Abstract
What drives the progress and success of start-up processes? The “entrepreneurship nexus” perspective holds that entrepreneurial processes and their outcomes are shaped by the interplay of individuals and the “opportunities” they pursue. This chapter argues that progress within this perspective has been hampered by inescapable complexities inherent in any notion of “opportunity.” To make further progress, the chapter argues that what prior research has been trying to capture in the “opportunity” construct needs to be studied under three separate theoretical notions: external enablers, new venture ideas, and individuals’ opportunity confidence.
“[T]here is remarkable consensus on the definition of an opportunity”
(Alvarez, Barney, & Anderson, 2013 , p. 302)
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Notes
- 1.
Although “opportunities” had been discussed before in entrepreneurship (e.g., Gaglio, 1997) and management (e.g., Jackson & Dutton, 1988), most of the work has appeared after the publication of Shane and Venkataraman’s paper. Short, Ketchen, Shook, and Ireland (2010) reviewed 68 papers in 16 leading journal, which used “opportunity” in relevant ways in title, abstract, or keywords. Only eight of these were published before 2000. A whopping 150 papers fulfilling the criteria were published in the same journals 2010–2014 (Davidsson, 2015).
- 2.
This is not to deny the progress that has been made on topics such as the sources of opportunities (e.g., Eckhardt & Shane, 2003; Holcombe, 2003; Plummer et al., 2007), different types of opportunities (e.g., Eckhardt & Shane, 2003; Companys & McMullen, 2007; Sarasvathy, Dew, Velamuri, & Venkataraman 2003), and (to a lesser extent) operationalizations of their characteristics (Dahlqvist & Wiklund, 2012; Grégoire, Shepherd, & Schurer Lambert, 2010). The greatest conceptual and empirical progress has arguably been made on drivers of the perception of opportunity (e.g., R. A. Baron, 2006; R. A. Baron & Ensley, 2006; Dimov, 2007; Grégoire & Shepherd, 2012; Grégoire, Barr, & Shepherd, 2010; Shane, 2000; Shepherd & DeTienne, 2005), including McMullen and Shepherd’s (2006) important distinction between (perception of) first-person and third-person opportunities. However, progress on core issues pertaining to the nexus framework has been limited (Davidsson, 2015).
- 3.
Important ideas, an adapted figure, ditto table, and some small snippets of text in this chapter first appeared in Davidsson (2015).
- 4.
The theorized substance of phlogiston was a leap forward over the ancient, four-element theory of (proto-) chemistry, and in its heyday it helped develop human understanding of phenomena like combustion, metabolism, and corrosion as well as how they are interconnected. However, over time its assumed characteristics turned out to be anomalous and with the new discovery/theory of oxygen, phlogiston was proven nonexistent and the associated theory inferior to the oxygen- and energy-based explanations that superseded it.
- 5.
The definition in the top right corner of Fig. 8.1 has a level of recurring use (with or without adaptation; see Davidsson, 2015) within and across authors. This is the definition originally suggested by Shane and Venkataraman (2000; see also Shane, 2000) with reference to Casson (1982). It is not Casson’s wording, though; Casson (1982) does not offer a definition of “opportunity.” Apart from its creative grammar (sell organizing processes?), note that this definition implies the scope conditions for-profit, innovation, and a user pays revenue model.
- 6.
This is, of course, about the freesheet Metro and its original launch in Stockholm in 1995. I anonymized the case only to make it a little bit harder to identify the author in earlier submissions of what became Davidsson (2015). I cut it from the final version and now that I use it here, I really wanted to keep the RideRead name as well. Clever, ay?
- 7.
As a citizen of country B—that is, born a B-countrarian—I was equipped with this contextual knowledge and hence could make sense of RideRead’s initial success, at least in arrears. I claim no general ability to spot “objective opportunities” with this kind of detail and clarity, and especially not a priori.
- 8.
This said, I acknowledge that instances where the focal entity essentially consists of a site and its characteristics, such as well-defined geographical markets (Barreto, 2012), real estate development sites (Fiet, 2007), or potential mining sites (Bakker & Shepherd, 2015), offer some potential for a reasonable approximation of “objective opportunity” for some types of research designs relying on observational data. There would still be question marks for “objective favorability,” though, as well as ambiguity regarding what are the constituent parts of the “opportunity.”
- 9.
Note that under this definition, there is no uncertainty about the opportunity itself; the only uncertainty concerns whether agents are going to correctly discover and exploit it. Shane (2012, p. 15) tries to get away from this by saying that the definition of opportunity in Discovery Theory only requires the opportunity to have a probability of a profitable outcome which exceeds zero. This, of course, is inconsistent with Eckhardt and Shane’s statement and effectively excludes nothing. Since flight was not against the laws of nature even in medieval times, I would grant Da Vinci a success chance of at least 0.000000000000000000001—a number exceeding zero—had he set his mind to creating LEO Air. As we shall soon see, excluding no sets of external circumstances may actually be a good thing, but the more important lesson is that the entire exercise of finding the criterion that draws the line a priori between opportunities and non-opportunities is a vain and unnecessary effort.
- 10.
Admittedly, the scheme could actually work if we were only interested in issues of fit. But admitting this in the main text wouldn’t allow as powerful and ending to the paragraph.
- 11.
Current formulations of Discovery Theory both do and do not allow for this. It is sometimes emphasized that opportunities are uncertain and/or that they may have expired by the time the entrepreneur is ready to launch. It is also acknowledged that agents act on subjective conjectures along with an implication that these may be wrong. However, there is no concept for such non-opportunities that agents may unwisely try to exploit or a concept that includes both opportunities and such non-opportunities (“conjecture” denotes positive evaluation and not the substance of the [non-] opportunity; see Eckhardt & Shane, 2003, p. 339). Individual and opportunity remain the elements of the nexus.
- 12.
One way of making sense of how this came to be is to note that “objective opportunity” as defined by Shane and Venkataraman (2000) may actually suit their first central research question ([1] why, when, and how opportunities for the creation of goods and services come into existence?) but not the remaining two questions ([2] why, when, and how some people and not others discover and exploit these opportunities?, and [3] why, when, and how different modes of action are used to exploit entrepreneurial opportunities?).
- 13.
- 14.
Three arguments have been raised against using subjective ideas in a nexus approach. As we noted earlier in this chapter, Shane (2012, p. 16) argues that without actor-independent “opportunities,” there is no meaningful nexus. Second, the evolving idiosyncrasy view holds that the “opportunity” (this usually refers to a subjective idea) is so intertwined with the agent that they cannot be meaningfully separated (Dimov, 2011; Sarason et al., 2006). Third, there is the suggestion that the solution to the elusiveness of “opportunities” is not to put subjective ideas in their place but to increase the focus on actions in the entrepreneurial process (e.g., Dimov, 2011; P. Klein, 2008). See Davidsson (2015) for rebuttals of all three.
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Davidsson, P. (2016). The Entrepreneurship Nexus. In: Researching Entrepreneurship. International Studies in Entrepreneurship, vol 33. Springer, Cham. https://doi.org/10.1007/978-3-319-26692-3_8
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