Cognitive Process of Entrepreneurs in the Examination of Opportunity Evaluation

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Type of Academic Paper – Dissertation
Word Count – 13421 words


Entrepreneurship is about recognizing valuable opportunities and converting them into an innovative businesses. The paper discusses the cognitive process that is used by entrepreneurs for the evaluation and evaluation of the opportunity. The research is conducted to identify the cognitive process and the factors that are important for the evaluation of the opportunity. The research involves the collection of primary and secondary data along with using qualitative as well as quantitative methods for collecting the data.

The population of the study was business owners and entrepreneurs and a sample of 45 entrepreneurs was selected to collect the primary data. for the collection of primary data, the questionnaire was used as an instrument with 12 questions on it. The variables of the study were relatedness of entrepreneurs with the potential industry, the market size, and the innovation type. The conjoint analysis was performed on the collected data and the results of primary data were completely aligned with the results of secondary data or literature review.

The literature review confirmed that the relatedness has a positive link with the opportunity evaluation effectiveness. It also confirmed that the mass market is more effective as compared to a niche market and radical innovation is more reliable as compared to incremental innovation for evaluating and pursuing an opportunity.

The majority of the entrepreneurs in the primary data also confirmed the importance of a high level of relatedness of entrepreneurs for effectively evaluating the opportunity. The entrepreneurs in the majority also believed that the mass market is more reliable and the opportunity that provides a chance for radical innovation is expected to be better as compared to incremental innovation. In the end, a conclusion with a set of recommendations is provided for the readers.

Key Words: Cognitive process, Entrepreneurs, Relatedness, Innovation, Radical, Incremental, Mass market, Niche market, Opportunity, Evaluation.


Research topic and question overview

The cognitive process is an important concept for the learning of individuals and growing further. The importance of cognition or cognitive process for the managers or the entrepreneurs cannot be neglected as the cognition helps the entrepreneurs to spot and examine the opportunity prevailing in the business environment. The cognitive process helps to identify different factors that are linked and important for opportunity evaluation such as relatedness of the entrepreneurs with the industry, opportunism of the entrepreneurs, and some of the factors linked with the industry (Short et al, 2010). According to Welpe et al (2012), in response to this identification, the entrepreneurs further use the cognition to evaluate the opportunity and come up with a result either the opportunity is valuable or not. Keeping in view the importance of the cognition or cognitive process towards the evaluation of the existing opportunities by the entrepreneurs, the topic is selected so that the cognitive process of entrepreneurs can be explored to come up with knowledgeable and valuable outcomes.

Research contexts/backgrounds

Foo (2011) states that entrepreneurship is about spotting the existing market gap and opportunity that is valuable and then providing an innovative and creative solution for fulfilling the gap. The entrepreneurs use their skills and abilities to evaluate the opportunity as the successful entrepreneurs are good in evaluating the opportunity. The entrepreneurs give importance to different factors for evaluating an opportunity more or less attractive. The size of the potential target market, the relatedness of entrepreneurs, the opportunism of entrepreneurs, and the type of innovation are some of the important factors that are linked for the evaluation of opportunity. According to Moroz & Hindle (2012), a market gap does not mean that the gap or opportunity exists that is valuable but it is the responsibility of the entrepreneurs to first evaluate the opportunity before deciding to provide the innovative solution for the market gap or opportunity.  The use of cognition is required for the evaluation of opportunity by the entrepreneurs to turn it into a successful venture.

Chell (2013) mentioned that logical reasoning and critical thinking is important to process to come up with valuable outcomes, judgments, and decisions. The use of cognitive abilities for decision making or evaluating a particular strategy or opportunity in the business context is a significant factor that contributes to success. Entrepreneurs need to use the cognitive process for the evaluation of the opportunities identified. In the cognitive process, the relatedness of the entrepreneurs with the relevant industry matters as the high relatedness would most probably be in favour of better opportunity evaluation. The cognitive process is used by entrepreneurs. The cognition of the entrepreneurs also gives a high level of importance to the size of the market as it also contributes towards the opportunity evaluation. entrepreneurs all around the world use the cognitive process and personal experience and knowledge are the significant factors that contribute to the evaluation of the opportunity through cognition (Lorhke et al, 2010).

The rationale of the research

The importance of opportunity evaluation cannot be ignored for the success of entrepreneurs. The use of the cognitive process is also important for the proper evaluation of the opportunity. If the entrepreneur is not going to use personal experience and knowledge, the innovative solution or product or service would not be an effective and valuable outcome for solving the problem. There is a chance that the problem does not lie in the solution but it may lie in the opportunity evaluation (Tang et al, 2012).

The relatedness of the entrepreneurs with the industry helps the entrepreneurs to better evaluate the opportunity. The market size also matters in making an opportunity less or more attractive as mass-market innovation has more potential for success in comparison with niche market innovation. Radical innovation is an innovation that is major in nature while incremental innovation is a small scale innovation. Radical innovation improves the evaluations of the opportunity as the opportunity with radical innovation tend to be more attractive than incremental innovation.

The research gap is identified as the research is needed to find out the cognitive process of entrepreneurs. for the evaluation of opportunities that exist in a particular market.

Keeping in view the importance of cognitive process, relatedness, innovation type, and market size with the opportunity evaluation, the topic is selected so that the research findings of the research can be used for further research. The young and upcoming entrepreneurs can also use the research findings effectively as it would highlight the cognitive process of the entrepreneurs for the evaluation of the opportunities. It would be a good source of learning for young entrepreneurs to spot the process and follow it without making huge mistakes at the early age of their entrepreneurial career.

Research hypotheses and objectives

It is important to develop some of the hypotheses and objectives of the research so that the research can be aligned around those objectives and hypotheses. The lack of objectives and hypotheses would not let the researcher stay focused and come up with effective and valuable results of the research.


Following are the hypotheses developed for the study

H1: The process of opportunity evaluation involves higher cognitive effort aligning positive relationship with relatedness.

H2: In the process of opportunity evaluation and entrepreneurs’ intention, reliance is higher if the target is towards the mass market rather than a niche market.

H3: In the process of opportunity evaluation and entrepreneurs’ intention, reliance would be higher if the opportunity presents radical innovation rather than incremental innovation.

H4: The new product opportunity evaluation and exploitation intention of entrepreneurs are positively related to their opportunism.

H5: Opportunity evaluation and exploitation intention for an opportunity targeted with the mass market would be higher than the niche market if an entrepreneur has a higher level of opportunism.

H6: Opportunity evaluation and exploitation intention for an opportunity that presents radical innovation would be higher than incremental innovation if an entrepreneur has a higher level of opportunism.

Research objectives

The objectives of the research are

  • To identify the involvement of cognitive effort aligning positive relationship with relatedness for opportunity evaluation.
  • To identify the contribution of reliance for an opportunity with radical innovation rather than the incremental innovation in the process of opportunity evaluation.
  • To identify the contribution of reliance for opportunity evaluation and entrepreneur’s intention when the target market is mass rather than a niche.
  • To identify the contribution of the entrepreneur’s opportunism for the opportunity evaluation and exploitation intention of entrepreneurs.

Dissertation structure

It is important to structure the dissertation properly so that effective outcomes can be achieved. The proper dissertation structure would also impress the readers and leave a positive impact on the reader about the researcher and the research. This impress would help the reader to rely on the findings of the research. The dissertation is structured properly and systematically so that the first image can be positive for the reader.

The dissertation starts with a proper introduction that highlights the overview of the topic, provide the background of the study, rationale for choosing the topic, and it also states the hypotheses of the research study that are going to be tested. The objectives are also clearly identified in the introduction part so that the alignment can be made in different research parts with the objectives. Moving forward, a detailed literature review is presented by focusing on the topics of entrepreneurship, entrepreneurial opportunities evaluation, influencing factors of entrepreneurial opportunity evaluation, and the conjoint analysis. After the literature review, a detailed methodology is presented explaining the data collection methods, sources, and instruments. Along with it, the population, sample, and the statistical tools used are also mentioned in the methodology section. The analysis of the statistical results of the primary data and the discussion on the results are also provided in detail after the methodology section. In the end, a conclusion is provided for the paper along with some recommendations that are prepared after understanding the findings of the research.

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Literature Review

Entrepreneurship and entrepreneurship opportunity evaluation


Scholars in the field of entrepreneurship often define the concept of entrepreneurship by distinguishing traditional business entrepreneurial activities. For example, Austin describes the entrepreneurial process as a non-profit organization, government department, or business organization by comparing the entrepreneurial mission, the market utility, the performance evaluation method, and the resource allocation method (Austin et al., 2006). Also, some scholars elaborate on the connotation of entrepreneurship from the perspective of social needs and believe that entrepreneurship is the process of satisfying social needs, creating social values, and solving social problems (Janssen et al., 2012). Some scholars follow the definition of business entrepreneurship, emphasize entrepreneurial opportunities, and define entrepreneurship as the process of creating social wealth by creating new enterprises or adopting innovative management models (Martin and Osberg, 2007, Zahra et al., 2009). Also, Dimov (2010) believes that entrepreneurship is a business that constantly pursues new opportunities to create social value. It is a brave behaviour that constantly innovates, improves, and is not limited by resources (Dimov and Milanov, 2010). The Stanford University Entrepreneurship Research Center proposes that entrepreneurship refers to the behaviour of entrepreneurs using business operations models to solve problems in society through innovative behaviour (Etzkowitz, 2003).

Entrepreneurial activities include both entrepreneurial activities that serve both profit and social purposes, as well as non-profit entrepreneurial activities that are entirely driven by social goals. In Van Stel et al. (2005), entrepreneurial activity refers to the entrepreneurial process of adopting some innovative means in the business model to solve existing problems, while taking into account the process of economic profit and social value creation. Dacin et al. (2011) define the entrepreneurial organization and the traditional model to create social value completely. Although scholars on the definition of entrepreneurship have their own opinions, there are many common points in these definitions, such as innovation, commercial means.

Entrepreneurial opportunities evaluation

Different from the core goal of commercial entrepreneurial opportunities with profitability, entrepreneurial opportunities need to focus on creating social value and paying attention to profitability (De Carolis and Saparito, 2006). Entrepreneurial organizations are hybrid organization that spans profitability and social mission. To maintain the sustainable development of both public welfare and profitability, entrepreneurship needs to explore opportunities with dual economic and social values (Mair et al., 2006). Therefore, entrepreneurial opportunities can be defined as the possibility of entrepreneurs investing time, energy, and money to generate social influence (Plummer and Armitage, 2007).

Evaluation is a comparison process between goodness and badness for a particular object. The evaluation object can be a matter of people and things, or it can be a certain point of view. The evaluation results generally have certain reference standards. The evaluation process is the test of the evaluation subject’s understanding (Keh et al., 2002). The process is also a decision-making process. In general, evaluation and description are confusing. The description focuses on the description of objective facts, and the evaluation is the value of something, namely the choice and explanation of the “goodness or badness” of the research object, which is of high subjectivity. If it is an evaluation of entrepreneurial opportunities, the quality of the evaluation results will directly affect whether the entrepreneur decides to invest a large number of people and property to develop this entrepreneurial opportunity to enter the next stage of entrepreneurship (Welpe et al., 2012).

When entrepreneurs face entrepreneurial opportunities, they use their evaluation criteria to make a personalized comparative analysis of entrepreneurial opportunities (Wood and Williams, 2014). This is an opportunity evaluation. Opportunities can generally be seen as a possibility in the future. Entrepreneurs often can control this possibility and believe that these opportunities are worth developing. This “worth” understanding is highly subjective.

Hills and Shrader (1998) believe that many entrepreneurs have no problem in generating ideas, but there is a fundamental difference between ideas and opportunities. Ideas exist in ideology, while opportunities are based on objective reality. A detailed assessment of an idea is made to judge whether it can be transformed into a real opportunity. Entrepreneurs generally put a positive impact on opportunities before they put them into entrepreneurial action. Therefore, entrepreneurs need to study how entrepreneurs judge the opportunity at the subjective level in the face of an entrepreneurial opportunity (Grichnik et al., 2010).

From the perspective of the elements of entrepreneurship and based on Timmons (1989) entrepreneurial model theory, Koellinger et al. (2007) first construct a comprehensive model of entrepreneurial behaviour, in which entrepreneurial behaviour is assumed to be a fully rational process. The financial market, the perception of cost and the social environment are seen as the antecedents of this process. The author believes that opportunity perception includes two logical stages of perceptual opportunity and evaluation of perceived opportunities, and ultimately determines whether entrepreneurial behaviour occurs. Thus, it is seen that the evaluation of opportunities is an important part of the entire entrepreneurial process.

Regardless of the definition of entrepreneurial opportunities in the academic world, the opportunities themselves are only the entrepreneur’s ideas for a future or a certain situation (Renko et al., 2012). Generally speaking, if the identification of entrepreneurial opportunities is regarded as the starting point of the entrepreneurial process, then the opportunity for real entrepreneurial activities depends on the entrepreneur’s accurate grasp and evaluation of entrepreneurial opportunities. Since entrepreneurial opportunities are a vague and dynamic concept, the scenarios it contains are generally vague, which will gradually become clear over time (Ardichvili et al., 2003). Based on this, the entrepreneurial process is to continuously evaluate the future scenarios contained in the opportunity, and thus decide the dynamic process of continuing to pursue or abandon the entrepreneurial opportunity (Kor et al., 2007). From this point of view, the opportunity evaluation runs through the entire entrepreneurial process, and it is also the first door for entrepreneurs to start entrepreneurial activities. Nicolaou et al. (2009) propose that the evaluation of new business products for entrepreneurs who are just starting out or for large companies is a central part of entrepreneurial activity. Therefore, when entrepreneurs have strong entrepreneurial motives, entrepreneurship can be said to be the result of entrepreneurs’ evaluation of entrepreneurial opportunities.

Timmons (1989) summarized a framework for evaluating entrepreneurial opportunities. The entire framework involved 53 indicators. In general, there were eight broad categories: industry and market, economic base, harvest conditions, competitive advantage, management team, and fatal flaws. Zimmerer and Yasin (1998) propose a flow chart for the qualitative evaluation process of entrepreneurial opportunities. There are five steps: the first step is to determine what value the product has brought to the customer and to derive new results based on the analysis of the potential market of the product. The potential demand for the product and the return on investment of the product. The second step is to analyze the risk of product launch, including R&D, finance and competition. In the third step, the product knows whether it can meet the expected production and quality requirements. The fourth step is to assess the up-front capital requirements for new product launches and what financing channels to use. The fifth step is to consider risk factors and the means to manage these risks on a larger scale.

Stevenson (2000) suggests that to fully evaluate entrepreneurial opportunities, five issues must be considered. First, is the size of the market brought about by the opportunity, and the rate of growth of the opportunity over time. Second, it can cover all the input costs, including capital cost, time cost, and opportunity cost. Third, the opportunity opens up a brand new business field and has strong expansion. Fourth, when the uncertainty event occurs, it can gain sustainable benefits. Fifth, the product has truly met market expectations and solved market demand.

Longenecker et al. (2006) point out five basic criteria for evaluating entrepreneurial opportunities: market demand, competitive advantage, high rate of return, matching of entrepreneurs and opportunities, and entrepreneurial opportunities without fatal flaws.

Burch (1986) proposes four evaluation methods in Entrepreneurship: standard scoring matrix, Westinghouse method, HananPotentiomncter method, and Baty’s selection factor method. These methods are based on certain scoring rules for certain factors of entrepreneurial opportunity according to the level of scores to evaluate entrepreneurial opportunities. Kyrö and Niemi (2008) use the fuzzy mapping principle to construct an opportunity to evaluate the mathematical chess type and to quantify the index weights and scores, making the evaluation process more procedural and operable. The evaluation results are more comparable.

Influencing factors of entrepreneurial opportunity evaluation

At present, in the research on the evaluation of entrepreneurial opportunity, scholars mainly focus on the indicators for the evaluation of entrepreneurial opportunities. The most influential is the eight major categories of entrepreneurial opportunity evaluation indicators of Timmons (1989). After research, Shane and Venkataraman (2000) believe that three variables play a key role in the opportunity assessment: the entrepreneur’s perception of risk, the probability of the chance of success, and the profit that may be obtained in the future. Both the perceived risk and the likelihood of success determine whether the entrepreneur ultimately starts a business, and the potential profit return is the driving force for the entrepreneur to keep working hard. Simon et al. (2000) are mainly concerned with the cognitive bias of entrepreneurs and the influence mechanism of risk perception on behavioural decision-making. In the research process, the case-study method is used, and it is found that risk perception negatively affects entrepreneurial decision-making, while cognition deviation will affect the size of the risk perceived by the entrepreneur and ultimately influence the decision-making. This cognitive bias is mainly reflected in three aspects of overconfidence, control of fantasy and belief in the law of decimals, and the impact mechanism of each aspect on the final entrepreneurial decision-making will be different. Overconfidence has no obvious influence on entrepreneurial decision-making (Forbes, 2005). Controlling fantasy and believing in the law of decimals will positively influence entrepreneurial decision-making in the entrepreneurial process. Later, Keh et al. (2002) add optimistic bias to this theoretical model. Baker et al. (2003) find that gender differences affect entrepreneurs. In the face of the same entrepreneurial opportunities, men are more likely to pay attention to the positive aspects of opportunities, but women are more likely to pay attention to the negative aspects of opportunities. The direct result of this difference is that men are more inclined to choose to develop this opportunity in the face of opportunity assessment, and women are easy to see the risks behind opportunities, so they will give up. Baron (2009) points out that there is a certain correlation between entrepreneurs’ attitudes and opportunity evaluations (Hmieleski and Baron, 2008). Entrepreneurs are optimistic when they evaluate opportunities, and they tend to choose to develop this opportunity. On the contrary, they tend to give up this opportunity. Haynie et al. (2009) focus on the relationship between the entrepreneur’s mastery of resources and the opportunity assessment. Mitchell and Shepherd (2010)’s research is based on the research system of Timmons, and he explores the common managers and experience by referring to its index system. He tries to figure out the differences between the rich entrepreneurs in the opportunity assessment indicator system. Experienced entrepreneurs think they are very important. Grégoire and Shepherd (2012) propose an assessment of an opportunity by judging five important indicators: (1) the length of time the opportunity exists; (2) having good characteristics; (3) the potential market size growth rate will gradually increase; (4) the size of the initial scale; (5) the opportunity itself is feasible. Wood et al. (2014) evaluate entrepreneurial opportunities based on 14 indicators of market evaluation and reward evaluation.

Relatedness and opportunity evaluation

Opportunity evaluation behaviour and management behaviour of entrepreneurs are influenced by previous experience and their relatedness to the potential market. The entrepreneurial behaviours carried out by entrepreneurs are the external manifestations of entrepreneurial ability (Fatoki, 2014), so entrepreneurs with high-quality prior experience and relatedness are more likely to take correct entrepreneurial actions and show stronger entrepreneurial ability (Quan, 2012). Entrepreneurs’ previous entrepreneurial experience generates tacit knowledge to help them make entrepreneurial opportunities under uncertain and time-stressed decision-making (Sarasvathy, 2001), thus giving them a strong opportunity. Individuals with entrepreneurial experience develop an entrepreneurial mindset that enables them to better capture entrepreneurial opportunities (McGrath and MacMillan, 2000). Repeated entrepreneurs are more familiar with the whole process of entrepreneurial activities, and are more conducive to their entrepreneurial activities. Entrepreneurs with management experience can increase the survival rate of new companies in the first three years, thereby reducing the likelihood of new business failures (Miralles et al., 2016). Entrepreneur-related industry knowledge has a strong influence on the development of entrepreneurial knowledge (Choi et al., 2008). Industry-related knowledge enables entrepreneurs to be sensitive to industry change and development, so they can better identify and develop valuable business opportunities. As a result, entrepreneurs with a variety of prior experiences have demonstrated greater entrepreneurial capabilities in identifying and developing entrepreneurial opportunities, creating and managing new businesses.

Shane and Venkataraman (2000) point out that increasing the efficiency of opportunity identification and evaluation must consider two factors: the information necessary to identify an opportunity and the cognitive characteristics necessary to develop an assessment opportunity. The entrepreneurial experience, industry experience and functional experience of entrepreneur diversity contribute to the diversity of their external network relationships (Hallak et al., 2011). The highly diverse network embedded by entrepreneurs is an important channel for external support in the early stages of resource-poor startups, making it easier to access scarce resources and information that are valuable to new businesses (Ardichvili et al., 2003). This valuable knowledge and information provide entrepreneurs with the knowledge and information necessary to identify opportunities and the resources necessary to develop information, thereby enabling them to identify and develop entrepreneurial opportunities. Multiple entrepreneurial experiences enable entrepreneurs to better gather information and make effective decisions for identifying new business opportunities. Such activities can only be understood by people who have worked (Muchena et al., 2005). Entrepreneurs who previously had multiple creation experiences develop entrepreneurial thinking and problem-solving skills, which increases the ability of entrepreneurs to further identify and develop entrepreneurial opportunities (Ucbasaran et al., 2003).

Therefore, the first hypothesis is proposed:
H1: The process of opportunity evaluation involves higher cognitive effort aligning positive relationship with relatedness.

Market type and opportunity evaluation

The literature on marketing and strategy reveals that in a relatively uncompetitive niche market, compared to mass market, companies have the right to self-pricing products, which can result in higher profits (Parrish et al., 2006). The greater the difference in company products, the smaller the competition the company faces. Drucker (2014) believe that because of the narrow market space of the niche strategy and the disadvantages and risks of relying on final product sales, the niche strategy will exert a negative impact on corporate performance. Deephouse (1999) reveals two competitive approaches based on niche strategies—Product Niche and Customer Niche.
Eisenhardt and Schoonhoven (1990) research the microelectronics industry and find that the fate and growth of a company largely depend on whether the niche is in the process of formation, growth or maturity. In the early stage of the venture, retailers who focus on product depth and specialization will get better performance than the incumbent companies that are engaged in product diversity. Further research finds that in the strong competition situation, SMEs tend to have more products.

SAKAMOTO et al. (1990) point out that in the market economy environment of “limited commodities and unlimited markets”, there will always be blind spots that other enterprises have not occupied. The products or services of small and medium-sized enterprises can revolve around “finding market gaps”. Enterprises use their advantages of less capital investment, small enterprise-scale, less management personnel, flexible operation, low market entry, and exit costs, and participate in the market division of labour through specialized operations, to carefully serve a small market to achieve a certain gap. SMEs can make full use of the professional technology and management capabilities formed by “product differentiation” to find the “gap” of the market.

Iansiti and Levien (2004) argue that the niche strategy is a differentiated operational strategy that enables them to differentiate their businesses in an ecosystem by capacity specialization. Drucker (2014) points out that the niche strategy aims to achieve a real monopoly in a small scope, to protect enterprises from the competition and other people’s challenges. The whole point of the most successful niche strategy is to try to make yourself look unremarkable. Since their products have become an essential element in a program, no one is willing to compete.

Ortt et al. (2015) sum up the basic idea of the niche strategy. Any market will always have some business gaps that cannot be reached by large enterprises. Entrepreneurs can choose one based on their small scale, flexibility, adaptability, small products or service areas, concentrate on providing products or services to these gap markets, and become the first. At the same time, they establish barriers to entry, gradually forming a stable and lasting advantage as well as gaining a higher industry level.

Based on the above analysis, the third hypothesis is proposed:
H2: In the process of opportunity evaluation and entrepreneurs’ intention, reliance is higher if the target is towards the mass market rather than a niche market.

Innovation type and opportunity evaluation

Shane and Venkataraman (2000) suggest why, when and how to use opportunities, and the characteristics of opportunities. Many aspects of entrepreneurial opportunities have the potential to increase or decrease the likelihood that potential entrepreneurs will take advantage of this opportunity (Walker, 2007). Regarding the discussion of the characteristics of entrepreneurial opportunities, most scholars talk about the profit, risk, and feasibility of the relevant market, but rarely pay attention to the innovation of entrepreneurial opportunities. But Schumpeter (1934) puts forward the “innovation theory”, emphasizing the important role of innovation activities in productivity (Carland et al., 2007). Plucker et al. (2004) find that in most cases, the combination of novelty and practicality is the most common definition of innovation.

The most common definition of innovation is uniqueness or rarity (Shalley et al., 2004). The novelty of an entrepreneurial opportunity means that the commercial content or service or product contained in the opportunity has not appeared or spread. Feasibility considerations focus more on the issue of feasibility (Dean et al., 2006), and feasibility refers to the practicality or easiness perceived by an opportunity. According to Nussbaum et al. (2003), the feasibility of entrepreneurial opportunities is represented by the target market situation and the founder’s seed capital requirements.

Shane and Venkataraman (2000) argue that entrepreneurial opportunity evaluations are influenced by both entrepreneurs and opportunity innovation. Gupta (2013) uses the evaluation form of Timmons (1999) to point out that the innovation of opportunity has advantages in the industry and market, competitive advantage, the strategic difference between ideal and reality, such as the influence of products or services on the market. High and emerging industries have less competition and are more likely to occupy a leading position in the market. Competitors have not yet awakened and competition is weak. Therefore, the higher the innovation of entrepreneurial opportunities, the higher the evaluation of entrepreneurial opportunities by entrepreneurs (Boso et al., 2013). Tumasjan et al. (2013) find that the feasibility of entrepreneurial opportunities has a positive impact on entrepreneurial opportunity assessment and entrepreneurial opportunity development.

Choi and Gray (2008) point out that entrepreneurial opportunity development is the process by which entrepreneurs can effectively scale up the identified entrepreneurial opportunities. Gatewood et al. (2002) point out that evaluation criteria reflect the value of entrepreneurs, and expectations related to risks, personal goals and efforts that affect this value judgment. Therefore, cognitive evaluation is positively related to the innovation type of opportunities and products.

Based on the above analysis, the second hypothesis is proposed:
H3: In the process of opportunity evaluation and entrepreneurs’ intention, reliance would be higher if the opportunity presents radical innovation rather than incremental innovation.

Entrepreneurial Opportunism and opportunity evaluation

META, proposed by Ahmetoglu et al. (2010), assesses individual differences in the ability to recognize and exploit opportunities, innovate and create change (Kuratko, 2007, Shane and Venkataraman, 2000). According to Chandler and Hanks (1993), entrepreneurs are different in opportunity identification and evaluation because of their different entrepreneurial competencies. Bird (2019) believes that entrepreneurial competency is a high level of personal traits, including personality traits, skills, and knowledge, and can be considered as entrepreneurial ability to successfully perform entrepreneurial work in an organization. Sarasvathy et al. (2013) emphasize the entrepreneurial problem from the interaction process between entrepreneurs and the external environment, and put forward the concept of Entrepreneurial social competency, combining social competence theory with social capital theory to study entrepreneurship at the organizational level.

According to Ahmetoglu et al. (2011), the total META score significantly predicted all entrepreneurial outcomes and is essential to predict entrepreneurial activity and achievement. META has four dimensions: Entrepreneurial Proactivity, Entrepreneurial Creativity, Entrepreneurial Opportunism and Entrepreneurial Vision. Entrepreneurial Opportunism refers to the tendency to spot new business opportunities. Entrepreneurs with higher opportunism will promote their exploitation of opportunities in novel and innovative ways. Ahmetoglu et al. (2011)’s research also indicates that opportunism is positively related to entrepreneurial activities and achievements.

Based on the above analysis, the fourth hypothesis is proposed:
H4: The new product opportunity evaluation and exploitation intention of entrepreneurs are positively related to their opportunism.
H5: Opportunity evaluation and exploitation intention for an opportunity targeted with the mass market would be higher than the niche market if an entrepreneur has a higher level of opportunism.
H6: Opportunity evaluation and exploitation intention for an opportunity that presents radical innovation would be higher than incremental innovation if an entrepreneur has a higher level of opportunism.

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Conjoint Analysis

Conjoint Analysis (CA) is a kind of multiple statistic method. The research on the theory is based on the demand for market research methods in the wake of the development of the commercial economy (Green et al., 2001). The academic circle and the operational management circle have paid increasing attention to the way to measure the demands and preferences of consumers (Louviere, 1988). Green and Srinivasan (1978) introduced Conjoint Analysis into the field of marketing. Conjoint Analysis becomes an important method to describe consumers’ decision-making. Green et al. (1972) applied it into the field of commerce and gain good effects. Since then, it is loved by marketing researchers. Conjoint Analysis technology is widely adopted in Europe and America. Lancaster (1971) proposes the multi-index simulation theory based on the Fishbein-Roseberg model and the new economic theory of consumer selection. Wilkie and Pessemier (1973) get the combination method based on the expected value model. In this method, the total utility of some multi-feature targets is obtained by sorting the weighted sum of the target’s feature level and the corresponding utility value. The conjoint approach is based on a decomposition approach in which respondents respond to a set of general profiles. The task of the analysis is to find a combination of principles for a given feature, such as the principle of addition, which is consistent with the respondent’s overall preference.

As for the research in entrepreneurial researches, Shepherd and Zacharakis (2018) recommended several topics where entrepreneurship studies could fruitfully use CA by drawing from economics (e.g., decision-making rationality), social psychology (e.g., decision anchoring under uncertainty), marketing (e.g., the liability of newness), and extant entrepreneurship research (e.g., strategic decision making). Subsequently, other researchers have recommended other topics, including corporate venturing (Shepherd and Krueger, 2002) and entrepreneurial intuition (Mitchell et al., 2005). In general, CA could potentially revive research studying the individual-level phenomenon, an area that has been somewhat deemphasized following widespread disillusionment with the ‘‘trait” approach (Gartner, 1990). Because entrepreneurship occurs at the individual-opportunity nexus (Shane & Venkataraman, 2000), however, deemphasizing the former is not a viable option. One issue with previous (especially trait-based) studies is they often proxied decision making with demographics (e.g., age) or attitudinal (e.g., need for achievement) attributes, resulting in a decision making ‘‘black box” (Mitchell et al., 2005). With its advantages in examining respondents’ ‘‘theory in use,” however, CA may help open this box by providing insight into entrepreneurial decision making.

To date, researchers have frequently used CA to examine VCs’ and, to a lesser extent, entrepreneurs’ (Choi and Shepherd, 2004) criteria for evaluating opportunities. Some have also examined how specific biases can affect these assessments (DeTienne et al., 2008). However, the relatedness factor, innovation type as well as market type of products haven’t been explored through CA. Therefore, this research tries to apply the CA method to find out the factors that influence the cognitive process of entrepreneurs in the examination of opportunity evaluation.

Literature and hypotheses summary

Through reviewing the literature review of the above entrepreneurial opportunity evaluation method and factors influence entrepreneurial opportunity evaluation, the author believes that there are two shortcomings:
First of all, the existing quantitative research is a study of the evaluation index system of entrepreneurial opportunities, but an entrepreneurial opportunity has many attributes, some of which can be quantified, such as potential market size, expected market growth rate, etc.; but some attributes are not easy to quantify, such as the relatedness, the innovation type of products and the market type.

Secondly, the current qualitative research is more focused on the characteristics of the opportunity itself and external factors. However, as the main body of evaluation opportunities, entrepreneurs receive less attention. As entrepreneurs, each person has different characteristics, and people are rational. Especially when entrepreneurs evaluate entrepreneurial opportunities, they will face extremely complicated situations. The processing of information on opportunities itself cannot be completely rational. The evaluation system and steps lead to conclusions. Therefore, this paper also considers the gender and the META (Entrepreneurial Tendencies and Abilities) into the process of entrepreneurial opportunity evaluation.

The CA method is applied to test the following hypotheses:
H1: The process of opportunity evaluation involves higher cognitive effort aligning positive relationship with relatedness.
H2: In the process of opportunity evaluation and entrepreneurs’ intention, reliance is higher if the target is towards mass market rather on a niche market.
H3: In the process of opportunity evaluation and entrepreneurs’ intention, reliance would be higher if the opportunity presents radical innovation rather than incremental innovation.
H4: The new product opportunity evaluation and exploitation intention of entrepreneurs are positively related to their opportunism.
H5: Opportunity evaluation and exploitation intention for an opportunity targeted with the mass market would be higher than the niche market if an entrepreneur has a higher level of opportunism.
H6: Opportunity evaluation and exploitation intention for an opportunity that presents radical innovation would be higher than incremental innovation if an entrepreneur has a higher level of opportunism.


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