Examine the three theoretical models of opportunity recognition Essay

Examine the three theoretical models of opportunity recognition - Essay Example In our second section, we de-construct the factors that impact opportunity recognition. Here, we explain the various ways in which cognition impacts opportunity recognition. In our third section, we study the influence of human and social capital on the opportunity recognition process. In our fourth and last section, we summarize the arguments and provide concluding remarks. I. Opportunity Recognition: theoretical constructs The capacity to identify and spot a successful business opportunity is the hallmark of a preliminary stage in any new entrepreneurial venture creation (Ardichvili, Cardozo & Ray 2003). Once an opportunity is recognized, the individual then proceeds to analyze it through different angles. What distinguishes an individual’s capability to identify the right opportunity? This forms the basis of the discussion for our paper. When we extend the unit of analysis from an individual to a firm, then we can also infer that opportunity recognition follows from a caref ul, analytical process (Denrell, Fang & Winter 2003). Possibly, we could conclude that an individual may not possess all the resources that are at the disposal of a firm, yet an individual develops his or her own methods to evaluate a business opportunity. ... These form the broad backbone of the opportunity recognition process. Shane (2003 p.60) also lists out three factors that influence the possibility of gaining information access: 1) prior life and work experience, 2) the social network structure and 3) information search. Previous experiences in a particular field helps people gain awareness and confidence about the domain. Sometimes, this translates into a deeper capacity for identifying unexplored business possibilities within the chosen business realm (Bishop 2011). Again, if the individuals belong to a family that has predominantly focused on their own businesses, this could influence them to spot business opportunities more easily. In essence, family occupation could influence individuals’ attitude and thought processes about business. Certain functional domains could also guide individuals towards entrepreneurial domains. For examples, people with more exposure to sales and marketing tend to have a good grasp of the mark et. They understand consumer behavior to some extent and can appreciate the process flow of business. This could be one factor that gives them an entrepreneurial spirit. Membership of a network also assists in the opportunity recognition process. Ozgen & Baron (2007) suggest that individuals may gain information about new business ventures from their mentors, business networks and professional associations. For individuals who have been entrepreneurs before, this would help them identify new business ideas more easily (Ucbasaran, Westhead & Wright 2009). Networks could be formal ones such as that of colleagues sharing the same work function at the employer’s premises. Another possibility is a group that meets informally after