Principal Topic

Opportunity recognition is seen as an integral part of entrepreneurship (Timmons et al, 1987; Venkataraman 1997) and it has been studied from various perspectives, including: survival (Teach, Schwartz, and Tarpley 1987); cognition (Gaglio and Taub 1992) and process (Singh, Hills, and Lumpkin 1999). This study intends to contribute to the work being done on opportunity recognition by detailing the relationship between opportunity recognition and firm growth. More specifically, this work deconstructs opportunity recognition into two subsets—“opportunity seeking” and “advantage seeking”—and demonstrates which activities led to higher growth.

Method

The data for this paper comes from a study of technology firms in the aerospace, electronic components, and telecommunications industries in the United States. A total of 192 mail surveys were returned during the spring of 2000. Constructs titled opportunity-seeking and advantage-seeking were developed and regression analysis was performed on the sales growth for each firm over a three-year period. Semi-structured phone interviews with a subset of these firms was also completed to gather qualitative data to help elucidate our findings.

Results and Implications

The results from our study suggest that firms should perform certain opportunity seeking activities in order to sustain continuous growth. Results also show that firms looking for high growth should perform opportunity-seeking activities to spur radical innovation. The data also implies that advantage-seeking activities may be appropriate during certain periods of a firm’s life, and that advantage seeking activities contribute to incremental innovation. Based on these findings, a theoretical model depicting when firms should consider emphasizing opportunity-seeking activities and when they should emphasize advantage-seeking activities is proposed. This investigation helps further define how opportunity recognition is practiced in entrepreneurial firms and has implications for scholars doing work in the field. Practitioners will also gain insights into what scanning and recognition activities they should employ in order to stay competitive in their industry.

CONTACT: Andrew C. Corbett, University of Colorado, College of Business, Campus Box 419, Boulder, CO 80309-0419; (T) 303-492-1175; (F) 303-417-9617; andrew.c.corbett@colorado.edu