International Conference on TIM, 2012, Nepal
Opportunity Recognition Model of
Successful Entrepreneurs of Nepal
Dr. Binod Krishna Shrestha,
Associate Professor,
Kathmandu University, School of Management
Email: [email protected]
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International Conference on TIM, 2012, Nepal
INTRODUCTION
• Opportunity recognition an initial stage of venture creation.
• Past research indicates three basic steps: Perception >
discovery > creation
• Incompetent execution of these steps is the main reasons of
failures of business start ups (Kakati, 2003).
• No empirical research in this theme of entrepreneurship in
Nepal.
• Findings important to guide aspiring entrepreneurs to prevent
them from failure.
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International Conference on TIM, 2012, Nepal
OBJECTIVES
The main objective:
• To explore the opportunity recognition model that
successful entrepreneurs used in their entrepreneurial
process.
Specific research objectives:
1. What factors inspired entrepreneurs to generate new
business ideas?
2. How did entrepreneurs sense business opportunities?
3. How did entrepreneur discover fit the between the
business opportunities and their resources?
4. How did entrepreneurs make their venture success?
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International Conference on TIM, 2012, Nepal
LITERATURE REVIEW
• Entrepreneurs search for change, recognize change, and
convert them into opportunity in the process of business
innovations (Drucker, 1988)
• Entrepreneurs recognize things that others do not and exploit
them as opportunity (Kirzner, 1973).
• Entrepreneurship is driven by perception of opportunity
(Stevenson, Roberts, & Grousbeck, 1985).
• The entrepreneurs discovered customers’ problems to be
solved or needs to be fulfilled (Bhave, 1994).
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International Conference on TIM, 2012, Nepal
LITERATURE REVIEW
• An opportunity may be perceived as the chance to meet a
market need through a creative combination of resources to
deliver superior value (Ardichvili, Cardoza & Ray 2003).
• Opportunity recognition appears to include three distinct
processes (Shane, 2000):
1. Sensing or perceiving market needs and/or underemployed
resources (perception),
2. Recognizing or discovering a ‘fit’ between particular market
needs and specified resources (discovery), and
3. Creating a new ‘fit’ between previously separate needs and
resources in the form of a business concept (creation).
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International Conference on TIM, 2012, Nepal
METHOD
• Case study method was used with in-depth
examination of 30 entrepreneurs (Yin, 1994).
• Theoretical sampling used (Flick, 2006) who went
through successful opportunity recognition process in
the last ten years
• Qualitative data collected from semi-structured
interviews with entrepreneurs.
• Started with a few open-ended questions
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International Conference on TIM, 2012, Nepal
METHOD
• In what way you came up with this business idea?
• How did you decide this business rather than others?
• How did you make sure that this business would make
money or be successful in the market?
• Collected retrospective and real time data which
ensures external and internal validity of the data
(Bingam & Eisenherdt, 2011).
• The entrepreneurs were interviewed several times to
collect the complete answers.
• Following Flick (2006), detailed notes of the statements
of the respondents were prepared during the interview.
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International Conference on TIM, 2012, Nepal
METHOD
• The analysis began with compilation of the data
and synthesizing the results from the interviews
for each entrepreneur, leading to mini cases.
• Entrepreneurs’ statements in the case studies were
systematically evaluated
• Several themes were generated by keeping in
mind the literature review
• Sub-themes were collapsed into broader level
themes, and they were reported below.
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International Conference on TIM, 2012, Nepal
RESULTS
• Desire and experiences in a particular business
• ‘I wanted to do something related to this business,
• ‘I had certain knowledge in this sector and even asked
other people about this business’.
• ‘I have long experiences in this field of business.
• ‘I built a casual job into a business
• ‘Friends circle having experiences and interested in
this business field to support me’.
• ‘Parents wanted that I start this business’.
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International Conference on TIM, 2012, Nepal
RESULTS
• Research and Business Idea
• ‘mini survey on customers and people working in this
business sector’.
• ‘there were mismatch between demand and supply’.
• Some saw that ‘there would be even more demand in the
coming years and
• ‘Changing environment signaled the potential increase in the
demand of this product’.
• ‘Personal inconvenient experiences from the existing product
that I buy everyday provided me insight of this business
opportunity.
• ‘Lack of quality Nepali products and incapability of producers
to provide continuous supply’
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International Conference on TIM, 2012, Nepal
RESULTS
• Business Screening
• confirmed whether they can really start the
business successfully.
• Self efficacy of the entrepreneurs
• ‘Long experience in this field’,
• ‘my determination to accomplish’,
• ‘good knowledge and expertise in this field’ and
• ‘ability to invest and expertise in marketing of
these products’
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International Conference on TIM, 2012, Nepal
RESULTS
•
•
•
•
•
Economic feasibility and future prosperity.
‘this business need low investment and high return’
‘this business would provide economic prosperity.
The market opportunities and trend
‘there were chances to bring a new concept in the market
and gain monopoly in this business’.
• ‘based on a growing economy I was confident that the
demand for this product would increase’.
• Friends and networks
• ‘I discussed this business idea with my relatives and few
close friends, they were quite convinced with this brilliant
idea to make money’.
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International Conference on TIM, 2012, Nepal
RESULTS
• Successful Innovation
• ‘hard work’, ‘intuition’ and analyses’.
• ‘a strong creative team and their commitments
and supports of their staffs and partners for the
successes’.
• ‘the help of existing business networks and good
contact with customers’
• ‘migration pattern and demographic change
created market needs of the products, but the
supply was less’.
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International Conference on TIM, 2012, Nepal
RESULTS
• competitive strategy
• ‘We were able to quote a competitive price hence
customer were attracted’.
• ‘We focused on core target customers and their
satisfaction’.
• ‘We offered innovative concepts’.
• ‘We offered international brand which was cheaper and
better quality than those offered by others’.
• ‘We were the first mover in this business over time
which helped us to capture huge market’.
• ‘We did not have strong competition’.
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International Conference on TIM, 2012, Nepal
Results: Model and criteria used in different opportunity
recognition
Inspirations
Sensing
business
opportunity
Discovery of
opportunity and
resource fit
Creation of
successful
business
Self desire
Personal
experiences
Study and
observation
Self efficacy
Self efficacy
Supports of
family and
relatives
Demand gap
Economic
benefits
People and team
capacity
Quality gap
Opportunity and
demand
Relationship
and networks
Business
network
Opportunity and
demand
Competitive
strategy
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International Conference on TIM, 2012, Nepal
DISCUSSION
• Nepali entrepreneurs use a specific process to recognize
business opportunities and bring the opportunities into
successful ventures (Drucker, 1988).
• Opportunity recognition process indeed consists of perceiving
a possibility of creating a new business (Christensen, Madsen,
& Peterson, 1989).
• They pursue model of discovering customers’ problems to be
solved or needs to be fulfilled (Bhave 1994).
• They also use resources in terms of personal efficacy, social
networks and competitive strategies to make a business
success (Ardichvili, Cardoza & Ray (2003)
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International Conference on TIM, 2012, Nepal
DISCUSSION
• Therefore nepali entrepreneurs also go through
three distinct processes of perception, discovery
and creation (Shane, 2000).
• They sense market needs, discover fit between the
needs and their resources, create a business
concept and implement them successfully.
• In this process market knowledge or experiences
of both personal, family and friends plays greater
role (Shane, 2000; Ardichvili, Cardoza, & Ray,
2003; Kakati, 2003).
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International Conference on TIM, 2012, Nepal
IMPLICATIONS AND CONCLUSION
• In-depth case studies was appropriate given the lack
of research on the topic, but has limitations in terms
generalizability.
• Develop survey instruments and conduct survey
research with large samples and perform more
quantitative data analysis.
• Nepali entrepreneurs used sophisticated model during
business start up and making them success.
• The entrepreneurs discovered problems to solve or
needs to be fulfilled.
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International Conference on TIM, 2012, Nepal
IMPLICATIONS AND CONCLUSION
• Opportunity recognition requires a set of skills of
sensing market and assessing them.
• The findings has implications on guiding and
teaching students.
• Enable first to recognize the market gaps to start
thinking of what to innovate,
• screening out the business concepts based on their
self capacity, financial feasibility and market
demands
• equipped with management skills to sustain the
business.
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Thank you
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