend to be sustained over time.

Basing on this logic, the authors thought there were 3 types of sources of technological opportunities: (1) the advance of scientific understanding; (2) technological advances originating outside the industry; and (3) feedbacks from technology.

First, it was believed that significant technological breakthroughs can be traced directly to advances in basic general scientific understanding that occurred just prior to the breakthrough (p. 189). After facing the need or an object, the science will be employed from the mind of the researcher. Thus, scientific advantage generated offsets to diminishing returns to R&D. Meanwhile, the scientific and engineering disciplines could provide and help facilitate technical progress of various kinds. These basic researches could be applied in various industries.

Second, here the party at the upstream or downstream of the supply chain could be important to industry R&D efforts. Third, the technology and research of today might only provide new starting points for future technology, which was called "compulsive sequences" or "natural trajectories." The logic of this feedbacks also suggested that although they could partially offset the tendency of R&D to deplete prevailing opportunities, in the long run they cannot totally offset that tendency (p. 192).

By using the data from Yale Survey, the above proposition was verified. Among the industries, the industry like drugs and semiconductors appear close to science; while motors, generators, industry controls, motor vehicle parts, and accessories are relatively distant from science. Universities and labs are often important to new sciences, but the basic sciences, compared with applied science and engineering fields, did not show high relevance to industry R&D (p. 197).

Material suppliers, production equipment suppliers, research equipment suppliers, and users were found important sources of technological knowledge. Namely, the sources with vertical linkages were important. About the natural trajectories, changes in scale of production, mechanization/automation, improving process yield, improving input material, and from batch to continuous process are found important resources.

Accordingly, the authors could distinguish industries that are rich in technological opportunities from those that are not (p. 201). Also among high opportunity sectors, different sources of opportunities impacted differently on R&D/sales, process innovation, and product innovation. The R&D intensity was correlated with (1) the connections with several of the fields of science; (2) the contributions made by university and government labs; (3) the work of equipment suppliers.