International Business Review 22 (2013) 293–303

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International Business Review

journal homepage: www.elsevier.com/locate/ibusrev

Sources of opportunities used by growth minded owner managers of

small and medium sized enterprises
Bev Hulbert a,*, Audrey Gilmore b,1, David Carson b,2
a
School of Management, University of Southampton, Highfield, Southampton SO17 1 BJ, England, United Kingdom
b
Ulster Business School, University of Ulster, Shore Road, Newtownabbey BT37 0QB, N. Ireland, United Kingdom

A R T I C L E I N F O A B S T R A C T

Article history: The purpose of this paper is to investigate the sources and nature of opportunities used by
Received 18 June 2010 owner-managers of small and medium size (SMEs) firms in order to grow their businesses.
Received in revised form 28 March 2012 In addition to the owner-manager’s desire for growth, clearly there needs to be both
Accepted 23 April 2012 opportunities to pursue and sufficient management activities that will discover such
Available online 5 June 2012 opportunities, so that a business can grow. These opportunities may originate through
some form of environmental change such as advances in technology or by exploiting
Keywords: changes in the marketplace, for example, the exit of a competitor.
Entrepreneurship
Research was carried out within twenty SMEs whose owner-manager’s aimed to grow
Marketing
their businesses. The focus of the research was on the sources of opportunities they
Opportunity recognition
SME growth
encountered and how and why opportunities were recognized by these firms.
The key findings of this research illustrate that the majority of sources for business
opportunities for SMEs in this study lie in the market place and are not a direct
consequence of environmental change. Traditional marketing analysis tools can, therefore,
identify significant sources and scope for growth opportunities for SMEs.
ß 2012 Elsevier Ltd. All rights reserved.

1. Introduction

SMEs are major providers of new jobs (Audretsch, Verheul, Wennekers, & TThurik, 2002; Stokes & Wilson, 2006)
providing approximately 75 million jobs, and representing 99% of the 23 million enterprises in the EU (Nymen, Berck, &
Worsdofer, 2006). In the US, SMEs have generated 22.5 million (64%) of net new jobs between 1993 and 2008 according to
the US small Business Administration (http://web.sba.gov). The UK Government economic policy has for some thirty years
encouraged the start-up and development of Small and Medium Size Enterprises (SMEs) in order to stimulate economic
activity and foster an enterprise culture to create employment opportunities (Bolton, 1971; Grey, 1998; SBS, 2004). Yet only
some 7% of start ups grow to a turnover of more than £1m (SBS, 2004).
This paper focuses on where and how SMEs source opportunities. SMEs behave differently from large companies in the
way that they do business; they are run by owner-managers who have an individual or personal style of management.
Mainstream marketing and business theories focus on aspects such as planning, advertising and how to implement
marketing activities; however these theories are designed for large organizations where financial resources and marketing
expertise are more readily available. Traditional marketing textbook definitions and concepts may not easily apply to SMEs

* Corresponding author. Tel.: +44 02380 593065.

E-mail address: bjh1@soton.ac.uk (B. Hulbert).
1
Tel.: +44 02890 366397.
2
Tel.: +44 02890 366550.

0969-5931/$ – see front matter ß 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.ibusrev.2012.04.004
294 B. Hulbert et al. / International Business Review 22 (2013) 293–303

as they have limited resources, expertise and experience. Owner managers tend to be generalists rather than specialists and
are more likely to have a technical background rather than a business one. They often have limited marketing knowledge
especially in the early stages of their existence and may not recognize the need to employ specialists or be willing to pay for
specialist advice. Rather than taking a systematic and evaluative approach, SME owner/managers may take a more informal,
intuitive approach to doing business (Gilmore & Carson, 2007).
Many SMEs are started up by entrepreneurially-minded people. These people often spot opportunities that existing or
larger firms have not recognized, or are not interested in. Where and how opportunities are identified needs further
exploration and this study looked at what happens after the initial start-up phase has been completed and examines the
sources of opportunity exploited by growth minded owner-managers. It is reasonable to assume that owner-managers of
small businesses initially acted entrepreneurially to create the business, that is, he or she recognized an opportunity and
obtained the resources necessary to turn it into a business. Although some SME owner/managers may stay entrepreneurial
or become serial entrepreneurs, some will give priority to managing their growing firm and become more involved in day to
day operational activities. While having an entrepreneurial orientation and a marketing orientation can be viewed as distinct
concepts, the interaction and combined ability of both to influence business performance can be very useful. Matsuno,
Mentzer, and Ozsomer (2002) argue that the two orientations not only affect an organisation’s performance but also
influence each other. The objective of this study was to discover where the sources of new opportunities that offer potential
for growth originate and whether owner-managers continued to behave entrepreneurially. Initially the literature pertaining
to the meaning of business and entrepreneurial opportunities in the context of existing small and growing firms is explored.

2. Review of theory

Observation of marketing practice in SMEs has led to increasing research activity concerned with entrepreneurial and
small business marketing, both in the USA and in Europe (especially in the UK) over the last 20 years (Carson & Gilmore,
2000; Cummins, Gilmore, Carson, & O’Donnell, 2000; Hills, 1995). The output of this research has led to a greater
understanding of what has been termed ‘entrepreneurial marketing’. This is defined as ‘marketing in firms which grow
entrepreneurially, by generating new business ventures’ (Bjerke & Hultmann, 2002, p. 15). Thus entrepreneurial marketing is
about creating something new, something that did not otherwise exist such as a new venture. This process can begin with
entrepreneurial alertness, or with an individual’s motivation to construct an image of the future (Gaglio & Katz, 2001). The
focus of this research is not specifically about entrepreneurial marketing but is clearly positioned in theory relating to small
business marketing and it is recognized that in researching growing SMEs’ exploitation of opportunities, the findings may
have some bearing on entrepreneurial marketing. Thus this research is positioned at the interface of entrepreneurship and
marketing theory – opportunity pursuit seeming to be at the heart of both strategic marketing decisions and entrepreneurial
activity (Barrow, 1993; Birley, 1983; Carson, Cromie, McGowan, & Hill, 1995; Krackhardt, 1995).
The focus of the study is to discover the origination of opportunities for the owner-manager in SMEs which may be
suitable for marketing: that is, to determine the extent that opportunities are based on a pre-existing ‘gap’ in the market – a
‘marketing’ opportunity, and to investigate the extent that opportunities are created through technical invention or other
environmental change – an ‘entrepreneurial’ opportunity. The research also provides some insights into how and why
opportunities are spotted and who acted upon it.
The process of finding opportunities is still relatively under researched (Chandra, Styles, & Wilkinson, 2009). Many firms
tend to discover opportunities while just going about every day business, while others search more proactively for
opportunities. As SME owner/managers often take a more informal, intuitive approach to doing business (Gilmore & Carson,
2007), this may extent to how they discover opportunities.

2.1. Entrepreneurial opportunity

At a generic level entrepreneurial opportunity can include a variety of phenomenon such as: the creation of new enterprises
(Low & MacMillan, 1988); why, how and what happens when entrepreneurs act (Stevenson & Jarillo, 1990); new entry, entering
new or established markets with new or existing goods or services by launching a new venture (Lumpkin & Dess, 1996); and the
discovery, evaluation and exploitation of opportunities (Chandra et al., 2009; Shane & Venkataraman, 2000).
Within SMEs opportunity recognition is more specific to the firm and the owner-managers situation, but how they
actually recognize opportunities is not very well understood. Entrepreneurial opportunities can range from identifying the
need for fundamental changes in how products or services are configured, to carrying out more incremental modifications to
existing products and services. Opportunities can be found by either search or discovery. Drucker (1998) writes that
opportunities are identified through a purposeful, rational and systematic search process and/or in response to a particular
problem. Kirzner (1997) states that opportunities are unknown until discovered, but recognizes that it is difficult to search
for something that does not yet exist.
Prior studies of international opportunity recognition have found that firms with little or no prior international
experience and knowledge were more likely to find opportunities as a result of discovery rather than by carrying out
deliberate searches (Crick & Spence, 2005; Ellis & Pecotich, 2001; Simmonds & Smith, 1968). Chandra et al.’s (2009) study
found that nearly all first time international opportunities were identified by means of discovery where information firstly
came from networks, or from attending trade events or other serendipitous encounters.
 B. Hulbert et al. / International Business Review 22 (2013) 293–303 295

Table 1
Entrepreneurs as innovators or traders.

Innovators Traders

Focus on developing new products. Alert to profit opportunities.

Aim to find and exploit new markets. Operate in a competitive marketplace, which is governed by price.
Combine existing factors to create something new. Some people are more astute in spotting opportunities than others.
Apply determination and leadership to cause change. Will buy at the lowest price and sell at the highest.
Profit is a by-product. Risk takers motivated by profit.
Source: Rae (1999, p. 12).

2.2. Entrepreneurship theory in the context of opportunities

Entrepreneurship is a discovery process, an innovation process and an uncertainty bearing process (Kirzner, 1973; Knight,
1997; Schumpeter, 1992). The modern concept of entrepreneurship was first introduced by Schumpeter (Bjerke & Hultmann,
2002). Schumpeter viewed entrepreneurs as innovators taking advantage of disruptive events in the economy to found new
ventures. Shane (2003) terms these disruptive events as stemming from technological changes, political and regulatory
changes and social and demographic changes. An alternative view was that of Kirzner who viewed entrepreneurship as
seeking opportunities within the marketplace, through being alert to gaps in the market to create a new equilibrium (Bjerke
& Hultmann, 2002).
There are many definitions of entrepreneurship typical of which is Rae (1999) ‘entrepreneurship is the process of
identifying and exploiting opportunities through bringing together resources to form ventures, which create or release
value.’ (p. 16). The study of entrepreneurship has taken two different perspectives – seeking to explain the entrepreneurial
phenomenon by looking at the attributes and characteristics of people who behave entrepreneurially or seeking to explain
entrepreneurship in terms of the environment in which entrepreneurial activity flourishes (Sarason, Dean, & Dillard, 2006;
Shane, 2003). A combination of these approaches is illustrated by Rae (1999) who discusses the behavior of entrepreneurs in
terms of whether they are innovators or traders drawing on the theories of economists Schumpeter (1992) and Kirzner
(1973, 1979, 1985, 1997) to illustrate his argument. These characteristics are summarized in Table 1.
Others suggest that an understanding of ‘opportunity’ should lie at the heart of entrepreneurship theory and the academic
study of entrepreneurship (Shane & Venkataraman, 2000; Venkataraman, 1997). The ‘individual-opportunity nexus’ is
proposed as a general overarching framework for research in the field of entrepreneurship (Shane, 2003). The proposed
framework examines the characteristics of opportunities; the individuals who discover and exploit them; the process of
resource acquisition and organizing; and the strategies used to exploit and protect the profits from those efforts. In the light
of this reasoning Shane (2003) interprets Schumpeter and Kirzner perspectives differently and in terms of the nature of the
opportunities and the implications for entrepreneurs (as summarized in Table 2).
There is some debate as to the extent that Kirznerian opportunities should form part of entrepreneurship studies and
Eckhardt and Shane (2002) use the term entrepreneurial opportunities to define, in essence, Schumpetarian opportunities.
Others, for example, Bjerke and Hultmann (2002) refer to the Kirznerian opportunities as marketing opportunities.
In discussing these sources of opportunities, Shane (2003), states that ‘researchers have much more information about
sources of Schumpeterian opportunities than about Kirznerian opportunities.’ (p. 22). This is clearly because Schumpeterian
opportunities are more readily associated with entrepreneurial activity which has been the subject of academic research.
Shane (2003) could find no empirical evidence about the sources of Kirznerian opportunities and no more explanation for
them other than that they emerged from poor marketing decisions of existing participants in the market. Clearly Kirznerian
opportunities are overlooked or not considered to be entrepreneurial by some entrepreneurship scholars and indeed the
central theme of Shane’s (2003) ‘individual-opportunity nexus’ research framework is concentrated on understanding
Schumpeterian opportunities.
The discussion of what constitutes an ‘entrepreneurial opportunity’ continues (McMullen, Plummer, & Zoltan, 2007) and
in this regard this research takes the view that both Schumpeterian and Kirznerian opportunities are in reality ‘business
opportunities’ which may be pursued entrepreneurially through a new venture (Shane (2000) describes this as a new way of
‘organizing’) or by an existing business through some form of marketing activity. This study therefore explores the meaning
of ‘business opportunities’ in the context of existing firms, which because they are small and growing and owned by the
significant shareholder, may, by some, be perceived as being entrepreneurial.

Table 2
Schumpeterian versus Kirznerian opportunities.

Schumpeterian opportunities Kirznerian opportunities

Disequilibrating Equilibrating
Requires new information Does not require new information
Very innovative Less innovative
Rare Common
Involves creation Limited to discovery
Source: Shane (2003, p. 21).
296 B. Hulbert et al. / International Business Review 22 (2013) 293–303

2.3. Marketing theory in respect to opportunities

The most dominant paradigm in marketing theory is the ‘managerial’ one (Bjerke & Hultmann, 2002) and it represents the
mainstream view of marketing as taught in business schools around the world (Bjerke & Hultmann, 2002; McDonald &
Wilson, 2011). The importance of firms’ having a marketing orientation or being market-driven is considered to be vital to
business success (Day, 1994; Hult, Ketchen, & Slater, 2005; Kolhi & Jaworski, 1990). ‘‘Market driven organizations have
superior market sensing, customer linking and channel bonding capabilities’’ (Day, 1994, p. 41). The marketing literature
advocates that market driven firms use processes for gathering, interpreting and using market information and are more
‘systematic, thoughtful and anticipatory than other firms’ (Day, 1994, p. 41). However the characteristics and nature of SMEs
and how owner-managers do business does not fit well with such logical and methodical approaches. Traditional marketing
approaches that are logical, systematic and require large budgets need to be adapted considerably to fit small, growing
businesses that rely very heavily on the experiential knowledge and expertise of the owner/manager with a small
operational budget.
Within the strategic marketing literature the ‘opportunity’ is considered mainly in the context of the SWOT analysis. This
approach to opportunity recognition has evolved from Drucker’s (1998) view that opportunities are identified through a
purposeful, rational and systematic search process and/or in response to a particular problem. From a strategic marketing
perspective the foremost model is the marketing plan which has been widely accepted as the template used to identify the
way forward for any company and is typified in the five question approach to strategic marketing management: where are
we now? Where do we want to be? How might we get there? Which way is best? and How can we ensure survival?
(Lysakowski, 2007; McDonald & Wilson, 2011; Wilson & Gilligan, 2005).
It is in consideration of the first question that the marketer performs a situation analysis that according to Ferrell and
Hartline (2005) ‘summarizes all pertinent information obtained about three key environments; the internal environment,
the customer environment and the firm’s external environment.’ (p. 11). Cravens and Piercy (2006) take the view that the
purpose of such an evaluation is to identify opportunities or performance gaps, and then initiate activities to take advantage
of the opportunities. In the context of marketing theory little research or academic discussion as to the nature and source of
opportunities is evident. In discussion of the SWOT analysis, much of the marketing literature (for example, Best, 2005;
Cravens & Piercy, 2006; Day, 1984, 1994; Drummond & Ensor, 2005; Ferrell & Hartline, 2005; Kotler, 1997, 2003) refer to the
assessment of the external environment in terms of customers, competition, economic conditions, social trends, technology
and government regulations that, in terms of the firm’s internal resources and capabilities, can lead to the uncovering of
strategic advantages that can be leveraged in the firm’s marketing strategy. In this context Ferrell and Hartline (2005)
identify fourteen potential external opportunities in a marketing context: rapid market growth, rival firms are complacent,
changing customer needs and tastes, opening of foreign markets, mishap of a rival firm, new product discoveries,
government deregulation, new technology, demographic shifts, other firms seek alliances, high brand switching, sales
decline for substitute product, and changing distribution methods. It can be surmised from this list that the source of
opportunities identified here cannot be all classified as ‘gaps’ in the market but could be more accurately described as
business opportunities. Clearly the same opportunities are open to others including new market entrants in the form of new
firms started by entrepreneurs.
In the marketing literature, the marketing audit or situation analysis refers to looking for or sourcing opportunities but
there is little or no description of what those opportunities might be. There is the assumption that the marketer will
automatically recognize these opportunities when examining the data. However, apart from the generic growth strategies
depicted as organic or acquisition growth, the most common approach to determining potential growth strategies in
academic literature is that of Ansoff’s (1975) product/market matrix. The matrix, illustrates four combinations of existing
and new products with existing and new markets when viewed from an individual firm’s perspective and these
combinations suggest four possible growth strategies; market penetration, market development, product development and
diversification It is recognized that the Ansoff matrix now forms part of a more classical approach to marketing and therefore
the meaning of terms such as new market have developed to include how value is delivered to customers through new
business models such as online retailing or customer loyalty programmes. However, these four growth strategies provide the
contexts for finding sources of opportunity for SMEs and can be used to identify potential opportunities which are
determined by the combination of current and new products and current and new markets.
In terms of market penetration, the opportunity is to increase sales of existing products in the current market in which the
firm operates, using such marketing tactics as competitive pricing, sales promotion or advertising. Increased market
penetration may also be achieved through acquisitions that lead to market consolidation such as buying out a competitor
(Gilmore, Carson, & Rocks, 2006).
In terms of market development, the opportunity is to find new markets for existing products using such tactics as
exporting, new means of distribution (for example, the internet) or re-positioning the product within a different market
segment (for example, French Cognac producers repositioned their product as a pre-dinner aperitif – cognac mixed with
tonic – for the 25–35 age group from its established after dinner drink for the mature, mainly male, 55+ age group).
In terms of product development, the opportunity is to update the product offering to reflect changing tastes or
technology through such tactics as modifying existing products (adding features, facilities or performance) or developing
new products. In terms of diversification, the opportunity is to move beyond existing areas of operation and product
technology through such tactics as acquisition, merger or strategic alliance (Andersson, 2002).
 B. Hulbert et al. / International Business Review 22 (2013) 293–303 297

These opportunities are seen in the context of strategic growth choices for existing firms and are related to the current
marketing practices the firm employs, regardless of firm size and as such are most likely examined in terms of a firm’s
marketing strategy.
Therefore from both a marketing and entrepreneurial point of view, sources for new opportunities come from an
understanding of the marketplace itself (customers, competitors and suppliers), together with the business environment in
which that market operates. This is shown in the conceptual model (Fig. 1) which shows the relationship between the
various sources of opportunity discussed above and their relationship to the marketing strategies that are available either for
a new venture or for the growth of an existing business.
Ansoff’s matrix is used as an analysis tool, rather than as a predictive tool, to retrospectively examine the recognition of
opportunities that were valuable for SMEs in this study.

3. Methodology

This study used a phenomenological, inductive approach. Although this research sought to find patterns of relationship
between the thought processes of owner-managers and the influences that these have upon the approach to business
opportunities, hence suggesting relationships of cause and effect, the research itself does not seek to prove these connections
with a positivist scientific method and then to generalize the findings, but its epistemological approach is rather to uncover
areas of interest and establishing emerging patterns of opportunity recognition and in the context of growth in SMEs. The
ontological assumption is that people shape the environment in which they operate by being actively involved and
interacting with that environment, rather than being passive recipients (Carson, Gilmore, Perry, & Gronhaug, 2001). The
research recognized that owner/managers’ relationships and networks (both past and future) will impact upon how ideas
circulate and get combined and recombined (Ridley, 2011). Therefore the researchers were interested in owner-manager’s
opinions and attitudes, which in themselves are subjective, the resultant actions and the influence of these upon outcomes.

Sources of Opportunity

Environmental Marketplace
Change Dynamics

(Schumpeterian (Kirznerian or
opportunities) marketing
opportunities)

Changes in: ‘Gap’ (un-met need).

Political, Growth in demand.
Social, Market consolidation.
Economic, or Change in customer needs or
Technological tastes.
environments Competitive activities.
Change to distribution
method.
Changes in supply chain.

Entrepreneurial Business growth

opportunity opportunity
(New venture)

Marketing strategies:
Marketing strategies:
Market penetration
New product/service Product development
offering Market development
New business model Diversification

Fig. 1. Conceptual model: sources of opportunities and resulting marketing strategies.

298 B. Hulbert et al. / International Business Review 22 (2013) 293–303

In conducting this research it was recognized that the researchers had personal experience as participants in the
management of the type of businesses being researched and brought that experience based knowledge to the research. Close
involvement in the subject of study may be considered as a negative aspect of the research structure if, as in the positivist
tradition, the research findings are viewed to be free of researcher influence. However, this research used the researchers’
personal experience as a strength because it allowed an understanding of basic beliefs, fears and hopes of the owner-
managers being studied which are nevertheless attached to known literature frameworks. In simple terms, the researchers
were seen as ‘kindred spirits’ by the owner-managers and consequently they were less guarded in their replies than might
have been the case.
Essentially this research was based on the activities of owner-managers, whose businesses have demonstrated growth for
a period of three years. Because the pursuit of business opportunity for the SMEs has only recently become subject to
academic inquiry this research was not seeking to confirm pre-tested hypothesis but rather sought to explore the
phenomenon. The value of this approach does not lie in large samples but in the intensive probing of respondents seeking
psychological depth, that is investigation of motivations, associations and explanations (Carson et al., 2001). In other words,
in this research, richness of data rather than quantity of data was the priority.
The method of data collection chosen was based on a conceptual framework developed from the literature (shown in
Fig. 1), followed by in-depth interviews using a research protocol which listed key themes to be discussed along with prompt
cues to be used if needed. In these interviews the tension between structuring an interview to increase reliability and the
wish to ‘generate richness, diversity and creative insight’ was recognized. Therefore, the discussions pursued in the
interviews were dictated in pace and nature by the respondent, with the interview being ‘guided’ by topics derived from the
conceptual model (Fig. 1). This provided some focus for the interviews and also allowed the respondent to discuss and
elaborate on issues that were pertinent to his or her experience regarding opportunity recognition. The discussion topics
related to the companies background, the owner/manager’s background knowledge, how they gained knowledge, any
analytical tools or methods they used, alertness to opportunity and how they evaluated opportunities.
The selection of companies for research was based on companies that were seeking or have recently (in the previous 3
years) been successful in obtaining second stage venture capital financing to fund expansion. The companies were selected
from the client list of a venture management consultancy (Cambridge Venture Capital) specializing in raising first and second
stage funding. To be included in the research the companies were still managed by the principal founder(s) and owner(s) of
the business; the companies had been trading for at least three years and fitted the criteria for SMEs defined in the 1985
Companies Act {in the UK the statistical definition of a small firm is a business with fewer than 50 employees and that of a
medium size firm as having 50–249 employees, (DTI – Small Business Service 2003)}.
From a potential list of 62 companies, 42 firms met the above criteria and 20 firms were selected for research based on
their willingness to take part given the pressure and time implications for the owners. One in-depth face to face interview
was carried out with each company. This was followed up with a telephone interview. The follow-up interview was carried
out to verify the accuracy of the transcript from the first interview (a copy having been sent prior to the telephone
conversation) and to clarify issues raised from an initial analysis of the transcript. These issues were wide ranging covering
all aspects of the research enquiry. In total, 40 interviews were held over a six month period.
Interviews were recorded, transcribed and then analyzed using the constructs in the conceptual model, that is marketing
opportunities arising from marketplace dynamics, opportunities facilitated indirectly by environmental change and
opportunities arising directly from environmental change.
Marketing opportunities were identified by using Ansoff’s model as an analytical tool in the context of the industry in
which the opportunities were being pursued. This study evaluated the marketing opportunities that owner/managers follow
rather than limiting the consideration of marketing opportunities to those related to seeking out more revolutionary
opportunities.

4. Findings

Initially the findings will provide some insights into how and why opportunities are spotted and who acted upon it. This
will be followed by findings relating to the marketing opportunities arising from marketplace dynamics and those facilitated
indirectly and directly by environmental change.

4.1. How and why opportunities are recognized

Some of the SMEs studied indicated that their experiential knowledge helped them identify opportunities, some
indicated that it was because they were alert to opportunities, some said it was because they were always analyzing the
marketplace and some said it was a combination of two or more of these criteria.
Experiential knowledge – nine companies illustrated that experiential knowledge was highly important to how they
spotted opportunities. For example one SME owner/manager said: ‘‘we have been working in this industry for nearly 20 years,
we came upon an idea as a result of what we were doing in securing internet transactions, we were involved in developing a new
product and it needed security to allow people to buy things with their credit card over the internet. In adding those security feature
we found the system became very slow and then we realized there was an opportunity to accelerate that encryption’’.
 B. Hulbert et al. / International Business Review 22 (2013) 293–303 299

Alertness to opportunity – twelve companies related that they were always alert to opportunities and that this was how
they spotted opportunities. For example one owner/manager said: ‘‘I think that opportunism is about being receptive to gaps in
the market. If we’ve got the technical capabilities to do something new then personally I’m always looking for ways to exploit it. . .
for me, well is almost a subconscious process’’.
Carrying out market analysis was also important to many of these firms. Although none of these firms carried out format
market research, the owner/managers were keen to gather market information wherever or whenever they could. For
example, one owner/manager stated that although he did not carry out formal market research he was always gathering
information when he was at trade shows or conferences and some of this led to how he recognized opportunities: ‘‘I
discovered that there were a number of competitors but then I realized that there was nobody doing exactly what we proposed to
do’’.

4.2. Marketing opportunities arising from marketplace dynamics

Opportunities are created through some form of technical, social or economic change but may remain unrecognized or
exploited for some time and therefore a ‘gap’ in the market may exist waiting for the opportunity to be grasped. This may be
termed a ‘marketing’ opportunity in that it is an opportunity that exists in the marketplace and can be recognized through
knowledge of the market. If no change in social, technological or economic circumstances are identified by either the owner-
manager or researcher it was deemed that there must be an existing gap to be filled or a change in the competitive structure
of the market. In reality the concept of a gap in the market was clearly understood by all interviewees and used by them as
the source of the opportunity if this was the case.
In terms of an opportunity stemming from a ‘gap’ in the market there were seven situations where an opportunity was
based on a market opportunity not associated with a change in the business environment. These opportunities are illustrated
in Table 3.
All of these opportunities clearly arose within their marketplace but two of them (03 and 05) were not strictly because of a
‘gap’ in the market but were resulting from complimentary businesses becoming available.

4.3. Market opportunities facilitated indirectly by environmental change

A totally new opportunity lies in a change to the business environment, which, in turn, means one or more changes to the
political, economic, social and technological environments. That is to say those new opportunities arise out of technical or
scientific advances, a change in economic conditions, a change of political policy and changes in society, cultural,
demographical or behavioral.
There were eight opportunities where changes in the business environment had given rise to new market opportunities.
However, these changes did not directly, or in themselves lead to the market opportunity. Table 4 provides the detail.
Seven of these opportunities are clearly based on existing market needs but involve a level of new technology to facilitate
better solutions than those currently being used or to keep pace with developments in adjacent markets. Four of these
opportunities involved using the Internet to meet existing needs in a different way.

Table 3
Market opportunities arising from market place dynamics.

Firm Nature of opportunity

03 The opportunity is to purchase a business from a competitor who has decided to withdraw from the market. The main attraction is
the production plant which compliments that already owned and to move it into the current factory. This is interpreted as market
consolidation.
04 The opportunity is increasing the applications for non invasive diagnostic systems, together with opening a subsidiary in Brazil. This
is interpreted as new market development.
05 The opportunity is to purchase a business which is in a different but related part of the supply chain and to extend the operation base
of the existing business. The opportunity arose out of the illness of the current owner. This is interpreted as market consolidation.
06 The opportunity has come to expand the basic business base. New office accommodation has been acquired and new additional staff
employed to meet current demand for a ‘no frills & inexpensive’ service. This ‘stripped out’ service offering is in contrast to that
offered by large consultancies that dominate the market. This is interpreted as market penetration.
15 The opportunity was to meet the need for ‘timed dependence recruitment system’ software to add to their existing personnel
management software. Time dependence was not offered by any competitors but demand from the existing customer base of 400
customers was strong and a large network company with 120,000 payroll customers wanted to fully integrate the new software with
pay roll software. This is interpreted as new product development.
17 This marketing consultancy had seen the opportunity to extend its service to include short term personal selling. Many of its smaller
clients could not afford or need to employ salespeople but needed some representation to develop their markets in the short term.
This is interpreted as new product development.
19 This opportunity was to start a franchise opticians business. The current business consisted of five outlets all carefully branded and
the owner has a good track record in finding new locations in which to expand. There was evidence of some restructuring in the
industry with companies such as Spec Savers (a new franchise operation) starting to make inroads into a traditional market. This is
interpreted as new market development.
300 B. Hulbert et al. / International Business Review 22 (2013) 293–303

Table 4
Market opportunities facilitated by environmental change.

Firm Nature of opportunity

07 This opportunity was the development of an entirely new type of recruitment agency approach using the internet to provide on-line
live interactions. This is interpreted as new product development using emerging technology.
08 The opportunity is to develop a retail shop operation. The business is a mail order sex aid catalog but recent social and cultural
changes make retail outlets more acceptable as evidenced by the growth of Ann Summers outlets. This is interpreted as new market
development taking advantage of changing social attitudes.
09 The company supplies telephony systems – switchboards, handsets, etc. and the opportunity is to add intranet using recent computer
technology and data and video to the service provision using internet connectivity. This is interpreted as new product development
using emerging technology.
10 This graphic design company has seen a gap in the market to provide web page designed to provide and communicate marketing
messages rather than those provided by system software writers with little or no design and marketing experience. This is
interpreted as new product development using emerging technology.
11 The increasing use of cash machines and credit card purchases has led to security concerns. The opportunity for this company is to
take advantage of the development of Smart card technology developed elsewhere and establish themselves as leading secondary
suppliers in the UK market. This is interpreted as new market development using emerging technology.
12 The business services charge card accounts for large companies by processing employee card transactions and is in the process of
providing multi access technology through internet connectivity for its clients employees and extending the service beyond travel
expenses to include recording part time employment and payment of itinerant employees. This is interpreted as market
development using emerging technology.
13 The company is a leading authority on project management with its own purpose built software. There is a gap for ‘international/
multi-location project management techniques and software for which the development of the internet has facilitated new solutions.
This is interpreted as new product development using emerging technology.
18 This company is a design company designing high technology consumer products such as DVD players and Televisions. The
development of WAP technology has created a demand for products that can utilize it. This is interpreted as new product
development using emerging technology.

The eighth opportunity again meets an existing market need but required social change and a general liberalization of
views about sex and sex aids in order to get the required planning consents and allow the firm to bring a degree of
respectability to its business.

4.4. Opportunities derived directly from environmental change

There are five companies whose opportunity arose directly from the invention and development of new technology and
as such are derived from an environmental change. Table 5 gives an overview of these opportunities.
There is no common theme for the technological developments on which these opportunities were based, the technology
being as diverse as physics and chemistry to information systems and data manipulation. Five out of twenty opportunities
arising out of such new technological developments may seem a high percentage, but the research was based on the client list of
a Cambridge Venture Capital company and two of the companies were located in the University supported innovation center.
These firms were contacted a year after the initial study to investigate how they were progressing. The majority of the
companies pursuing opportunities with new technology had been bought over by larger companies, with more money and
resources to allow the further development of the technology and to achieve the full potential of the developments. In some
cases the owner/managers said that selling their businesses also allowed them to cash-in on their company’s development
and potential.

Table 5
Opportunities derived directly from environmental change.

Firm Nature of opportunity

01 New technology in ink jet design, ink dosage control systems and ‘metal’ bearing inks has created the opportunity for an entirely new
means of producing printed circuit boards. The new technology reduces the wastage rate of current production systems dramatically
and makes practical the production of very short production runs and prototype developments. This is interpreted as new
technology.
02 This firm is pioneering internet security solutions made necessary by the growth of on-line shopping. The opportunity in this
research was a pioneering hardware/software solution for use by internet service providers. This is interpreted as new technology.
14 This company invented the first digital loudspeaker which required a frictionless transducer to operate effectively. The opportunity
that was the focus of this research was the invention of a ceramic transducer which would lead to numerous opportunities in addition
to the original loudspeaker requirement. This is interpreted as new technology.
16 This company had been producing intelligent telephone systems when it came upon the idea of managing call center queues. The
growth of call centers and growing customer dissatisfaction with them led to a demand for a way of automating call management
where the company dialed back the customer to save the customer waiting on line. This required a technical solution involving both
hardware and software development. This is interpreted as new technology.
20 This company was in the business of digitizing printed documents and creating a database mainly of government publications for
business use. The opportunity was to provide the data using the internet and creating a portal for wider access by providing a new
digitized data library for on line search (researchers note: Yahoo was formed at the same time as this company and the forming of
Google was conjoint with this opportunity). This is interpreted as new technology.
 B. Hulbert et al. / International Business Review 22 (2013) 293–303 301

The majority of companies who were pursuing opportunities through the identification of market opportunities still
existed in their original form, with the same owner/manager and appeared to have grown more gradually. Overall the
companies pursuing market opportunities were less likely to have been sold or to have achieved fast growth.

5. Discussion

Opportunities were identified by SMEs based on their experiential knowledge and/or because they were alert to
opportunities and always analyzing the market place. Although none of the firms in this study carried out formal market
research, the owner/managers were keen to gather market information wherever or whenever they could as they were
constantly looking for new opportunities for their companies and to make the most of their potential.
From this study it would appear that only five opportunities were ‘Schumpeterian’ ones that is, they were based on
significant environmental change (see Table 5). Of these five opportunities, 3 led to new operating divisions within the
existing firms and could therefore truly be described as entrepreneurial (Mueller, 2007; Shane, 2003). It would seem
reasonable to conclude that the other 17 cases were ‘market opportunities’ for the existing firms even though they required
quite different levels of innovation to be realized. Of these market opportunities, 3 were based on market penetration, 8 were
based on developing new products and 6 were based on entering new markets.
The key finding of this research is that a majority of sources for business opportunities for SMEs lie in the market and
although some are derived indirectly from environmental change, most are not derived as a direct consequence of disruptive
environmental change. Given the small number of companies involved this would appear to be a strong statement, however
rationally it would seem unlikely that very few SMEs would have this capability and in fact given that many of these firms
were located in and around the University town of Cambridge, England, the findings may indicate a higher than to be
expected relationship. However of significance is that such changes can lead indirectly to new ways of meeting existing
market needs and to ‘spin-off’ opportunities. This finding illustrates that it is very useful for SMEs to systematically search
the market place for opportunities, looking for either new or modified product ideas, and looking for new or emerging

Sources of Opportunity

Disruptive New markets as Marketplace

Environmental a secondary Dynamics
Change result of
environmental (Kirznerian or
(Schumpeterian change marketing
opportunities) opportunities)

Changes in: Meet existing ‘Gap’ (un-met need).

Political, needs in ‘new’ Growth in demand.
Social, way. Market consolidation.
Economic, or ‘Spin off’ Change in customer needs or
Technological developments & tastes.
environments new infra- Competitive activities.
structures. Change to distribution
method.
Changes in supply chain.

Entrepreneurial Business growth

opportunity opportunity
(New venture)

Marketing strategies:
Marketing strategies:
Market penetration
New product/service Product development
offering Market development
New business model Diversification

Fig. 2. Descriptive model: sources of opportunities and resulting marketing strategies.

302 B. Hulbert et al. / International Business Review 22 (2013) 293–303

markets. Therefore this should be seen as an important part of the owner/managers job and will be impacted upon by his or
her competence. Thus searching for sources of opportunities should be a proactive activity for SME owner/managers and not
left to chance or ‘luck’ even though serendipity or being in the right place at the right time can also provide opportunities. The
distinction between entrepreneurial opportunities and marketing opportunities is, in the context of growing SMEs,
unhelpful and could lead to confusion. Business opportunities, whether arising from disruptive environmental change or
from market-led change, can be pursued entrepreneurially (that is through a new venture) or by an existing business seeking
to grow. The decision to start a new venture in these companies was based on the strengths and resources available within
the firm and not on the source of the opportunity.
A further conclusion of this study is that using the term ‘a gap in the market’ in terms of identifying opportunities is in
itself too limiting in describing market-led opportunities given the breadth and scope in sources of opportunities arising out
of a dynamic market place. The use of Ansoff’s matrix to analyze market based opportunities provided valuable insights into
the sources of such opportunities. As such it is still a valuable framework for owner managers and their advisors to use to find
new opportunities for the growth of the firm.
Consequently traditional marketing analysis tools can identify significant sources and scope for growth opportunities for
SMEs as depicted in the descriptive model (Fig. 2) which is modified from the conceptual model (Fig. 1) to reflect secondary
or spin-off opportunities from environmental changes.

6. Conclusion

This study has investigated how SME owner-managers source opportunities so that they can grow their businesses. All of
the owner-managers in this study wanted to grow their businesses and recognized that they needed to source opportunities.
The opportunities originated from either market place dynamics, or directly and indirectly from environmental change.
These owner-managers found opportunities by using their experiential knowledge and/or because they were alert to
opportunities and were always analyzing the market place. SME owner/managers behavior is informed by their relationships
and networks and this will impact upon how ideas evolve and develop to become useful to their specific business context.
The limitation of this research is that it had as its focus, the opportunity management activities of owner-managers of
SMEs most of which were clustered around Cambridge in the United Kingdom, a geographical spread of locations from the
South of England to North East England. They are all located therefore in the most prosperous regions of the UK.
Opportunities sourced by SMEs in this study were based on market penetration, the development of new products and by
entering new markets. Given that there has been more research information available about sources of Schumpeterian
opportunities than about Kirznerian opportunities (Shane, 2003), this research has contributed to that debate. The SMEs in
this study were able to source opportunities derived from market place dynamics such as: the opportunity to purchase a
business from a competitor, to open a new subsidiary in another country, to purchase a business that is part of the existing
supply chain, by franchising, and extending the product range with new software.
Further research on opportunity recognition by SME owner-managers is planned in two stages. SMEs within the regional
entities of the United Kingdom (Wales, Scotland and Northern Ireland) and within two regions of Australia will be carried out
to investigate how they source opportunities to grow their businesses over time. The outcomes of these studies will be
analyzed and compared to identify the differences and similarities in SME owner-managers approach to opportunity
recognition and development in different locations. In addition a follow up study of the SMEs investigated for this research
will be carried out to compare the market performance of each of these firms.

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Dr. Bev Hulbert is a Senior Lecturer and Head of the Marketing Subject Group at Southampton University School of Management. Bev is a successful academic
with a proven track record as a CEO, strategic thinker and entrepreneur. Bev has held a number of senior management posts in both large and small businesses and
over a period of 12 years started four distinct businesses, one of which grew over 5 years to employ 80 people with a turnover of £15 million. A late start to an
academic career led to a PhD in 2006. He was chair of the UK Academy of Marketing Special Interest Group on Entrepreneurial and Small business Marketing
1997–9 and 2003–5 and Chair of the Annual Academy of Marketing Conference in 2012.

Dr. Audrey Gilmore is Professor of Services Marketing at the University of Ulster. Her teaching and research interests are in service marketing and management,
entrepreneurial marketing, SME marketing management competencies and networking. Currently she is the Special Interest Group co-ordinator for the Academy
of Marketing, an active member of its Entrepreneurial and SME marketing SIG and a regular contributor to the UIC International Research Symposium on
Marketing and Entrepreneurship. She is the out-going editor of the European Journal of Marketing and is on the review boards of various academic journals in the
UK, Europe, and USA.

Dr. David Carson is Professor of Marketing at the University of Ulster. His research interests lie in marketing for SMEs and service industries, particularly in travel
and tourism. He has published widely in these areas. He has wide business experience both in consultancy and directorship roles. He is past President of the
Academy of Marketing.