Knowledge that Transforms

Strategic entrepreneurship refers to firms' pursuit of superior performance via simultaneous opportunity‐seeking and advantage‐seeking activities. Both small and large firms face impediments while pursuing strategic entrepreneurship. While small firms' opportunity‐seeking skills may be strong, their limited knowledge stocks and lack of market power inhibit their ability to enact the competitive advantages necessary to appropriate value from opportunities the firms choose to pursue. In contrast, large firms are skilled at establishing competitive advantages, but their heavy emphasis on the efficiency of their existing businesses often undermines their ability to continuously explore for additional opportunities. Building on a variety of theories, including network, learning, resource‐based, and real options, we suggest that collaborative innovation can enable both types of firms to overcome their respective challenges. Collaborative innovation is the pursuit of innovations across firm boundaries through the sharing of ideas, knowledge, expertise, and opportunities. For small firms, we contend that pursuing entrepreneurship collaboratively allows them to preserve their creativity and flexibility while mitigating the inherent liabilities of smallness. We argue that collaborative innovation permits large firms to exploit their advantage‐creating skills while concurrently exploring for opportunities outside their current domain. Thus, small and large firms that learn how to integrate strategic entrepreneurship and collaborative innovation are well positioned to create wealth. Copyright © 2008 Strategic Management Society.

Entrepreneurs who focus on innovation in their products, their production techniques, and their markets play a key role in economic growth. The direction of their activity is guided by their goals: wealth, power, and prestige. Current institutions, shaped by history and government are critical in determining where entrepreneurs will find it most promising to direct their efforts, sometimes, but not always, benefiting the general welfare. One goal of good policy, therefore, is redesign of institutions so as to attract entrepreneurial activity to beneficial directions. Copyright © 2008 Strategic Management Society.

We develop a process model of how users, an understudied source of entrepreneurship, create, evaluate, share, and commercialize their ideas. We compare and contrast our model to the classic model of the entrepreneurial process, highlighting the emergent and collective nature of the user's entrepreneurial process. Users are often ‘accidental’ entrepreneurs who happen upon an idea through their own use and then share it with others; more specifically, the development of an idea and subsequent experimentation, adaptation, and preliminary adoption often occur before that idea is formally evaluated as the basis of a commercial venture. Users also tend to engage in collective creative activity prior to firm formation—often within the social context provided by user communities—that results in the improvement of ideas. Finally, we provide detailed data on the prevalence of user entrepreneurship in the juvenile products industry. Copyright © 2007 Strategic Management Society.

Although (opportunity) beliefs are becoming increasingly recognized as fundamental to understanding entrepreneurial cognition and strategic action, little is understood about the mechanisms that are responsible for the formation and evolution of these beliefs. Introducing the mechanisms of gists, matching, and updating from philosophy's and psychology's coherence theory, we propose a theoretical framework to explain how third‐person opportunity beliefs (beliefs that one has recognized an opportunity for someone with the right knowledge and motivation) are formed and how they evolve to become first‐person opportunity beliefs (beliefs that one has recognized an opportunity for himself or herself). We conclude by examining how the model contributes to literatures ranging from entrepreneurial cognition and action, to strategic myopia and organizational attention, to opportunity recognition, discovery, and creation. Copyright © 2007 Strategic Management Society.

While organizational processes, such as internationalization, acquisition, and alliance, are a fundamental concept within many literatures and central to firm capabilities, controversy exists regarding how they become high performing. One view emphasizes the role of experience while a second view emphasizes cognition and, in particular, the role of articulated heuristics. Using qualitative and quantitative field data on the internationalization process of entrepreneurial firms from three culturally distinct regions (Finland, U.S., Singapore), we juxtapose these two competing theoretical views to better gain insight into organizational processes and capabilities. The core contribution of our paper is insight into the structure of firm capabilities. Results show that organizational heuristics more closely relate to the development of a high performing process and hence a firm capability. At a broader level, we contribute to strategy by empirically validating the strategic logic of opportunity, a logic that is particularly relevant in dynamic markets and growth oriented firms. We also contribute to entrepreneurship by adding to the opportunity discovery vs. opportunity creation debate, and by shedding light on the relationship between structure and performance in new ventures. Overall, we contribute to the emerging but growing body of research emphasizing a more cognitive view of firms. Copyright © 2007 Strategic Management Society.

Much research suggests that social networks shape the emergence and development of nascent ventures. Scholars have argued that founders' and firms' networks influence innovation and the identification of entrepreneurial opportunities, as well as facilitate the mobilization of resources for growth and the harvesting of value from fledgling firms. It is not an exaggeration to claim that existing empirical findings point to the centrality of networks in every aspect of the entrepreneurial process. However, with exceptions so few they may be counted on one hand, this research untenably treats network structures as exogenous—in other words, as if entrepreneurs and enterprises do not pursue valuable connections. In this article, we review the literature on networks in entrepreneurial contexts, argue that it disproportionately focuses on the consequences of networks at the expense of research on their origins, and consider the implications for the literature of the fact that most entrepreneurs and young ventures are strategic in their formation of relations. We then articulate a research agenda composed of five areas of inquiry we consider critical to a better understanding of networks and entrepreneurship. Copyright © 2008 Strategic Management Society.

Entrepreneurs play a central role in new venture creation. Because they do, careful attention to relevant aspects of their behavior and cognition can offer useful insights into key aspects of this complex process. Specifically, investigation of carefully selected behavioral and cognitive factors can add appreciably to our understanding of the basic processes that underlie new venture creation (e.g., how opportunity recognition or creation actually occurs, how and what entrepreneurs learn from increasing experience in launching and operating new ventures). Evidence is reviewed concerning the role of behavioral and cognitive factors in several key activities performed by entrepreneurs. In addition, the potential role of a variable that has not yet been systematically investigated in the context of new venture creation— affect —is explored. Finally, suggestions are offered for future research designed to further explicate the role of behavioral and cognitive factors in new venture creation (e.g., research on the role in entrepreneurship of self‐regulatory and metacognitive mechanisms; research on the cognitive and foundations of entrepreneurial alertness). Copyright © 2007 Strategic Management Society.

Do entrepreneurial opportunities exist, independent of the perceptions of entrepreneurs, just waiting to be discovered? Or, are these opportunities created by the actions of entrepreneurs? Two internally consistent theories of how entrepreneurial opportunities are formed – discovery theory and creation theory – are described. While it will always be possible to describe the formation of a particular opportunity as an example of a discovery or creation process, these two theories do have important implications for the effectiveness of a wide variety of entrepreneurial actions in different contexts. The implications of these theories for seven of these actions are described, along with a discussion of some of the broader theoretical implications of these two theories for the fields of entrepreneurship and strategic management. Copyright © 2007 Strategic Management Society.