cOPPORTUNITY RECOGNITION

If we look at what differentiates successful entrepreneurs from the unsuccessful

ones, the most important craft is opportunity recognition. This is a process that we
have learned how to systematize and teach to entrepreneurs.

Entrepreneurs who have the most success are those who are able to find a real
niche in the market that offers enough of a margin to meet their needs and
aspirations. Successful entrepreneurs understand the importance of ´failing on
paper.µ They carefully assess their idea to make certain that it has an adequate
market and enough profit margin before they ever launch their venture.

Substantial gains can be made by individuals and organizations adept at detecting new opportunities.
But how do business leaders do that concretely? Organization research shows that managers are
more inclined to identify threats than opportunities, but it is still not clear why this is the case.
Likewise, research points to several factors that may facilitate the recognition of opportunities.
Yet empirical observations have been limited by retrospective biases and other conceptual
challenges. As a result, key questions remain not only about what factors facilitate the recognition
of opportunities, but also about why these factors play such a role. To further understanding of
these issues, we study the reasoning strategies that individuals mobilize for recognizing
opportunities. We develop a model of opportunity recognition as a cognitive process of structural
alignment, and analyze the think-aloud verbalizations of executive entrepreneurs as they try to
recognize opportunities for new technologies. In contrast to prior research, the qualitative and
quantitative data do not provide evidence that individuals use prototypes to recognize opportunities.
Instead, we find that different kinds of mental connections play different roles in the process of
recognizing opportunities, with different consequences. We also document why and how prior
knowledge may facilitate this process. By drawing attention to the cognitive underpinnings of
opportunity recognition, we cast light on why it constitutes such a challenging task for individuals
and organizations. In turn, this provides a useful basis for exploring the factors that explain why
some individuals/organizations are able to recognize opportunities that others simply fail to see.

Key Words: opportunity recognition; issue interpretation; cognitive processes; entrepreneurship;

verbal protocols

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Cluster of extraordinary abilities or related 'excellences' that a firm acquires from its
founders, after consistent striving over the years, and which cannot be easily imitated. Core
competencies are what give a firm one or more competitive advantages, in creating and
delivering value to its customers in its chosen field. Also called core capabilities or distinctive
competencies. See also core rigidities.

A core competency is fundamental knowledge, ability, or expertise in a specific subject

area or skill set. For example, an individual who becomes certified as a Microsoft Certified
Software Engineer (MCSE) is said to have a core competency in certain Microsoft systems
and networks. Companies with specific strengths in the marketplace, such as data storage
or the development of accounting applications, can be said to have a core competency in
that area. The core part of the term indicates that the individual has a strong basis from
which to gain the additional competence to do a specific job or that a company has a
strong basis from which to develop additional products.

SWOT ANALYSIS

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