Based on these observations regarding superficial/structural similarities and individuals’ ability to recognize non-obvious opportunities, my (Dean) colleague and I (Grégoire and Shepherd 2012) explored the degree to which beliefs about technology-market matches with low superficial similarity levels and high structural similarity levels differ from beliefs about technology-market matches with other similarity configurations. The study found that the human mind clearly prefers reasoning involving structural relationships such that opportunity beliefs about a novel technology-market match with low superficial similarity levels but high structural similarity levels are more positive than beliefs for new technology-market matches with high superficial similarity levels but low structural similarity levels, and—rather obviously—they are also more positive than beliefs for new technology-market matches with low levels of both superficial and structural similarity. Unsurprisingly, the most positive opportunity beliefs for new technology-market matches have high levels of both superficial and structural similarities.
Thus, as we have argued, differences across possible opportunities are relevant. That is, individuals’ cognitive abilities and resources are not the only factors that matter in the formation of opportunity beliefs; information differences about opportunities’ underlying elements play an important role in this process as well. Consideration of the ways differences in opportunities impact structural alignment’s effectiveness in generating opportunity beliefs complement studies recognizing the role these differences play in opportunity exploitation. For example, Samuelsson and Davidsson (2009) showed that the effects human and social capital have on new ventures’ development activities are substantial for ventures going after innovative opportunities but not for ventures going after imitative opportunities. Further, Dahlqvist and Wiklund (2012) validated an opportunity newness measure and revealed that newness correlates with intellectual property protection and patent application. By shifting the focus away from the performance effects of exploitation-relevant differences to the inherent traits of opportunity beliefs for new supply-demand combinations, researchers can more successfully differentiate between the effects of differences across possible opportunities and the effects of individuals’ motivations, resources, and capabilities.
Conclusion
In this chapter, we illustrated how individuals’ prior knowledge impacts the opportunity- recognition process. While higher levels of knowledge (education) seem to facilitate opportunity recognition generally, different types of knowledge trigger the recognition of different types of opportunities (e.g., knowledge related to problems of nature can trigger the identification of environmental opportunities, and knowledge related to international markets can facilitate the identification of opportunities abroad). Knowledge related to opportunity recognition can be internal to the entrepreneur but can also be provided by external sources, such as venture capital investors. Moreover, it appears that entrepreneurs’ prior knowledge plays an important role in the cognitive process of structural alignment that “connects the known with the unknown” and, in doing so, can facilitate opportunity recognition. In the next chapter, we explore how entrepreneurs’ motivation, independently and conjointly with knowledge, impacts entrepreneurial cognition.
Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.
References
Alvarez, S. A., & Barney, J. B. (2010). Entrepreneurship and epistemology: The philosophical underpinnings of the study of entrepreneurial opportunities. Academy of Management Annals, 4(1), 557–583.
Alvarez, S. A., & Busenitz, L. W. (2001). The entrepreneurship of resource-based theory. Journal of Management, 27(6), 755–775.
Amabile, T. M. (1997). Entrepreneurial creativity through motivational synergy. Journal of Creative Behavior, 31(1), 18–26.
Anand, V., Glick, W. H., & Manz, C. C. (2002). Thriving on the knowledge of outsiders: Tapping organizational social capital. The Academy of Management Executive, 16(1), 87–101.
Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18(1), 105–123.
Armstrong, S., Curtis, M., Kent, R., Maxwell, D., Mousseau, F., Pearce, F., Sadler, K., Tamminga, P., & Tansey, G. (2011). In L. Knight (Ed.), World disasters report 2011: Focus on hunger and malnutrition. Lyons: Imprimerie Chirat, 2(1), 41–49.
Ashbolt, N. J. (2004). Microbial contamination of drinking water and disease outcomes in developing regions. Toxicology, 198(1), 229–238.
Audretsch, D. B., & Feldman, M. P. (1996). R&D spillovers and the geography of innovation and production. The American Economic Review, 86(3), 630–640.
Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43(5), 909–924.
Barnett, M. L. (2008). An attention-based view of real options reasoning. Academy of Management Review, 33(3), 606–628.
Baron, R. A. (2006). Opportunity recognition as pattern recognition: How entrepreneurs “connect the dots” to identify new business opportunities. Academy of Management Perspectives, 20(1), 104–119.
Baron, R. A., & Ensley, M. D. (2006). Opportunity recognition as the detection of meaningful patterns: Evidence from comparisons of novice and experienced entrepreneurs. Management Science, 52(9), 1331–1344.
Bassok, M., & Holyoak, K. J. (1989). Interdomain transfer between isomorphic topics in algebra and physics. Journal of Experimental Psychology: Learning, Memory, and Cognition, 15(1), 153.
Baum, J. A., & Silverman, B. S. (2004). Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups. Journal of Business Venturing, 19(3), 411–436.
Baum, J. A., Calabrese, T., & Silverman, B. S. (2000). Don’t go it alone: Alliance network composition and startups’ performance in Canadian biotechnology. Strategic Management Journal, 267–294.
Blanchette, I., & Dunbar, K. (2001). Analogy use in naturalistic settings: The influence of audience, emotion, and goals. Memory & Cognition, 29(5), 730–735.
Bloodgood, J. M., Sapienza, H. J., & Almeida, J. G. (1996). The internationalization of new high-potential US ventures: Antecedents and outcomes. Entrepreneurship: Theory and Practice, 20(4), 61–77.
Boston Indicators Project. (2007). A time like no other: Charting the time for the next revolution. Boston: The Boston Foundation, 35(1), 137–163.
Boyd, D. P., & Gumpert, D. E. (1983). The effects of stress on early-stage entrepreneurs. Frontiers of Entrepreneurship Research, 180, 58–63.
Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making. Journal of Business Venturing, 12(1), 9–30.
Buttner, E. H. (1992). Entrepreneurial stress: Is it hazardous to your health? Journal of Managerial Issues, 4, 223–240.
Cardon, M. S., Foo, M. D., Shepherd, D., & Wiklund, J. (2012). Exploring the heart: Entrepreneurial emotion is a hot topic. Entrepreneurship Theory and Practice, 36(1), 1–10.
Carpenter, M. A., Pollock, T. G., & Leary, M. M. (2003). Testing a model of reasoned risk-taking: Governance, the e
xperience of principals and agents, and global strategy in high-technology IPO firms. Strategic Management Journal, 24(9), 803–820.
Catrambone, R., & Holyoak, K. J. (1989). Overcoming contextual limitations on problem-solving transfer. Journal of Experimental Psychology: Learning, Memory, and Cognition, 15(6), 1147.
Catrambone, R., & Holyoak, K. J. (1990). Learning subgoals and methods for solving probability problems. Memory & Cognition, 18(6), 593–603.
Cattani, G., & Ferriani, S. (2008). A core/periphery perspective on individual creative performance: Social networks and cinematic achievements in the Hollywood film industry. Organization Science, 19(6), 824–844.
Chang, S. J. (2004). Venture capital financing, strategic alliances, and the initial public offerings of internet startups. Journal of Business Venturing, 19(5), 721–741.
Chatterji, A. K., Fabrizio, K. R., Mitchell, W., & Schulman, K. A. (2008). Physician-industry cooperation in the medical device industry. Health Affairs, 27(6), 1532–1543.
Chattopadhyay, P., Glick, W. H., & Huber, G. P. (2001). Organizational actions in response to threats and opportunities. Academy of Management Journal, 44(5), 937–955.
Chen, H., & Chen, T. J. (1998). Network linkages and location choice in foreign direct investment. Journal of International Business Studies, 29(3), 445–467.
Chi, M. T., Feltovich, P. J., & Glaser, R. (1981). Categorization and representation of physics problems by experts and novices. Cognitive Science, 5(2), 121–152.
Choo, F., & Trotman, K. T. (1991). The relationship between knowledge structure and judgments for experienced and inexperienced auditors. Accounting Review, 6(3), 464–485.
Clement, C. A., & Gentner, D. (1991). Systematicity as a selection constraint in analogical mapping. Cognitive Science, 15(1), 89–132.
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35, 128–152.
Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9(5), 371–395.
Corbett, A. C. (2005). Experiential learning within the process of opportunity identification and exploitation. Entrepreneurship Theory and Practice, 29(4), 473–491.
Costanza, R., D’Arge, R., de Groot, R., Farber, S., Grasso, M., & Hannon, B. (1997). The value of the world’s ecosystems services and natural capital. Nature, 387, 253–260.
Coviello, N. E. (2006). The network dynamics of international new ventures. Journal of International Business Studies, 37(5), 713–731.
Coviello, N. E., & Munro, H. J. (1995). Growing the entrepreneurial firm: Networking for international market development. European Journal of Marketing, 29(7), 49–61.
Crossan, M. M., & Berdrow, I. (2003). Organizational learning and strategic renewal. Strategic Management Journal, 24(11), 1087–1105.
Crossan, M. M., Lane, H. W., & White, R. E. (1999). An organizational learning framework: From intuition to institution. Academy of Management Review, 24(3), 522–537.
Csikszentmihalyi, M. (1975). Play and intrinsic rewards. Journal of Humanistic Psychology, 15(3), 41–63.
Csikszentmihalyi, M. (2000). Beyond boredom and anxiety. San Francisco: Jossey-Bass.
Dahl, D. W., & Moreau, P. (2002). The influence and value of analogical thinking during new product ideation. Journal of Marketing Research, 39(1), 47–60.
Dahlqvist, J., & Wiklund, J. (2012). Measuring the market newness of new ventures. Journal of Business Venturing, 27(2), 185–196.
Daily, G. (Ed.). (1997). Nature’s services: Societal dependence on natural ecosystems. Island Press, 1(1), 75.
Das, T. K., & Teng, B. S. (2000). A resource-based theory of strategic alliances. Journal of Management, 26(1), 31–61.
Davenport, T. H., & Prusak, L. (1998). Working knowledge: How organizations manage what they know. Cambridge, MA: Harvard Business Press.
Davidsson, P. (2003). The domain of entrepreneurship research: Some suggestions. In D. A. Shepherd & J. Katz (Eds.), Cognitive approaches to entrepreneurship research (pp. 315–372). Bingley: Emerald Publishing.
Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301–331.
Day, S. B., & Gentner, D. (2007). Non intentional analogical inference in text comprehension. Memory & Cognition, 35(1), 39–49.
Deeds, D. L., Decarolis, D., & Coombs, J. E. (1999). The impact of firm-specific capabilities on the amount of capital raised in an initial public offering: An empirical investigation of the biotechnology industry. Strategic Management Journal, 20, 953–968.
Dimov, D. (2004). The individuality of opportunity identification: A critical review and extension. In J. Butler (Ed.), Opportunity identification and entrepreneurial behaviour (pp. 135–161). Greenwich: Information Age Publishing.
Dimov, D. (2007a). Beyond the single-person, single-insight attribution in understanding entrepreneurial opportunities. Entrepreneurship Theory and Practice, 31(5), 713–731.
Dimov, D. (2007b). From opportunity insight to opportunity intention: The importance of person-situation learning match. Entrepreneurship Theory and Practice, 31(4), 561–583.
Domurath, A., & Patzelt, H. (2016). Entrepreneurs’ assessments of early international entry: The role of foreign social ties, venture absorptive capacity, and generalized trust in others. Entrepreneurship Theory and Practice, 40(5), 1149–1177.
Dunbar, K. (1993). Concept discovery in a scientific domain. Cognitive Science, 17(3), 397–434.
Dunning, J. H. (2000). The eclectic paradigm as an envelope for economic and business theories of MNE activity. International Business Review, 9(2), 163–190.
Dutton, J. E., & Jackson, S. E. (1987). Categorizing strategic issues: Links to organizational action. Academy of Management Review, 12(1), 76–90.
Dutton, J. E., Worline, M. C., Frost, P. J., & Lilius, J. (2006). Explaining compassion organizing. Administrative Science Quarterly, 51(1), 59–96.
Dyer, J. H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23(4), 72–679.
Eckhardt, J. T., & Shane, S. A. (2003). Opportunities and entrepreneurship. Journal of Management, 29(3), 333–349.
Etzioni, A. (1996). The responsive community: A communitarian perspective. American Sociological Review, 61(1), 11.
Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. American Economic Review, 79(3), 519–535.
Evans, A. G., & Varaiya, N. P. (2003). Anne Evans: Assessment of a biotechnology market opportunity. Entrepreneurship Theory and Practice, 28(1), 87–105.
Feinberg, S. E., & Gupta, A. K. (2004). Knowledge spillovers and the assignment of R&D responsibilities to foreign subsidiaries. Strategic Management Journal, 25(8–9), 823–845.
Fernhaber, S. A., Gilbert, B. A., & McDougall, P. P. (2008). International entrepreneurship and geographic location: An empirical examination of new venture internationalization. Journal of International Business Studies, 39(2), 267–290.
Fernhaber, S. A., McDougall-Covin, P. P., & Shepherd, D. A. (2009). International entrepreneurship: Leveraging internal and external knowledge sources. Strategic Entrepreneurship Journal, 3(4), 297–320.
Fiske, S. T., & Taylor, S. E. (1991). Social cognition (2nd ed., pp. 16–15). New York: McGraw-Hill.
Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth ventures. Academy of Management Journal, 46(3), 374–384.
Frederick, D. M., & Libby, R. (1986). Expertise and auditors’ judgments of conjunctive events. Journal of Accounting Research, 28, 270–290.
Foley, D. (2003). An examination of indigenous Australian entrepreneurs. Journal of Developmental Entrepreneurship, 8(2), 133.
Fried, V. H., Bruton, G. D., & Hisrich, R. D. (1998). Strategy and the board of
directors in venture capital-backed firms. Journal of Business Venturing, 13(6), 493–503.
Gaglio, C. M., & Katz, J. A. (2001). The psychological basis of opportunity identification: Entrepreneurial alertness. Small Business Economics, 16(2), 95–111.
Gavetti, G., & Rivkin, J. W. (2005). How strategists really think. Harvard Business Review, 83(4), 54–63.
Gavetti, G., & Rivkin, J. W. (2007). On the origin of strategy: Action and cognition over time. Organization Science, 18(3), 420–439.
Entrepreneurial Cognition Page 6
