DISCOVERING VENTURE IDEAS BY INNER-CITY RESIDENTS THAT CAN BE EXPLOITED TO CREATE NEW WEALTH
Robert
D. Nixon, University of Louisville
James O. Fiet, University of Louisville
Mahesh Gupta, University of Louisville
Principal Topic
This study tests a new approach for training presumably disadvantaged inner-city residents to discover ideas that can be exploited to create new wealth. That is, we are investigating to determine if inner-city residents can be trained to act entrepreneurially. This study is an extension of recent work by Fiet and colleagues that yielded promising results using a student population. This new approach systematically searches self-selected consideration sets of information channels, which are sources of frequent, low-cost signals about potential new ventures. Previous findings suggest that the specificity of prior knowledge is an important factor in making discoveries that can be exploited to create new wealth. This study tests whether specific knowledge related to inner-city environments is a significant factor in the search for valuable ideas within an inner-city setting.
Methods
A group of 45+ inner-city residents of a mid-western city were randomly assigned to either a treatment or control group. Each group met six times over an eight-week period. The intervention for the treatment group consisted of training in conducting systematic searches using consideration sets. Simultaneously, but separately, the control group was exposed to the literature and techniques of the alertness perspective, long regarded as the model for discovering promising ideas. A control group demonstrates that the treatment group actually can outperform luck-based results that could otherwise be attributed to alertness. The unit of analysis was the number of venture ideas, regardless of their potential to generate new wealth. The probability that the ideas could generate new wealth was judged based on four criteria: (1) value, (2) rarity, (3) imperfect imitability and (4) entrepreneurial fitness.
Results and Implications
There is growing support for the view that the discovery of wealth creating ideas may distinguish entrepreneurs from non-entrepreneurs. Our hypotheses posit that systematic search techniques will be superior to random search techniques and that specific knowledge will be an important predictor of the number of and potential of an idea for creating new wealth. In addition, this research may inform us about skills that can be enhanced through training that support improved decision quality in the domain of entrepreneurship and new wealth creation. If the results of previous research are generalizable to inner-city populations, public policy implications relating to inner-city training and the potential for new inner-city wealth creation may be significant.
CONTACT: Robert D. Nixon, 305 CBPA, Department of Management, College of Business and Public Administration, University of Louisville, Louisville, KY 40292; (T) 502-852-4847; robert.nixon@louisville.edu
2002 Babson College. All Rights Reserved. Last Updated March 2003.