Opportunity Discovery Measurement Scale Bleg

24 April 2009 at 6:34 am 1 comment

| Nicolai Foss |

Opportunity discovery is a key construct in large parts of the recent management literature on entrepreneurship (e.g., this important paper). We have often blogged on opportunity discovery here on O&M, for example, noting the problematic relation of the management construct of opportunity discovery to Kirzner’s original notion, and suggesting that new projects may be superior units of analysis for certain purposes.

Still, the sensing, perception, discovery of, etc. opportunities is surely relevant in entrepreneurship studies and should not be bypassed. Which brings us to the issue of, How is it measured? Given that dozens of articles have been written now with “opportunity discovery” in the title, I am struck by the paucity of empirical work that actually makes a stab at measuring opportunity discovery. Most articles on opportunity discovery are theoretical. And most consider the antecedents of opportunity discovery (e.g., personal knowledge, psychological attributes, search costs) rather than the discovery itself.

I suppose what we are interested in measuring is the discovery, by entrepreneurs or organizations, of opportunities, understood as new projects or ideas for projects that are uncertain, require some commitment of resources and are potentially be high in appropriable value.

There are to my knowledge (so far) only two studies that explicitly use a measurement scale for capturing opportunity discovery, both by the same author team (here and here) (the Shane paper that I linked to above does not develop a scale although it does deal empirically with opportunity discovery). Essentially, they use a simple count scale: “Respondents were presented with a statement asking them, ‘how many opportunities for creating or purchasing a business have you identified within the last five years.’ They were presented with eight opportunity identification outcomes (i.e., 0, 1, 2, 3, 4, 5, 6 to 10, or more than 10 opportunities).”

Do you know of other scales in the literature(s)?

Entry filed under: - Foss -, Entrepreneurship.

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1 Comment Add your own

  • 1. Peter Klein  |  24 April 2009 at 8:39 am

    A binary scale isn’t really a scale, though technically it is. There are some experimental papers that provide a purported profit opportunity and see which, if any, test subjects recognize it. The Demmert-Klein experiment (followed up here) is an example. I recently reviewed a paper that reported on a classroom experiment in which students playing a computer game had an opportunity to break the formal rules of the game for extra gain, trying to understand who would do this and why. Can’t reveal the details, unfortunately.

    I realize this isn’t exactly what you’re after, but presumably some of these laboratory simulations could be modified to pick up some count measure (e.g., how many opportunities did the subject discover).

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Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

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