A Crowd-Based Framework of Opportunity Recognition and Development

Abstract The ability to recognize or create new opportunities is one of the key prerequisites for a novice entrepreneur to engage in the new venture creation process. Despite the existence in the literature of multiple theoretical frameworks for opportunity recognition or creation, very few involve technological external enablers such as crowdsourcing initiatives into the opportunity recognition process, especially for novice entrepreneurs missing the required prerequisite individual assets. This study is undertaken to contribute to the current theoretical opportunity recognition literature by developing a new framework for opportunity recognition with a focus on novice entrepreneurs such as early-stage small business entrepreneurs. A multi-method research design is used and includes data collected from four different sources: (1) qualitative data from a series of open-ended interviews conducted with crowdsourcing platforms managers and entrepreneurs (2) data from a bibliometric study analyzing case studies of crowdsourcing projects that led to successful introduction of new products or services by entrepreneurial ventures less than ten-year-old; and (3) data from a review of online case studies detailing successful entrepreneurial use of crowdsourcing on crowdsourcing websites; and (4) data from internet search. This study’ findings confirm the initial assumption regarding the needs for specific entrepreneur’ individual assets and the key roles they play in the process of opportunity recognition. In addition, it contributes to the existing literature with the identification of determinants related to individual assets such as work ethic, emotional intelligence, humility, the ability to adapt to shifts in environmental factors and the availability of personal financial resources. The findings also support the existing literature as it pertains to the key role of experience and prior knowledge for opportunity recognition. However, it was also found that knowledge could be gathered from other sources such as firm internal knowledge base created from customer feedback, experimentation, social networks and competitors. A new framework is developed from the findings. It incorporates the level of the entrepreneur’s absorptive capacity which determines the ability to recognize opportunities while complementing or compensating for the lack of key individual assets through crowdsourcing strategies. In addition, the theoretical implications related to the cognitive and knowledge processes involved in entrepreneurial opportunity recognition are discussed. Finally, practical steps for using the proposed framework are provided to help unlock new possibilities for novice entrepreneurs such as early-stage small business entrepreneurs.