Effectual Entrepreneur and the Use of Social Media for Opportunity Recognition

  • Atthaphon MumiEmail author
Part of the Exploring Diversity in Entrepreneurship book series (EDE)


Social media have been perceived as the variety of online communication platforms that stimulate interaction in virtual communities. Existing studies have been found in manifesting the benefits of using social media for business-related purposes. Despite the emerging acceptance of these online communication platforms, few studies have explored social media in the context of entrepreneurship. This chapter, therefore, aims at providing an extended discussion of an entrepreneur’s use of social media, through the lens of the effectuation theory. We argue and propose that effectual entrepreneurs could benefit from using social media as it would influence the level of opportunity recognition. In addition, we discuss the contingent relationship between social media usage and various effectual attributes—affordable loss, entrepreneurial passion, and entrepreneurial self-efficacy—toward opportunity recognition. The conceptual framework from this chapter can be used as a foundation for future social media studies in the context of entrepreneurship.


Communication platforms  Effectuation Social media  Opportunity recognition 


  1. Aral, S., Dellarocas, C., & Godes, D. (2013). Introduction to the special issue-social media and business transformation: A framework for research. Information Systems Research, 24(1), 3–13.CrossRefGoogle Scholar
  2. Arend, R., Sarooghi, H., & Burkemper, A. (2015). Effectuation as ineffectual? Applying the 3E theory-assessment framework to a proposed new theory of entrepreneurship. Academy of Management Review. amr. 2014.0455.Google Scholar
  3. Bao, T., & Chang, T.-l. S. (2014). Why Amazon uses both the New York Times Best Seller List and customer reviews: An empirical study of multiplier effects on product sales from multiple earned media. Decision Support Systems, 67, 1–8.CrossRefGoogle Scholar
  4. Baron, R. A. (2006). Opportunity recognition as pattern recognition: How entrepreneurs “connect the dots” to identify new business opportunities. The Academy of Management Perspectives, 20(1), 104–119.CrossRefGoogle Scholar
  5. Bateman, P. J., Gray, P. H., & Butler, B. S. (2011). Research note-the impact of community commitment on participation in online communities. Information Systems Research, 22(4), 841–854.CrossRefGoogle Scholar
  6. Bird, B. J. (1989). Entrepreneurial behavior. Scott Foresman & Company. Glenview, IL. Taylor & Francis.Google Scholar
  7. Bird, B., Schjoedt, L., & Robert Baum, J. (2012). Entrepreneurs’ behavior: Elucidation and measurement introduction. Entrepreneurship Theory and Practice, 36(5), 889–913.CrossRefGoogle Scholar
  8. Cardon, M. S., Wincent, J., Singh, J., & Drnovsek, M. (2009). The nature and experience of entrepreneurial passion. Academy of Management Review, 34(3), 511–532.CrossRefGoogle Scholar
  9. Chandler, G. N., & Hanks, S. H. (1994). Founder competence, the environment, and venture performance. Entrepreneurship: Theory and Practice, 18(3), 77–90.Google Scholar
  10. Chandler, G. N., & Jansen, E. (1992). The founder’s self-assessed competence and venture performance. Journal of Business Venturing, 7(3), 223–236.CrossRefGoogle Scholar
  11. Cheliotis, G. (2009). From open source to open content: Organization, licensing and decision processes in open cultural production. Decision Support Systems, 47(3), 229–244.CrossRefGoogle Scholar
  12. Chen, C. C., Greene, P. G., & Crick, A. (1998). Does entrepreneurial self-efficacy distinguish entrepreneurs from managers? Journal of Business Venturing, 13(4), 295–316.CrossRefGoogle Scholar
  13. Cooper, A. C., Javier Gimeno-Gascon, F., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9(5), 371–395.CrossRefGoogle Scholar
  14. Croft, R. (2013). Blessed are the geeks: An ethnographic study of consumer networks in social media, 2006–2012. Journal of Marketing Management, 29(5–6), 545–561.CrossRefGoogle Scholar
  15. Dew, N., Read, S., Sarasvathy, S. D., & Wiltbank, R. (2009). Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices. Journal of Business Venturing, 24(4), 287–309.CrossRefGoogle Scholar
  16. Dew, N., Sarasathy, S., Read, S., & Wiltbank, R. (2009). Affordable loss: Behavioral economic aspects of the plunge decision. Strategic Entrepreneurship Journal, 3(2), 105–126.CrossRefGoogle Scholar
  17. Dew, N., Sarasvathy, S. D., Read, S., & Wiltbank, R. (2008). Immortal firms in mortal markets? An entrepreneurial perspective on the “innovator’s dilemma”. European Journal of Innovation Management, 11(3), 313–329.CrossRefGoogle Scholar
  18. Dewan, S., & Ramaprasad, J. (2014). Social media, traditional media, and music sales. MIS Quarterly, 38(1), 101–121.CrossRefGoogle Scholar
  19. Dou, Y., Niculescu, M. F., & Wu, D. J. (2013). Engineering optimal network effects via social media features and seeding in markets for digital goods and services. Information Systems Research, 24(1), 164–185.CrossRefGoogle Scholar
  20. Drucker, P. F. (1985). The discipline of innovation. Harvard Business Review, 63(3), 67–72.Google Scholar
  21. Fischer, E., & Rebecca Reuber, A. (2011). Social interaction via new social media:(how) can interactions on Twitter affect effectual thinking and behavior? Journal of Business Venturing, 26(1), 1–18.CrossRefGoogle Scholar
  22. Fischer, E., & Rebecca Reuber, A. (2014). Online entrepreneurial communication: Mitigating uncertainty and increasing differentiation via Twitter. Journal of Business Venturing, 29(4), 565–583.CrossRefGoogle Scholar
  23. Gaglio, C. M., & Katz, J. A. (2001). The psychological basis of opportunity identification: Entrepreneurial alertness. Small Business Economics, 16(2), 95–111.CrossRefGoogle Scholar
  24. Goh, K.-Y., Heng, C.-S., & Lin, Z. (2013). Social media brand community and consumer behavior: Quantifying the relative impact of user-and marketer-generated content. Information Systems Research, 24(1), 88–107.CrossRefGoogle Scholar
  25. Gopinath, S., Chintagunta, P. K., & Venkataraman, S. (2013). Blogs, advertising, and local-market movie box office performance. Management Science, 59(12), 2635–2654.CrossRefGoogle Scholar
  26. Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology, 78, 1360–1380.CrossRefGoogle Scholar
  27. Gumpert, D. E., & Stevenson, H. H. (1985). The heart of entrepreneurship. Harvard Business Review, 63(2), 85–94.Google Scholar
  28. Hanna, R., Rohm, A., & Crittenden, V. L. (2011). We’re all connected: The power of the social media ecosystem. Business Horizons, 54(3), 265–273.CrossRefGoogle Scholar
  29. Heinonen, K. (2011). Consumer activity in social media: Managerial approaches to consumers’ social media behavior. Journal of Consumer Behaviour, 10(6), 356–364.CrossRefGoogle Scholar
  30. Hills, G. E., Thomas Lumpkin, G., & Singh, R. P. (1997). Opportunity recognition: Perceptions and behaviors of entrepreneurs. Frontiers of Entrepreneurship Research, 17, 168–182.Google Scholar
  31. Hofer, C. W., & Sandberg, W. R. (1987). Improving new venture performance: Some guidelines for success. American Journal of Small Business, 12(1), 11–25.CrossRefGoogle Scholar
  32. Jiang, S., Chen, H., Nunamaker, J. F., & Zimbra, D. (2014). Analyzing firm-specific social media and market: A stakeholder-based event analysis framework. Decision Support Systems, 67, 30–39.CrossRefGoogle Scholar
  33. Johansson, E. (2000). Self-employment and liquidity constraints: Evidence from Finland. The Scandinavian Journal of Economics, 102, 123–134.CrossRefGoogle Scholar
  34. Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business Horizons, 53(1), 59–68.CrossRefGoogle Scholar
  35. King, R. A., Racherla, P., & Bush, V. D. (2014). What we know and don’t know about online word-of-mouth: A review and synthesis of the literature. Journal of Interactive Marketing, 28, 167–183.CrossRefGoogle Scholar
  36. Kirzner, I. M. (1979). Perception, opportunity, and profit: Studies in the theory of entrepreneurship. Chicago: University of Chicago Press.Google Scholar
  37. Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35(1), 60–85.Google Scholar
  38. Kotler, P. (2011). Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), 132–135.CrossRefGoogle Scholar
  39. Kozinets, R., Wojnicki, A. C., Wilner, S. J. S., & De Valck, K. (2010). Networked narratives: Understanding word-of-mouth marketing in online communities. Journal of Marketing, 74, 71.CrossRefGoogle Scholar
  40. Kumar, V., Bhaskaran, V., Mirchandani, R., & Shah, M. (2013). Practice prize winner-creating a measurable social media marketing strategy: Increasing the value and ROI of intangibles and tangibles for hokey pokey. Marketing Science, 32(2), 194–212.CrossRefGoogle Scholar
  41. Laroche, M., Habibi, M. R., & Richard, M.-O. (2013). To be or not to be in social media: How brand loyalty is affected by social media? International Journal of Information Management, 33(1), 76–82.CrossRefGoogle Scholar
  42. Leonardi, P. M., & Vaast, E. (2017). Social media and their affordances for organizing: A review and agenda for research. Academy of Management Annals, 11(1), 150–188.CrossRefGoogle Scholar
  43. Li, Y., Chen, H., Liu, Y., & Peng, M. W. (2014). Managerial ties, organizational learning, and opportunity capture: A social capital perspective. Asia Pacific Journal of Management, 31(1), 271–291.CrossRefGoogle Scholar
  44. Loughane, E. (2005). Net Success Interviews: Scholar
  45. Luo, X., & Zhang, J. (2013). How do consumer buzz and traffic in social media marketing predict the value of the firm? Journal of Management Information Systems, 30(2), 213–238.CrossRefGoogle Scholar
  46. Luo, X., Zhang, J., & Duan, W. (2013). Social media and firm equity value. Information Systems Research, 24(1), 146–163.CrossRefGoogle Scholar
  47. Ma, R., Huang, Y.-C., & Shenkar, O. (2011). Social networks and opportunity recognition: A cultural comparison between Taiwan and the United States. Strategic Management Journal, 32(11), 1183–1205.CrossRefGoogle Scholar
  48. Michaelidou, N., Siamagka, N. T., & Christodoulides, G. (2011). Usage, barriers and measurement of social media marketing: An exploratory investigation of small and medium B2B brands. Industrial Marketing Management, 40(7), 1153–1159.CrossRefGoogle Scholar
  49. Miller, A. R., & Tucker, C. (2013). Active social media management: The case of health care. Information Systems Research, 24(1), 52–70.CrossRefGoogle Scholar
  50. Moe, W. W., & Schweidel, D. A. (2012). Online product opinions: Incidence, evaluation, and evolution. Marketing Science, 31(3), 372–386.CrossRefGoogle Scholar
  51. Mumi, A., Obal, M., & Yang, Y. (2019). Investigating social media as a firm’s signaling strategy through an IPO. Small Business Economics, 53(3), 631–645.CrossRefGoogle Scholar
  52. Nam, H., & Kannan, P. K. (2014). The informational value of social tagging networks. Journal of Marketing, 78(4), 21–40.CrossRefGoogle Scholar
  53. Nambisan, S. (2017). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055.CrossRefGoogle Scholar
  54. Naylor, R. W., Lamberton, C. P., & West, P. M. (2012). Beyond the “like” button: The impact of mere virtual presence on brand evaluations and purchase intentions in social media settings. Journal of Marketing, 76(6), 105–120.CrossRefGoogle Scholar
  55. Ngai, E. W. T., Tao, S. S. C., & Moon, K. K. L. (2015). Social media research: Theories, constructs, and conceptual frameworks. International Journal of Information Management, 35(1), 33–44.CrossRefGoogle Scholar
  56. Oestreicher-Singer, G., & Sundararajan, A. (2012). The visible hand? Demand effects of recommendation networks in electronic markets. Management Science, 58(11), 1963–1981.CrossRefGoogle Scholar
  57. Orlikowski, W. J., & Scott, S. V. (2013). What happens when evaluation goes online? Exploring apparatuses of valuation in the travel sector. Organization Science, 25(3), 868–891.CrossRefGoogle Scholar
  58. Ozgen, E., & Baron, R. A. (2007). Social sources of information in opportunity recognition: Effects of mentors, industry networks, and professional forums. Journal of Business Venturing, 22(2), 174–192.CrossRefGoogle Scholar
  59. Perrigot, R., Kacker, M., Basset, G., & Cliquet, G. (2012). Antecedents of early adoption and use of social media networks for stakeholder communications: Evidence from franchising. Journal of Small Business Management, 50(4), 539–565.CrossRefGoogle Scholar
  60. Perry, J. T., Chandler, G. N., & Markova, G. (2012). Entrepreneurial effectuation: A review and suggestions for future research. Entrepreneurship Theory and Practice, 36(4), 837–861.CrossRefGoogle Scholar
  61. Phang, C. W., Zhang, C., & Sutanto, J. (2013). The influence of user interaction and participation in social media on the consumption intention of niche products. Information & Management, 50(8), 661–672.CrossRefGoogle Scholar
  62. Rapp, A., Beitelspacher, L. S., Grewal, D., & Hughes, D. E. (2013). Understanding social media effects across seller, retailer, and consumer interactions. Journal of the Academy of Marketing Science, 41(5), 547–566.CrossRefGoogle Scholar
  63. Read, S., Song, M., & Smit, W. (2009). A meta-analytic review of effectuation and venture performance. Journal of Business Venturing, 24(6), 573–587.CrossRefGoogle Scholar
  64. Rishika, R., Kumar, A., Janakiraman, R., & Bezawada, R. (2013). The effect of customers’ social media participation on customer visit frequency and profitability: An empirical investigation. Information Systems Research, 24(1), 108–127.CrossRefGoogle Scholar
  65. Rokka, J., Karlsson, K., & Tienari, J. (2014). Balancing acts: Managing employees and reputation in social media. Journal of Marketing Management, 30(7–8), 802–827.CrossRefGoogle Scholar
  66. Rollins, M., Nickell, D., & Wei, J. (2014). Understanding salespeople’s learning experiences through blogging: A social learning approach. Industrial Marketing Management, 43(6), 1063–1069.CrossRefGoogle Scholar
  67. Rui, H., Liu, Y., & Whinston, A. (2013). Whose and what chatter matters? The effect of tweets on movie sales. Decision Support Systems, 55(4), 863–870.CrossRefGoogle Scholar
  68. Sambasivan, M., Abdul, M., & Yusop, Y. (2009). Impact of personal qualities and management skills of entrepreneurs on venture performance in Malaysia: Opportunity recognition skills as a mediating factor. Technovation, 29(11), 798–805.CrossRefGoogle Scholar
  69. Sarasvathy, D. K., Simon, H. A., & Lave, L. (1998). Perceiving and managing business risks: Differences between entrepreneurs and bankers. Journal of Economic Behavior & Organization, 33(2), 207–225.CrossRefGoogle Scholar
  70. Sarasvathy, S. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243–263.CrossRefGoogle Scholar
  71. Sarasvathy, S., & Dew, N. (2008). Effectuation and Over-Trust: Debating Goel and Karri. Entrepreneurship Theory and Practice, 32(4), 727–737.CrossRefGoogle Scholar
  72. Schniederjans, D., Cao, E. S., & Schniederjans, M. (2013). Enhancing financial performance with social media: An impression management perspective. Decision Support Systems, 55(4), 911–918.CrossRefGoogle Scholar
  73. Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. New Brunswick, NJ: Transaction Publishers.Google Scholar
  74. Schweidel, D. A., & Moe, W. W. (2014). Listening in on social media: A joint model of sentiment and venue format choice. Journal of Marketing Research, 51(4), 387–402.CrossRefGoogle Scholar
  75. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.CrossRefGoogle Scholar
  76. Shane, S. A. (2003). A general theory of entrepreneurship: The individual-opportunity nexus.Northampton, MA: Edward Elgar Publishing.Google Scholar
  77. Singh, R. P. (2000). Entrepreneurial opportunity recognition through social networks. New York, NY: Routledge.Google Scholar
  78. Smith, K. (2016). Marketing: 96 amazing social media statistics and facts for 2016, 2016. Available at
  79. Stephen, A. T., & Galak, J. (2012). The effects of traditional and social earned media on sales: A study of a microlending marketplace. Journal of Marketing Research, 49(5), 624–639.CrossRefGoogle Scholar
  80. Stieglitz, S., & Dang-Xuan, L. (2013). Emotions and information diffusion in social media—Sentiment of microblogs and sharing behavior. Journal of Management Information Systems, 29(4), 217–248.CrossRefGoogle Scholar
  81. Sussan, F., & Acs, Z. J. (2017). The digital entrepreneurial ecosystem. Small Business Economics, 49(1), 55–73.CrossRefGoogle Scholar
  82. Swani, K., Brown, B. P., & Milne, G. R. (2014). Should tweets differ for B2B and B2C? An analysis of Fortune 500 companies’ Twitter communications. Industrial Marketing Management, 43(5), 873–881.CrossRefGoogle Scholar
  83. Toubia, O., & Stephen, A. T. (2013). Intrinsic vs. image-related utility in social media: Why do people contribute content to twitter? Marketing Science, 32(3), 368–392.CrossRefGoogle Scholar
  84. VanMeter, R. A., Grisaffe, D. B., & Chonko, L. B. (2015). Of “likes” and “pins”: The effects of consumers’ attachment to social media. Journal of Interactive Marketing, 32, 70–88.CrossRefGoogle Scholar
  85. Weiss, G. (2014). This is how small businesses are using social media. Available at
  86. Wilson, F., Kickul, J., Marlino, D., Barbosa, S. D., & Griffiths, M. D. (2009). An analysis of the role of gender and self-efficacy in developing female entrepreneurial interest and behavior. Journal of Developmental Entrepreneurship, 14(02), 105–119.CrossRefGoogle Scholar
  87. Wiltbank, R., Dew, N., Read, S., & Sarasvathy, S. D. (2006). What to do next? The case for non-predictive strategy. Strategic Management Journal, 27(10), 981–998.CrossRefGoogle Scholar
  88. Wiltbank, R., Read, S., Dew, N., & Sarasvathy, S. D. (2009). Prediction and control under uncertainty: Outcomes in angel investing. Journal of Business Venturing, 24(2), 116–133.CrossRefGoogle Scholar
  89. Yu, Y., Duan, W., & Cao, Q. (2013). The impact of social and conventional media on firm equity value: A sentiment analysis approach. Decision Support Systems, 55(4), 919–926.CrossRefGoogle Scholar
  90. Zadeh, A. H., & Sharda, R. (2014). Modeling brand post popularity dynamics in online social networks. Decision Support Systems, 65, 59–68.CrossRefGoogle Scholar
  91. Zhao, H., Seibert, S. E., & Hills, G. E. (2005). The mediating role of self-efficacy in the development of entrepreneurial intentions. Journal of Applied Psychology, 90(6), 1265.CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Mahasarakham Business SchoolMahasarakham UniversityMaha SarakhamThailand

Personalised recommendations