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Abstract:
Recognizing viable business opportunities builds the basis for entrepreneurial action and value creation. Even though the concept of opportunity has been discussed extensively, we still do not understand well how opportunities are recognized or developed to innovative business ideas on individual and firm level. Various factors related to opportunity recognition have been explored, such as education and business experience of the entrepreneur. While these findings are important, they do not explain sufficiently how entrepreneurs utilize these antecedents. Approaches originating from cognitive sciences have the potential to advance our understanding by examining underlying cognitive processes employed in opportunity recognition and business ideation. This conceptual paper provides a review of literature that deploys a cognitive perspective and discusses emerging theories, e.g. schemata, mental simulations, and structural alignment. Eventually, an outlook on future research, including practical issues, such as how to facilitate opportunity recognition, is presented.
Keywords: Entrepreneurial opportunity; Opportunity recognition; Business idea; Entrepreneurial cognition; Schemata; Entrepreneurial alertness; Counterfactual thinking; Pattern recognition; Structural alignment; Divergent thinking; Entrepreneurial creativity
1 Introduction
Entrepreneurship is defined as the process, in which opportunities are identified, evaluated and exploited (Baron and Shane, 2008, Shane and Venkataraman, 2000). Accordingly, opportunities are impetus for any entrepreneurial action and potential success. The recognition1 of opportunities is considered as a target-oriented process that serves as means to new value creation and innovation (Drucker, 1985). Although the concept of opportunity recognition (OR) has been discussed extensively within the research community, we still do not understand well, how opportunities for new business ideas are actually perceived on an individual and firm level. Various factors related to OR have been empirically examined, such as the positive effect of education and business experience on OR (e.g. Shepherd and DeTienne, 2005). While these findings are important, they do not explain sufficiently how entrepreneurs utilize these antecedents in the OR process. Furthermore, there is a large body of literature focusing on entrepreneurial personality and unique abilities, such as Kirzner's theory (1973) of the alert entrepreneur, who identifies opportunities without active search. However, treating alertness as something, the successful entrepreneurs possess, indeed does not explain, how they perceive opportunities. Rather than asking what special capabilities or experiences an entrepreneur should have, it is more promising to ask what kind of cognitive...