Joumal of Enterprising Culture Vol. 8, No. 2, (June 2000) 103-119 A MODEL OF THE ENTREPRENEURIAL OPPORTUNITY RECOGNITION PROCESS ALEXANDER ARDICHVILI Department of Human Resource Education University of Minois USA and RICHARD N. CARDOZO Carlson School of Management University of Minnesota USA The goal of this study is to propose a model of the entrepreneurial opportunity recognition process. A number of research propositions was generated based on the analysis of the available literature, and then validated by the analysis of in- depth cases of opportunity recognition that resulted in the creation of successful entrepreneurial ventures. The study indicates that entrepreneurial opportunities are discovered through recognition rather than purposeful search; prerequisites for successful opportunity discovery are a combination of entrepreneurial awareness, access to extended social networks, and prior knowledge of markets and customer problems; prior knowledge could exist due to work experience, personal, non-work related experiences and events, or due to relevant to these markets education. Further, opportunity recognition does not require an exceptional level of creativity, and is not likely to involve a prior knowledge of the ways to serve markets, INTRODUCTION The principal question facing individuals considering entrepreneurship is a concem for identifying the right set of circumstances and the right entrepreneurial activities necessary for success (Timmons, 1994). Identifying and selecting right opportunities for new businesses is among the most important abilities of a successful entrepreneur (Stevenson, 1991). Christensen, Madsen, and Peterson (1989) defined opportunity 103tlexander Ardichvili and Richard N. Cardozo recognition as “either a) perceiving a possibility to create new business; or ») significantly improving the position of an existing business, in both cases resulting in new profit potential” (pp. 3). In this paper, we will use the first part of the definition, and discuss only opportunities for creating a new business. The literature on opportunity recognition resulting in the creation of new businesses includes several related concepts. These concepts appear to take somewhat different meanings in different contexts, and are often confounded with one another. De Koning and Muzyka (1999) point out that researchers use the term “opportunity recognition” to describe one of two things: a) opportunity recognition as the specific “eureka” experiences, when an idea crystallizes suddenly; and b) as the evolution of an idea into full-blown business concepts. Further, de Koning and Muzyka (1999) use the term ‘opportunity development’ to describe the second, evolutionary aspect of the process. We believe that the process of opportunity development is conceptually distinct from opportunity recognition. The latter may be defined as awareness that a chance to develop a business exists. Because “awareness” is difficult to identify or measure, a more useful operational definition of opportunity recognition is the decision to pursue or reject further development of a specified “opportunity” at a particular moment. In recent years, substantial progress has been made in conceptualizing the opportunity recognition phenomenon. Several empirical studies have been conducted to generate new knowledge and validate the conceptual frameworks (see, for example, Hills, Lumpkin, and Singh, 1997; Kaish and Gilad, 1991; Shane, 1998). The above mentioned studies each make an important contribution, by identifying specific factors in opportunity recognition process. For example, Hills ef al (1997) point out the importance of networking as a prerequisite for an ability to identify more opportunities, and stress the importance of entrepreneurial alertness. Shane (1998) uses Kirzner’s (1979) information asymmetry theory to explain the opportunity identification process; Kaish and Gilad (1991) maintain that entrepreneurs are opportunistic leamers and combine search for information with opportunistic reactions to chance events. Despite the importance of these and other individual contributions, we are still far from an empirically supported model of opportunity recognition process that integrates multiple variables and is rigorous in explaining a multitude of situations. The goal of the present study is to propose a testable model of the opportunity recognition process. To achieve this goal, we first review the osA Model of The Entrepreneurial Opportunity Recognition Process existing literature on opportunity recognition and identify the most promising explanations and hypotheses about the process generated so far. Next, we conduct a qualitative study to validate the above hypotheses, determine which of these should be included in our model, and to determine whether there are other important issues that need to be explored, but have not yet been addressed in the literature. Then we Present the proposed model and suggest next steps for the model validation. LITERATURE ON OPPORTUNITY RECOGNITION; THEORY DEVELOPMENT AND HYPOTHESES Our literature review indicates that researchers have hypothesized about a number of factors that influence the way opportunities are identified by entrepreneurs. Among the major factors are: 1. Entrepreneurial awareness and alertness. 2. Information asymmetry and prior knowledge. 3. Discovery versus purposeful search. 4. Networking versus solo entrepreneurship. 5. Creativity. We could not find a workable definition of opportunity recognition, or @ successful opportunity recognition. In this paper, we will define successful entrepreneurial opportunity recognition as recognition that results in a creation of viable new businesses, Entrepreneurial Awareness and Alertness Kirzner (1973) was the first to use the term “alertness” to explain entrepreneurial recognition of opportunities. Ray and Cardozo (1995) argue that any recognition of opportunity by a Prospective entrepreneur is preceded by a state of heightened awareness of information, They called this state entrepreneurial awareness (EA), and define EA as a propensity to notice and be sensitive to information about objects, incidents, and 105Alexander Ardichvili and Richard N. Cardozo patterns of behavior in the environment, with special sensitivity to maker and user problems, unmet needs and interests, and novel combinations of resources (pp. 10). Further, in keeping with several authors, they claimed that personality characteristics and the environment interact to create conditions which foster higher EA (cf. Shapero, 1975; Sathe, 1989; Hisrich, 1990; Gaglio and Taub, 1992). Imbedded in this line of thought is the notion that higher EA increases the likelihood of an opportunity being recognized. There are, however, reports of studies that testify to the contrary. For example, Busenitz (1996) conducted an empirical test of Kaish and Gilad’s (1991) proposition that entrepreneurs are more alert to new opportunities and use information differently than managers do. Busenitz found little empirical support exists for the Kaish and Gilad theoretical framework, but indicated that the measures of entrepreneurial alertness need further development. Based on the above discussion, we formulated the following hypothesis. For the sake of simplicity, we will not make a distinction between “awareness” and “alertness,” and will use “alertness” to describe both concepts: HI: A high level of entrepreneurial alertness is associated with successful opportunity identification Information Asymmetry and Prior Knowledge People tend to notice information that is related to information they already know (Von Hippel, 1993). Based on this reasoning, Shane (1998) postulated that entrepreneurs will discover opportunities because prior knowledge triggers recognition of the value of new information. Drawing on the Austrian economics argument that entrepreneurship exists because of information asymmetry between different actors (Hayek, 1945), Shane maintains that any given entrepreneur will discover only those opportunities related to his or her prior knowledge. In his three stage study of opportunity recognition processes, Shane tested and confirmed a number of hypotheses, which we summarize as follows: «Any given entrepreneurial opportunity is not obvious to all potential entrepreneurs (the rationale being that all people do not possess the same information at the same time (Kirzner, 1997)). Each person’s idiosyncratic prior knowledge creates a “knowledge corridor” which allows them to recognize certain opportunities, but not 106A Model of The Entrepreneurial Opportunity Recognition Process others (Hayek, 1945; Ronstadt, 1988). According to Shane (1998), three major dimensions of prior knowledge are important to the Process of entrepreneurial discovery: prior knowledge of markets, prior knowledge of ways to serve markets, and prior knowledge of customer problems. Based on Shane’s conceptualization, we formulated the following hypotheses for our study: H2: Prior knowledge creates a “knowledge corridor” which allows entrepreneurs to recognize certain opportunities, but not others H3: Prior knowledge of markets is important to the process of entrepreneurial opportunity recognition H4: Prior knowledge of ways to serve markets is important to the process of entrepreneurial opportunity recognition HS: Prior knowledge of customer problems is important to the process of entrepreneurial opportunity recognition. Accidental Discovery Versus Systematic Search A large part of the erstwhile literature on entrepreneurship implicitly assumed that recognition of opportunity is preceded by a systematic search for available opportunities. Some researchers have challenged this approach, arguing that people do not search for opportunities, but, rather, happen to recognize the value of new information which they happen to receive, Kirzner (1997) explains that: “What distinguishes discovery (relevant to hitherto unknown profit opportunities) from successful search (relevant to the deliberate production of information which one knew one had lacked) is that the former (unlike the latter) involves the surprise that accompanies the realization that one had overlooked something in fact readily available” (pp. 71-72). Koller (1988) reported that most entrepreneurs recognized, rather than sought the opportunities for their firms. Teach, Schwartz, and Tarpley (1989) found that firms founded on “accidentally” discovered venture ideas and which had not been subjected to formal screening achieved break-even sales faster than those firms that had undergone more formal search. Teach et al (1989) also found different styles of opportunity recognition among the software firm 107flexander Ardichvili and Richard N. Cardozo presidents studied: only about half favored systematic approaches to searching for opportunities. Based on the above reasoning, we formulated the following hypothesis: H6: Successful entrepreneurs more often discover new venture opportunities accidentally rather than as a result of a purposeful search Networking Hills et al (1997) indicate that entrepreneurs’ networks are important to opportunity recognition. They base their argument on Granovetter’s (1973) classic paper on the strength of weak ties, which argues that weak ties (including casual acquaintances) are “bridges” to information sources not necessarily contained within an individual’s strong-tie network (including friends and family). Granovetter (1973) argues that the casual acquaintance is more likely to provide unique information that are close friends because most people have more weak ties than they have strong ties. A test of this hypothesis in a survey-based study allowed Hills et al (1997) to assert that entrepreneurs who have extended networks identify significantly more opportunities than do entrepreneurs who lack such networks. Hills ef a/, also hypothesize that the quality of network contacts can affect other characteristics, such as alertness and creativity, which in turn lead to increased identification of opportunities. The above argument leads to the following hypothesis: H7: Successful opportunity identification is associated with an extended social network Creativity Schumpeter (1934) was the first to introduce the notion that successful entrepreneurs discover opportunities that others do not see due to a special attribute: creativity. Winslow and Solomon (1993) seem to take for granted that creativity and entrepreneurship are similar if not the same. Kay (1986) concluded that creative factors play a great role in entrepreneurial decision making. Hills ef al (1997) report that 90 percent of those surveyed by them find creativity very important for the opportunity identification process. There are numerous definitions of creativity; several researchers have made attempts to define entrepreneurial creativity (Fernald, 1988; Kay, 1986). For the purpose of this paper, we 108A Model of The Entrepreneurial Opportunity Recognition Process use a definition provided by Ray and Cardozo (1996): “{entrepreneurial creativity] is an ability to rapidly recognize the associations between problems and their purported solutions by identification of non-obvious associations and/or by reshaping or reforming available resources in a non- obvious way.” (pp. 12). Thus, we hypothesize, that: H8: Entrepreneurs who identify successful opportunities are also creative However, entrepreneurs who lack networks (“solo entrepreneurs”) found creativity significantly more important than did the networked entrepreneurs. Entrepreneurs without strong networks also viewed themselves as being more creative, and were mote likely to set aside time specifically to be creative. Hills concludes that entrepreneurs who are networked to opportunity sources may not need to be as creative as those who are not well networked. The above argument leads to the following hypothesis: H9: For any level of successful opportunity recognition, entrepreneurs who are not well-networked are more creative than those who are well-networked, METHODOLOGY This study uses a case study design to examine the new venture opportunity identification processes. The case study design allows the incorporation of a variety of different sources of evidence, including interviews and archival documents provides richer descriptions of behaviors and thinking processes than a survey method would provide; and is especially useful in situations when behaviors cannot be manipulated through experimental designs. Sample For this study, we identified through personal contacts 20 experienced entrepreneurs who have started at least one successful venture (the majority of participants have started more then one venture). After conducting a preliminary analysis of the first eight cases, we concluded that additional interviews would not have produced dramatically new data 109Alexander Ardichvili and Richard N. Cardozo that would contradict or substantially extend the previous findings. Therefore, in keeping with Yin’s (1984) suggestion that the collection of additional cases should stop if no significantly new data is produced by each incremental case, we limited our analysis to these eight cases. Table 1 shows the eight entrepreneurs and the opportunities they discovered. At the entrepreneurs’ requests, we did not use their real names. The confidentiality considerations have also limited our ability to describe the opportunities in greater detail than what is currently provided in Table | The companies created based on studied opportunities range from $2 million to $200 million in sales. The sample included a variety of industries - from computer software to environmental consulting, from manufacturing to services. Table 1. The Entrepreneurs, Opportunities, and Companies Created Based on These Opportunities. Entrepreneurs tunities ‘Companies* HW Software for local area networks sold for $100 million KD Direct consumer marketing $200 million annual sales KK Environmental testing service $2 million annual sales KE ‘Data acquisition hardware ‘$100 million annual sales LD Innovative use of global positioning $100 million market system (GPS) capitalization SD Medical devices sold for $700 million SL. ‘Software for automated phone systems $ 15 million annual sales VD ‘Software for logistics management sold for $100 million ¥ In some cases, we indicate market capitalization or the company sale price, instead of annual sales, since the company’s sales data are not available Data collection This in-depth study was conducted in 1998, and involved interviews with the entrepreneurs, as well as document analysis. The interviews were unstructured and lasted from 1.5 to 2.5 hours. The interviews typically began with an invitation to describe how the entrepreneur discovered the opportunity that lead to the creation of his/her most successful venture. With some respondents, follow-up interviews and phone calls were conducted to clarify the issues. The interviews were conducted by the first author and two graduate research assistants. All participants agreed to tape recording, and the recordings were transcribed. 110A Model of The Entrepreneurial Opportunity Recognition Process Yin (1984) maintains that in case study research, corroboration of interviews through the use of archival records is important to validate information. Therefore, the interview data were supplemented with information from other sources. Specifically, copies of business plans, product information, promotional materials, and other materials provided by entrepreneurs have been analyzed. In addition, we conducted on-line searches for articles about the companies and entrepreneurs, using the ABI Inform and Lexis-Nexis databases. Recent press releases on companies have been collected through Pmewswire.com and Businesswire.com online services. Relevant patents have been reviewed through the IBM patent search web site. INWESTEXT was used to review reports from Wall Street analysts. Web-based and CD-ROM databases (Dun’s CD- ROM; Hoover's Company Profiles; Yahoo business web site) have been accessed to retrieve the information on those of the study companies that are publicly traded. Finally, since all the companies in this study were located in Minnesota, we found useful additional information through the local business news index and article collection at the local business reference library. Analysis An embedded case study design, in which the unit of analysis was the entrepreneurial opportunity, was used to analyze the data. This method was first proposed by Yin (1984), and successfully implemented in management and entrepreneurship research by Eisenhardt (1989, 1991), and, recently, in an opportunity recognition-related study by Shane (1998). Separate case studies on each of the eight opportunities were developed by combining the data from the interview transcripts, database search, and archival records. Reliability was established through the development of a case study protocol and a case study database (Yin, 1984), created in Microsoft Access. The case study protocol was based on the use of “table shells” to record data (Miles and Huberman, 1984). Construct validity was established by using multiple sources of data, the creation of a chain of evidence, and by having the primary interviewees review the report drafts (Yin, 1984; Shane, 1998; Miles and Huberman, 1984). Pieces of information from the cases were compared to the theoretical Propositions to determine the degree to which they were consistent, following the pattern matching logic recommended for case study design (Miles and Huberman, 1984). The pieces of information were also compared to rival, mutually exclusive theoretical propositions to determine utAlexander Ardichvili and Richard N. Cardozo the degree to which they were inconsistent with alternative explanations. ‘According to Yin (1984), case studies support a theory if the pieces of evidence are consistent with the tested theoretical propositions, but inconsistent with alternative mutually exclusive explanations. RESULTS This study provides evidence to support hypotheses H1, H2, H3, H5, H6, and H7 (Table 2). Based on these cases, H8 was not supported. Finally, the case data were insufficient to make definite conclusions regarding H4 and H9. Table 2, The Analysis Results: Entrepreneurs and Dimensions of the Opportunities. mw [Kp [KE [kK [ip [sp [st vo Hi Alertness s |? > es] Yes | yes H2: “Knowledge condor” | yes | yes [ves | yes [yes [Ves | yes 7 HS: Prior knowledge of yes P yes Pao [yes [ves | Yes [yes | ves markets Ha: Prior knowledge of ways | ? ys [ro |? ee ce to serve markets TS: Prior knowledge of an a a 2 od ‘customer problems TH: Discovery versus search | yes es [? yes | ves [yes [yes HT Newworks yes foes | Yes | yes | yes HS: Creativity, no [no | no] no | no | No_[ no | no. HS: Creativity: networked | NNC | NING [ NING [INC _[ NING] NING [INC TNINC | versus solo entrepreneurs ‘Uniqueness versus transfer__| 7 Tt afr rr Knowledge of technology [yes | no. yes [no | No | yes Tiducation relevant tothe [yes [yes [yes foes [ves [? 7 yes market * NING means: Networked/Non-creative H1 (Alertness). When analyzing the case data on this dimension, we realized that it is impossible to make any conclusions regarding the presence or absence of entrepreneurial alertness in any one of the eight entrepreneurs just based on the story of one venture/opportunity. We had to go back for additional information on other opportunities that the entrepreneurs have considered but did not pursue, or have considered and pursued. After collecting and analyzing these additional data, we concluded that six out of eight displayed strong propensity to notice and be sensitive to information about incidents and patterns of behavior in the environment. They were constantly thinking about opportunities around them, even when they did not have a need or time to start another venture. 2A Model of The Entrepreneurial Opportunity Recognition Process In contrast, the other two seemed not to be as alert to a variety of opportunities around them, and were content with concentrating on a job at hand. H2 (The “knowledge corridor”). Hayek (1945) argued that sources of the prior knowledge that lead to opportunity discovery are idiosyncratic, and result from work experience, personal events, and education. Shane (1998) indicates that this prior knowledge can be developed through a variety of roles, including experience as a supplier, user, and manufacturer; and education on a variety of dimensions, such as production processes, inputs, and user needs. In all eight cases we found that entrepreneurs had substantial prior knowledge in a certain area (see H3 and H4 below), which allowed them to identify an opportunity. H3 (Prior knowledge of markets). In seven cases, entrepreneurs discovered markets for which they had Prior knowledge. It is important to note that our cases confirmed Hayek's (1945) thesis that knowledge of markets is not just associated with working in a certain industry. It can be a result of a hobby, or other personal, not related to work experience. For example, LD is a passionate golf player, and the idea for his new venture occurred to him when being on a golf course. For SD, detailed knowledge of customer problems came from an unfortunate accident that made him a customer of a medical device company himself. HJ stumbled upon an opportunity when serving on the state govemnor’s task force created to analyze the reasons for problems with the effective use of state funds in a certain area. For the other four entrepreneurs, prior knowledge of customer problems was associated with many years of work in certain industries, in roles of either product/service suppliers or consumers of business services or products. H4 (Prior knowledge of ways to serve markets). These cases have demonstrated that prior knowledge of markets should not be equated with the prior knowledge of the ways to serve markets. Only two entrepreneurs had substantial understanding of how to serve the markets they identified. This knowledge was accumulated while serving these markets as a Consultant (SL), or working for a large company serving that market. The other six entrepreneurs had neither first-hand experience in serving these new markets, nor any other significant exposure to the ways of serving these markets. H5 (Prior knowledge of customer problems), In only one of eight cases could we not find evidence to support this hypothesis. Knowledge of markets (H3 above) seems always to be accompanied by an understanding of customer problems. In other words, to identify a viable opportunity, an 13Alexander Ardichvili and Richard N. Cardozo entrepreneur had not only to be familiar with a certain market, but also become aware of customer problems in that market. Thus, LD discovered an opportunity when reflecting on ways to solve a recurring problem, observed on many golf courses he played. HJ, analyzing the task force recommendations, became aware of a customer problem, a solution to which was not being provided by any state agency at that time, but could be efficiently handled by a new commercial enterprise. SD’s idea was a direct response to a problem that he experienced himself as a customer. SL was a consultant in the telecommunications industry for a number of years, and was collecting stories of customers frustrated with the level of technology and service available to them at that time: “My company was a nationwide company, [ had accounts all over the place, and traveled a lot. ‘And everywhere I went the problem was always the same.” H6 (Discovery versus search). Only one of cases (KK) did not provide sufficient data to conclude what led to the opportunity: purposeful search or accidental discovery. In the rest of cases, purposeful search did not play any significant role. For HJ, SD, and KE, opportunities emerged relatively quickly, as a result of chance encounters, or other unexpected events, For the other four entrepreneurs, the opportunity idea did not come as quickly. Rather, it crystallized after years of work, reflection, and as a result of a coincidence of a number of events, not of a plan. The following quote from an interview with KD expresses well the difference between discovery and plan: "People cut off opportunity by being too planful...” H7 (Networks). The overall support for this hypothesis was strong. Only one case (KK) did not provide any evidence of a strong network. All other cases provided ample evidence that, prior to acting on the opportunity, entrepreneurs had established networks of support. HJ was active in a number of professional associations and non-profit organizations; SD created a strong network through his prior work as a venture capitalist. KE had already a network of suppliers, investors and advisors from his previous, smaller ventures. VD did not seem to have as strong a network himself, but, carly on the idea evaluation stage, he entered into a partnership agreement with a couple of other entrepreneurs who had networks and provided the right contacts in the local investment and entrepreneurial community. H8 (Creativity). None of the eight cases provided any evidence that the studied entrepreneurs possess unusual levels of creativity. And many of the entrepreneurs explicitly stated that they do not consider themselves particularly creative, or that their ideas were especially innovative. LD’s comment is very typical in this respect: “I am not an inventor. I could 4A Model of The Entrepreneurial Opportunity Recognition Process never invent a GPS. I just look at it and say: ‘here is a place it can go. My vision is how you apply technology and be the first one there.”” H9 (Creativity in networked versus solo entrepreneurs) . All eight entrepreneurs were classified as not creative, and seven of them where well-networked. If we had a sample of non-networked entrepreneurs, who were also creative, we could conclude that there was a support for this hypothesis. In the absence of this additional evidence, we have to state that the data available to us is not sufficient to make any definite conclusions regarding this hypothesis. Other findings. In addition to the data for testing the original eight hypotheses, the cases produced a number of additional findings. First, we found that six entrepreneurs had significant prior knowledge of markets in Question through education in relevant fields (engineering, computer science, adult education, mass communication, etc.). It is interesting to note that business education did not seem to be an important factor - only one of the eight entrepreneurs has an MBA. Second, in seven cases the opportunity was based on a novel application of an existing technology in a new industry or area, not on a completely new idea or a product. This finding is consistent with our previous research on product-market strategies of new firms (Cardozo et al, 1995; Ardishvili and Cardozo, 1996), which indicates that there are very few truly “new to the world” products. Third, it seems that a detailed understanding of the technology that is at the foundation of a new opportunity is not a necessary condition for Successful opportunity recognition. Only five entrepreneurs had a strong understanding of the technology at the stage of the business idea generation and preliminary business analysis, ‘Three did not have this knowledge at the initial stage, but developed it later, when conducting the due diligence prior to realizing the opportunity. DISCUSSION AND PROPOSED MODEL The results of this study suggest that: * Entrepreneurial opportunities are likely to involve an application of an existing technology in a new market or industry, not a completely “new to the world” product or service. 115Alexander Ardichvili and Richard N. Cardozo © Entrepreneurial opportunities are discovered through recognition rather than purposeful search. «Prerequisites for successful opportunity discovery are a combination of entrepreneurial awareness, access to extended social networks, and prior knowledge of markets and customer problems. Prior knowledge could exist due to work experience, personal, non-work related experiences and events, or due to relevant to these markets education. © Opportunity recognition does not require an exceptional level of creativity, and is not likely to involve a prior knowledge of the ways to serve markets. Based on the above, we propose to test the following model of opportunity recognition (see Figure 1). The assumptions behind the model are: Figure 1. Proposed Model of the Opportunity Recognition Process. Prior knowledge markets and customer problems Taperience|/ * f ¥. Entrepreneurial alertness Work experience Education ‘Outcome: successful ‘opportunity recognition Personal Networks experiences Entrepreneurial opportunities are discovered, not identified through purposeful search. Therefore, “search” need not be a component of the model. 116A Model of The Entrepreneurial Opportunity Recognition Process * Opportunity recognition is determined by three major factors: entrepreneurial alertness; entrepreneurs’ networks; and prior knowledge of markets and customer problems. * Prior knowledge is a result of relevant education, experience, or a combination thereof. ¢ Relevant experience, in its turn, could be work-related, or could be a result of a variety of personal experiences and or events. * There could be an interaction effect between entrepreneurial alertness and prior knowledge: prior knowledge of markets and customer problems could be increasing alertness. Future empirical research is needed to test the proposed model on larger samples of companies and opportunity recognition projects. Some of the hypothesized relationships concern longitudinal processes, involving changes in cognitive states and knowledge base. Those phases of ontogenesis that do not involve written documents may occur very quickly and be internal to an individual, who may not be able to recount the Process perfectly nor be able to offer outsiders all the data they seek to map the process. Nonetheless, approaches such as cognitive mapping may offer the most effective insights into the process through which “opportunities” mature, i.e., through which value sought or value creation capability grow into creative combinations of resources to deliver superior value. Therefore, in addition to quantitative studies involving larger samples, we should also continue to use qualitative techniques, involving in-depth case studies, content analysis, and cognitive mapping. Future research is also needed to assess the domain over which the model rightfully applies. The concepts and empirical observations from which the model was developed are drawn from private-sector models of entrepreneurship. The terms business, industry, product, customer, marketplace, and other private-sector concepts appear throughout this paper. What about community, government, non-profit and other non private-sector organizations whose mission and performance are assessed differently than those of private-sector organizations? These organizations are increasingly under pressure to display entrepreneurial behavior and identify new opportunities for self-financing. Does the model of opportunity recognition apply in these contexts as well? Testing the model nn7Alexander Ardichvili and Richard N. Cardozo in non private-sector settings is needed to identify the domains over which it applies or does not apply. REFERENCES Buzenitz, L. (1996). Research on Entrepreneurial Alertness. Journal of Small Business Management, 34(4): 35-44. Brockhaus, R. H. (1980). Risk Taking Propensity of Entrepreneurs. Academy of ‘Management Journal, 23(3): 509-520. Christensen, P. S., Madsen, O. O., and Peterson, R. (1989). 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