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Entrepreneurship
TABLE OF CONTENTS
1. ABSTRACT .......................................................................................................................................... 2
2. INTRODUCTION ................................................................................................................................... 2
3. LITERATURE REVIEW ............................................................................................................................. 3
3.1. ENTREPRENEURIAL CREATIVITY, INNOVATION IN RELATION TO THE ENTREPRENEURIAL OPPORTUNITY ............. 3
4. DISCUSSION AND DEVELOPMENT OF A PROPOSED MODEL........................................................................... 4
5. CONCLUSION ...................................................................................................................................... 6
6. BIBLIOGRAPHY .................................................................................................................................... 8
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Enterprise and Innovation Research Paper
1. ABSTRACT
2. INTRODUCTION
1
Proponents: Gaglio, 1997; Hsieh et al., 2007; McMullen and Shepherd, 2006; Murphy, 2011; Shane and
Venkataraman, 2000; Venkataraman, 1997
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Enterprise and Innovation Research Paper
3. LITERATURE REVIEW
Innovation, creativity and entrepreneurial opportunity are three of the buzzwords of the
early twenty-first century, whereby entrepreneurial opportunity identification lies at the
heart of entrepreneurship (Stephen, 2012). Some scholars have viewed opportunity as a
discrete phenomenon that is exogenous to the entrepreneur and springs from external
circumstances, such as new technology or a social change. Others viewed opportunity as
inextricably linked to and stemming from the entrepreneurs own cognition. At various
times, opportunity has been used interchangeably with an idea or business concept, or
even an actual entrepreneurial endeavour. Often, no definition of opportunity is provided
and it is left to the reader to infer what scholars may have meant by opportunity (Renko et
al, 2012).
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Based on the above arguments, it is apparent that opportunity has been contrasted as
either an objective phenomenon that is distinct from the entrepreneur or a subjective
phenomenon inextricably linked to and stemming from entrepreneur's own cognition and
actions (Hansen, 2010). However, for an opportunity to be meaningful, it must be
recognized, discovered, identified, or created. In this sense, entrepreneurs need to generate
valuable ideas for new products and services that will appeal to an identifiable market as
well as potential opportunities and they must figure out how to bring their projects to
fruition (Chen et al, 2009). Timmons (1999) further argues that the central theme driving a
highly dynamic entrepreneurial process is the opportunity force by which entrepreneurs can
creatively identify opportunities and deploy appropriate resources.
In contrast, other scholars rather than viewing creativity as an individual characteristic, they
have considered it as an outcome or product. For example, Walton (2003) describes
divergent thinking as one of the most researched conceptualizations of creativity. Divergent
thinking is the generation of varied ideas that includes abilities of fluency, flexibility, novelty
of the ideas and elaboration. This is consistent with the view of opportunity as a creative
product (Dimov, 2007).
Furthermore, Heinonen et al (2010) claim that the two strategies for searching out
opportunities - proactive search4 and competitive scanning5 correlate together and form a
new opportunity search strategy creative behaviour which comprises the search for
problems and opportunities in the external environment in a proactive and innovative way
(Miller, 1987). Creative behaviour also relies on the creativity as a source of entrepreneurial
opportunity (Heinonen et al, 2011). Imbedded in this line of thought, creativity has a pivotal
role as a source of entrepreneurial opportunity.
With regards to innovation, referring to the concept of creative destruction, Schumpeter
(1934 cited in Puhakka, 2011) suggested that occasional technological innovations
temporarily disrupt market equilibrium and thereby create opportunities for
entrepreneurial profits. Furthermore, based on Schumpeter definition of entrepreneurship,
Bull & Willard (1993) suggest that entrepreneurial alertness is about discovering business
opportunities which have more radical impact on a market-place. Baumol (1993) has
widened the definition of entrepreneurial alertness by indicating that it refers to innovative,
non-routine activity which involves instincts, hunches and inspiration. Therefore, Innovation
is the manner in which the entrepreneur searches for new opportunities or the way in which
ideas are brought to a profitable conclusion.
Based on this reasoning, innovation also embraces a distinctive role as source of
entrepreneurial opportunity.
From the foregoing discussion emerges the notion of creativity either as a characteristic of
the entrepreneur or an outcome of tasks performed (Walton, 2003). These represent
person and product, two of the four Ps of creativity (Runco, 2004); the remaining two
4
Represents the art of entrepreneurship and refers to opportunities discovered ontology.
5
Refers to knowledge acquisition and opportunities enacted view.
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Enterprise and Innovation Research Paper
being press6 and process. Ardichvili et al (2003 cited in Hansen, 2010) present one of the
most notable examples involving creativity as a characteristic of entrepreneurs. In their
model, creativity is one of two personality traits shown to be related to successful
opportunity recognition. They further propose that high levels of creativity are related to
high levels of entrepreneurial alertness and self-efficacy.
Substantially, the elements constituting the entrepreneurial opportunity creation are
entrepreneurs creative cognitive process, internal creative qualities, environmental
conditions supporting or hindering creativity and the interaction of these elements. They
further have a significant impact on the innovativeness of the business opportunity. Hence,
the cognitive elements of entrepreneurial opportunities are alertness, knowledge,
perception, and cognitive processing.
Based on the seminal theory on entrepreneurial alertness by Kirzner (1997), it can be
defined as an attitude of receptiveness to available (but hitherto overlooked) opportunities
(Renko, 2012). In expanding on this work, entrepreneurial alertness to business opportunity,
hence, is the creativity of an individual, consisting of creativity base, creative process and
creative product. The creative base consists of interaction of individual qualities and
environmental conditions. The creative base makes it possible to behave entrepreneurially
alertly so that business opportunities can be found. The creative process realizes the
creative act and points out what kind of results are to be expected (Puhakka, 2011).
The cognitive activity is divided further into the phases of cognitive structure and cognitive
process. The cognitive structure has stages of perceiving, conceptualizing and schema
building based on information. The cognitive process stages of problem or task
presentation, preparation, response generation, response validation and outcome.
Through cognitive activity, entrepreneurs process their alertness to concrete business
opportunities. Business opportunities could be, at least in this case, catalytic, allocative,
refining or recycled. Catalytic opportunities are the most innovative because these are both
creatively radical and based on market demand. Allocative opportunities are the second-
most innovative, as those are based on market demand even though creative radicalness is
smaller. Refining and recycled opportunities are based more on an internal vision of an
entrepreneur or on the situation (for example, recycled resources released based on
bankruptcies) than on market need and/or originality.
Regarding knowledge, creativity springs from deep wells of expertise. In addition, creative
thinking pertain to combine areas of knowledge and come up with new ideas (Ahmed &
Shepherd, 2010). Wherein subtraction involves taking away features from the product to
look for development insight. Then multiplication requires adding a copy of an already
existing component but doing so in a way that alerts the copy in some fundamental way.
Also, division operates by breaking the product down and reconfiguring it in some
anticipated way. The last pattern into the innovation patterns that are used to analyse
creative problem solving, is the attribute dependency patterns. Accordingly, creative
problem solving emanates from the entrepreneurs deep knowledge and intuition.
The depicted model in Figure 2 embraces the discussion above, in which the pre-vision stage
is the preparation which pertains to the creativity activity, while evaluation involves
investigating the idea to determine whether or not it is viable. Also, the innovation
6
Refers to the environmental pressures that is supporting or hindering the creativity
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Enterprise and Innovation Research Paper
opportunity is defining the area of opportunity or problem. And ultimately the value of the
solution to a problem is only as good as the definition of the problem that was defined.
Further, incubation is the time ad space is needed to reflect on solutions or considerations
that not to be immediately apparent. The next step is convergence which is to select one or
few amongst the emerged ideas that will be a validate product or service. The final element
is elaboration, which refers to the work needed to refine the creative insight. Elaboration
processes are not confined to the pre-launch stage, hence it continues after launch because
the interaction with the market is important for development.
5. CONCLUSION
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Enterprise and Innovation Research Paper
creativity is the source of ideas and opportunities (Thompson, 2004), whereas commercially
viable innovations are the linchpin of entrepreneurship. One of the most notable examples
that illustrates our research premise is the world well-renewed entrepreneurs Coco Chanel
who is one of the names that we associate with designer clothing and perfumes. Her fame,
stemming from her creativity in the fashion industry, makes her one of the most successful
entrepreneurs of all time.
Once she opened her business and began to apply her taste and capacities to it, nothing
stopped her, not even the war that soon exploded. For the rest of her life, she worked as
both craftswoman and businesswoman, implementing her own view of the art of dressing
on her ever expanding clientele. She started as a hat maker to the divas, and they revealed
her name to Paris. Her business soon grew into something that changed the whole women
fashion (Dunlop, 2014).
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6. BIBLIOGRAPHY
Ahmed, P. & Shepherd, C. (2010) Innovation Management: Context, Strategies, Systems and
Processes, 1st ed. Financial Times/Prentice Hall
Chen, M. & Yang, Y. (2009) Typology and performance of new ventures in Taiwan - A model
based on opportunity recognition and entrepreneurial creativity, International Journal of
Entrepreneurial Behaviour & Research, 15 (5), 398-414
Dimov, D. (2007) Beyond the single-insight, single-person, attribution in understanding
entrepreneurial opportunities, Entrepreneurship Theory and Practice, 31(5), 713-731
Dunlop, J. (2014) 30 Most Influential Entrepreneurs Of All Time [Accessed on 08 Jan 2014]
www.incomediary.com/30-most-influential-entrepreneurs-of-all-time-2#_28_Coco_Chanel
Gaglio, C. & Katz, J. (2001) The Psychological Basis of Opportunity Identification:
Entrepreneurial Alertness, Small Business Economics, 16(2), 95-111
Hansen, D. (2007) Using the creativity model of opportunity recognition to understand the
front end of product innovation. PhD thesis, University of Illinois, Chicago
Hansen, D. (2010) A multidimensional examination of a creativity-based opportunity
recognition model, Journal of Entrepreneurial Behaviour & Research, 17(5), 515-533
Heinonen, J., Hytti, U. & Stenholm, P. (2011) The role of creativity in opportunity search and
business idea creation. Education + Training, 53 (8/9), 659672
Kirzner, I.M. (2009) The Alert and Creative Entrepreneur: A Clarification, Small Business
Economics, Vol. 32
Morrison, A. (2006) A Contextualisation of Entrepreneurship, International Journal of
Entrepreneurial Behaviour & Research, 12(4), 192-209
Puhakka, V. (2011) Developing a Creative-Cognitive Model of Entrepreneurial Alertness to
Business opportunities, Journal of Management and Strategy, 2(4), 85-94
Renko, M. & Shrader, R. (2012) Perception of entrepreneurial opportunity: a general
framework, Management Decision, 50(7), 1233-1251
Runco, M.A. (2004), Creativity, Annual Review of Psychology, 55, 657-687
Shane, S. & Venkataraman, S. (2000) The promise of entrepreneurship as a field of research,
Academy of Management Review, 25(1), 217-226
Stephen, K. (2012) Entrepreneurial Opportunity Identification: A Motivation-based Cognitive
Approach, Journal of Applied Management and Entrepreneurship, 17(2), 1077-1158
Stokes, D. & Wilson, N. (2010) Small business management and entrepreneurship, England:
Cenage Learning EMEA.
Thompson, J. (2004) The facets of the entrepreneur: identifying entrepreneurial potential,
Management Decision, 42(2), 243-258
Walton, A. (2003) The impact of interpersonal factors on creativity, International Journal of
Entrepreneurial Behavior and Research, 9(4), 146-162
Yusuf, S. (2009) From creativity to innovation, Development Economics Research Group, The
World Bank, 1818 H Street, NW, Washington, D.C. 20433, USA
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