Table of Contents

A Psychological Approach to Entrepreneurship

A Psychological Approach to Entrepreneurship

Selected Essays of Dean A. Shepherd

Dean A. Shepherd

Within an entrepreneurial context, what a person thinks and feels and how they behave are hugely consequential. Entrepreneurs often work in scenarios of considerable time pressure, task complexity, uncertainty and high performance variance. This fascinating volume explores the unique psychological qualities of individuals directly involved in the entrepreneurial process.

Chapter 4: Entrepreneurs’ Decisions to Exploit Opportunities

Young Rok Choi and Dean A. Shepherd

Subjects: business and management, entrepreneurship

Extract

Entrepreneurship involves phenomena and processes related to discovering, evaluating, and exploiting opportunities to create future goods and services (Shane & Venkataraman, 2000). The outcome of this process is new products or services or both. Newness, however, is a double-edged sword. On the one hand, newness represents something rare, which can help differentiate a firm from its competitors. On the other hand, newness creates a number of challenges for entrepreneurs. Newness can increase entrepreneurs’ uncertainty over the value of a new product (Knight, 1921; Olson, Walker & Ruekert, 1995; Sapienza & Gupta, 1994) and place a greater strain on the resources necessary for successful exploitation (Sapienza & Gupta, 1994; Stinchcombe, 1965). The exploitation of an opportunity refers to those activities and investments committed to gain returns from the new product arising from the opportunity through the building of efficient business systems for full-scale operations (cf. March, 1991).

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