The Individual-Opportunity Nexus
Chapter 2: The Role of Opportunities
The examination of opportunities is a central, but largely overlooked aspect of entrepreneurship. As I explained in Chapter 1, entrepreneurship involves the nexus of entrepreneurial opportunities and enterprising individuals. This nexus indicates that opportunities are an important part of the entrepreneurial process. In fact, one of the key premises of this book is that variation in opportunities themselves can account for at least some of the observed patterns in entrepreneurial activity, by influencing the decisions by people to exploit opportunities and their performance at opportunity exploitation. In this chapter I discuss entrepreneurial opportunities. I define an entrepreneurial opportunity as a situation in which a person can create a new means–ends framework for recombining resources that the entrepreneur believes will yield a profit. The main difference between an entrepreneurial opportunity and many other situations in which people seek profit is that an entrepreneurial opportunity requires the creation of a new means–ends framework rather than just optimizing within an old framework. Readers should note that entrepreneurial opportunities are not necessarily profitable. Sometimes they can turn out to be unprofitable, as occurs when the conjectures about the profit from recombination turn out to be wrong. Because entrepreneurial opportunities are not always profitable, they should not be thought of as Ricardian, Schumpeterian or other kinds of rents. Such a view would require entrepreneurial opportunities always to be profitable. Understanding entrepreneurial opportunities is important because the characteristics of an opportunity influence the entrepreneurial process. In particular, opportunities differ significantly in expected value. For...
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