Understanding opportunity recognition: A study in creative industries

Abstract

Opportunities are defined as openings to bring into existence new goods, services, raw materials and organizational methods that allow outputs to be sold at prices that are above production costs. In most cases, identification of an opportunity precedes the decision to become an entrepreneur. However, it is not just new entrepreneurs but existing entrepreneurs can also pursue opportunities which enable them to seek new and better directions for their businesses. Understanding how people identify, evaluate and exploit opportunities is becoming a central research theme in entrepreneurship (Venkataraman, 1997; Shane & Venkataraman, 2000). Yu (2001) argues that, for mainstream economists, the argument that “everyone is surrounded by opportunities, but they only exist once they have been seen”, is a paradox. However, by adopting a subjective perspective, Yu explains that an entrepreneur's mental construct plays a central role in the process of opportunity identification, and that it is not the knowledge itself, but the way people apply knowledge, that is crucial in recognizing opportunities.