Yvette Baggen

Opportunity identification by employees

Opportunities and their identification are of significant importance for competitiveness in today’s complex and turbulent business environment because they serve as a key influencing factor for new value-creation. Opportunity identification (OI) is interesting not only from the perspective of new business start-ups, but also from the perspective of employees in existing organisations. Each entrepreneurial process starts with an imagined, rudimentary idea in the mind of an individual. The further exploration and development of such opportunities by employees can lead to the realisation of all kinds of corporate entrepreneurship outcomes, such as innovation, strategic renewal, and internal or external venturing.

This dissertation reports on the capability of employees to identify opportunities, referred to as opportunity identification competence (OIC). Here, OIC is both conceptually mapped and empirically explored. A performance instrument to measure OIC is developed and tested in higher education. As well, 12 businesses, including 234 employees in 51 teams, participated in this research project. Most companies were in the category known as small and medium-sized enterprise (SME). The participating companies have in common that they felt an urgent need for entrepreneurship as a driver of competitiveness. Furthermore, they aimed to commit and stimulate their employees to contribute to the entrepreneurial process, without having formal mechanisms or structures for doing so.

Problem statement

Although the importance of OI has been recognised from both theoretical and practical points of view, research on OI is still young. Many empirical and conceptual studies lack a clear definition of opportunities, and it is not always evident which part of the OI process is being investigated. As a result, comparing studies is complicated and theory on OI remains fragmented. The main aim of the current dissertation was thus to contribute to the understanding of OI in relation to three overarching research issues: (1) the OI process, (2) defining OIC, and (3) measuring OIC.

The first research issue relates to defining the OI process. What opportunities are, and how they come into being, is a topic of lively discussion in the literature. Some scholars argue that opportunities exist in the economic environment, waiting to be discovered. Others argue that opportunities are subjective entities, socially constructed, and created by individuals. The position scholars choose has an impact on how opportunities and the process behind their identification are defined and investigated. Because using the term “opportunity” without defining it can be misleading, it is problematic that not all authors define OI. Furthermore, opportunities can be identified by teams as well as by individuals. New ventures are often created by teams; as well, in existing firms, innovations are often developed and realised by teams. However, though the literature offers some insight into OI in existing firms at the individual level, only few researchers have investigated OI at the team level.

The second research issue relates to defining OIC: the capability of employees to identify opportunities. OIC is investigated in the current thesis from a competence theory perspective. Two main characteristics of competencies are that (1) a competence is something people can learn, and (2) a competence is always connected to a certain context. Consequently, insight into the influence of contextual factors on OIC, referred to as antecedents, can help to get a better grasp on explaining individual’s OIC in its context. However, empirical work on which antecedents play a significant role in OIC in the context of existing companies is still scarce.

The third research issue relates to measuring OIC. In several studies, OIC was measured using different instruments, such as self-assessments and interviews in which participants had to list previously observed opportunities. Although these studies contributed significantly to understanding OIC, several authors argued that such measures might not fully capture OIC. Interviews and self-assessments measure perceptions, feelings, and impressions, instead of actual behaviour. Consequently, these authors suggest measuring the actual thinking or behaviour of employees, and they call for the development of performance tests to assess OIC.

To sum up, the goal of this thesis was to contribute to the understanding of OI in relation to the three overarching research issues mentioned above. The central research question of this dissertation was: What characterises opportunity identification by employees on the individual and team level? In order to answer this central research question, the following five research sub-questions have been formulated:

1. What is OIC?
2. What is a suitable instrument for assessing OIC?
3. What are antecedents of individual OIC (as an outcome of entrepreneurial learning) in a small and medium-sized business context?
4. To what degree do individual employees and teams have different cognitive OI frameworks for identifying business opportunities?
5. To what extent do the cognitive OI frameworks of individual employees and teams correspond with the cognitive OI framework of an experienced, independent entrepreneur?

The next section elaborates on these research sub-questions, their relationship with the chapters, and the corresponding results.

Content and main findings

Following the introduction of the research project in Chapter 1, Chapter 2 discusses the research sub-question “What is OIC?” This chapter begins with elaboration on the research roots, process model, and measurement of OIC through literature study. In the discussion of the objective and the subjective views on opportunities, it is concluded that these views are not mutually exclusive. Therefore, inputs from both the objective and subjective views were used in the present studies. Then the work of Wood and McKinley (2010) assisted in gaining insight into the complexity of the process fundamental to OI. In their conceptual model they include the influencing role of both environmental and relational factors in OI. Wood and McKinley (2010) described the opportunity production process as opportunity objectification and opportunity enactment. In the current study, OI was considered part of opportunity objectification, in which an individual has an imagined, rudimentary idea; in this very early stage, it is uncertain whether or not the idea could be a real opportunity. In order to reduce uncertainty, the individual shares the idea with friends and family: with trusted others. This results in a process in which the idea is further refined, improved, changed, and acted upon. Eventually, the idea objectifies into an opportunity acknowledged by others (or, sometimes, the idea is abandoned). Accordingly, individual OIC was defined as: “The ability of individuals to identify ideas for new products, processes, practices or services in response to a particular pain, problem or new market need” (Baggen et al., 2015, p. 417). Then a discussion of existing instruments for measuring OIC led to the conclusion that these instruments might not fully capture the actual thinking and behaviour of people, but rather measure perceptions (i.e., self-perceived OIC). Consequently, several authors suggest measuring the actual thinking or behaviour of employees, and they call for the development of performance tests to assess OIC.

Accordingly, Chapter 3 contains an investigation of the research sub-question “What is a suitable instrument for assessing OIC?” A performance assessment, referred to as the opportunity identification competence assessment test (OICAT), was developed and tested among 115 Dutch master’s students and 142 Portuguese bachelor’s students. Higher education was considered a suitable setting to test the OICAT before applying it among employees. The OICAT consisted of two tasks: Task 1, business idea generation, and Task 2, business idea evaluation. The development of Task 1 was informed by the