Where does opportunity recognition collide?

In this account the entrepreneur spots a profit opportunity that already exists in the market because other people have failed to notice it. The idea descends from Kirzner, for whom the entrepreneurial act is alertness to a price or resource mismatch that no one else has yet seen. Lumpkin and Lichtenstein's 2005 The role of organizational learning in the opportunity-recognition process built on this view, treating recognition as a moment of noticing that firms can make more likely through how they learn. Here the opportunity is out there waiting; the entrepreneur's contribution is perception. That differs from the account in which opportunities are actively built rather than found, from the account that reduces recognition to a specific cognitive mechanism, and from the account that treats recognition as only the first step of a longer staged process.[1]

Unit

One noticed profit opportunity that existed unseen in the market

Recovery means

Not applicable

Measured by

Entrepreneurial alertness scales and counts of opportunities individuals report noticing

This account is a debate about what an opportunity fundamentally is. Alvarez and Barney's 2007 Discovery and creation: Alternative theories of entrepreneurial action set two theories side by side. On the discovery theory, opportunities exist independently of the entrepreneur, formed by shocks to an industry, and the entrepreneur's job is to find and exploit them, much as the alertness account assumes. On the creation theory, opportunities do not exist until entrepreneurs act, experiment, and bring them into being through their own choices, so there is nothing to notice in advance. The two theories imply different actions, different data, and different kinds of risk. Naming both with the single phrase opportunity recognition hides the fact that one says the opportunity is discovered while the other says it is created, which is the deepest split beneath the shared label.[2]

Unit

An opportunity treated either as a found object or as a made one

Recovery means

Not applicable

Measured by

Contrasted through the assumptions a study makes about opportunity origin, decision style, and risk

This account explains recognition as a cognitive act inside one person's head. Baron's 2006 Opportunity recognition as pattern recognition argued that entrepreneurs 'connect the dots' between changes in technology, markets, and policy, perceiving a meaningful pattern where others see only unrelated events. Shane's 2000 Prior knowledge and the discovery of entrepreneurial opportunities showed that which opportunities a person recognises depends on the specific knowledge they already hold, so the same information yields different ideas for different people. On this view recognition is not general alertness but the fit between new information and an individual's existing stock of knowledge. That is narrower than the market-level alertness account, and it takes for granted that an opportunity is there to be perceived, sidestepping the discovery versus creation question.[3][4]

Unit

A recognised pattern linking new information to prior knowledge

Recovery means

Not applicable

Measured by

Prior-knowledge measures, pattern-recognition tasks, and interviews on how an idea was formed

This account treats recognition not as a single moment but as one stage in a longer process. Ardichvili, Cardozo, and Ray's 2003 A theory of entrepreneurial opportunity identification and development described a sequence that runs from perceiving a market need, through recognising a fit between that need and resources, to developing the perception into a shaped business opportunity. On this view the interesting work is the development that turns a rough perception into something a venture can pursue, not the instant of noticing. This account makes explicit that the field's various labels, recognition, identification, discovery, and development, mark different stages of the same activity rather than rival names for one instant. It therefore differs from the alertness and cognitive accounts, which tend to stop at the moment of noticing.[5]

Unit

A stage in the path from perceived need to a developed opportunity

Recovery means

Not applicable

Measured by

Process case studies and stage models tracing an opportunity from perception to a formed venture