Unraveling the process: A qualitative study of entrepreneurial cognition in opportunity recognition

Abstract

Because so many new ventures fail or discontinue operations, there is an increasing amount of research on individual entrepreneurs and the factors underlying the new venture creation process. Recognizing an opportunity is the foundation of new venture creation: one discovers a potential opportunity and then acts on it in some way. This exploratory study examined entrepreneurs' cognitive experiences as they recognized potential opportunities and the resources they utilized to support those activities. An analytic inductive strategy used critical incident interviews to generate accounts of experiences from thirty entrepreneurs engaged in a wide variety of industries in the early stages of their ventures. Information from each case was transformed into evidence that was categorized and analyzed within each case and across cases to discover themes of commonality among the participants' experiences. A creativity model (Amabile, 1996; Wallas, 1926) was used as an anchor in the analysis. The outcomes that emerged indicated that opportunity recognition is a phased, creative cognitive process that is supported by learning and outside support. A new theoretical framework of opportunity recognition was proposed, suggesting that environmental scanning, prior knowledge, incubation, and validation are requisite activities that entrepreneurs engage in as they recognize opportunities. Environmental scanning and incubation were shown to be competencies that can be enhanced with learning opportunities. Patterning activities were also indicated as entrepreneurs engaged in the incubation process. Ten percent of the entrepreneurs in this study admitted to having attention deficit hyperactivity disorder (ADHD), suggesting a new avenue of research inquiry. Learning activities and outside support were found to be important to the cognitive process of opportunity recognition. Networking, mentors, and the use of informal strategic partnerships facilitated learning, environmental scanning, and social interaction. A new construct, validation, was proposed suggesting that affirmation by other entrepreneurs, mentors, or experts of the potential viability of a business idea is an important support mechanism for nascent and established entrepreneurs. The outcomes of this study provide support and extensions of theory for entrepreneurship, opportunity recognition, and creativity, and suggest implications for educators and entrepreneurs related to supportive actions that can be taken to enhance important cognitive competencies.

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