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Abstract
Before technological change leads to new processes, products, markets, or ways of organizing, entrepreneurs must discover opportunities in which to exploit the new technology. To date, research has not explained adequately why entrepreneurs discover these opportunities, which creates several conceptual problems in the entrepreneurship literature. Drawing on Austrian economics, I argue that opportunity discovery is a function of the distribution of information in society (Hayek 1945). Through in-depth case studies of eight sets of entrepreneurs who exploit a single MIT invention, I show that entrepreneurs discover opportunities related to the information that they already possess. I use these findings to draw several implications that differ from those prevailing in the entrepreneurship literature, including: (1) entrepreneurs do not always select between alternative market opportunities for new technologies; (2) the source of entrepreneurship lies in differences in information about opportunities; (3) the results of prior studies of entrepreneurial exploitation may suffer from bias; and (4) individual differences influence the opportunities that people discover, how their entrepreneurial efforts are organized, and how the government can influence this process.
(Entrepreneurship; Austrian Economics; Discovery)
Technological innovations are usually thought to create business opportunities that are unequivocal and readily apparent to any knowledgeable observer. Drawing on Austrian economics, this article portrays the recognition of such opportunities as distinctive cognitive feats whose accomplishment is conditioned by an entrepreneur's prior experience and education. In-depth case studies demonstrate the multiple opportunities that can arise from a single innovation.
Alan Meyer
Introduction
Technological change provides the basis for the creation of new processes, new products, new markets, and new ways of organizing; and entrepreneurship is central to this process (Schumpeter 1934, p. 66). However, before technological change results in this process of entrepreneurial exploitation, entrepreneurs must discover opportunities in which to use the new technologies. Because opportunities do not appear in a prepackaged form (Venkataraman 1997), this process of opportunity identification is far from trivial. In any given new technology, entrepreneurs could fail to identify any opportunities, or could identify the wrong opportunities, making an explanation for the discovery of opportunities an important part of the domain of entrepreneurship research.
Unfortunately, most research on entrepreneurship investigates the entrepreneurial process after opportunities have been discovered (Fiet 1996). Researchers typically adopt this approach because they...