Opportunity recognition skill of entrepreneurs and its association with their paths to entrepreneurship and types of innovations: an empirical investigation of SME firms

Abstract

Opportunity Recognition Skill (ORS) is often considered to be the most important skill needed for an entrepreneur. One of the few attempts to identify the components of this skill (Ucbasaran et al, 2003) has proposed that there are two approaches associated with it, namely, the developmental approach and the alertness approach, which they have measured using a 12-item questionnaire (8 items for the former and 4 for the latter dimensions). When the present authors administered this questionnaire to 279 respondents and subjected the data to factor analysis, the results did not conform to the findings of the original researchers. The analysis yielded 4 factors, which could be named as: Alertness, Problem-solving, Learning, and Implementation orientations. As the original questionnaire had limited numbers of items, the last two dimensions had only one variable each. The results pointed to the need for expanding the OR Skill questionnaire through a fresh (pilot) investigation. As there were 33 entrepreneurs among the respondents, for whom the data on their innovativeness and paths to entrepreneurship were also available, it was further proposed to explore the linkages, if any, among the nature of their innovativeness, paths to entrepreneurship and the dimensions of their OR Skills. For this analysis, we used the traditional classification of innovations as radical and incremental along with a newer classification based on functional areas, namely: Operations, Marketing, Organizational and Boundary management innovations. Since the present data showed that there were four major motives for entrepreneurship, namely: Innovation (28%), Growth (18%), Inheritance (18%) and Necessity (36%), these were deemed to be the four different paths to entrepreneurship. Associations of these paths and the major types of innovation with the components of OR Skill were tested, which has led to the generation of a few interesting insights and researchable propositions