The Handbook of Technology and Innovation Management

14.2. Where Does Opportunity Come From?

14.2.1. The entrepreneurial firm

Why do (some) people start firms? This question has been at the heart of considerable research, not just in economics but also throughout the social sciences. Herbert and Link (1989) have identified three distinct intellectual traditions in the development of the entrepreneurship literature. These three traditions can be characterized as the German Tradition, based on von Thuenen and Schumpeter, the Chicago Tradition, based on Knight and Schultz, and the Austrian Tradition, based on von Mises, Kirzner, and Shackle.

Stevenson and Jarillo (1990) assume that entrepreneurship is an orientation towards opportunity recognition. Central to this research agenda are the questions 'How do entrepreneurs perceive opportunities and how do these opportunities manifest themselves as being credible versus being an illusion?'. Krueger (2003) examines the nature of entrepreneurial thinking and the cognitive process associated with opportunity identification and the decision to undertake entrepreneurial action. The focal point of this research is on the cognitive process identifying the entrepreneurial opportunity along with the decision to start a new firm. Thus, a perceived opportunity and intent to pursue that opportunity are the necessary and sufficient conditions for entrepreneurial activity to take place. The perception of an opportunity is shaped by a sense of the anticipated rewards accruing from and costs of becoming ...