Opportunity based approach to international entrepreneurship.
Opportunity based approach to
Presented by Sojourner Grace
International entrepreneurship (IE) “the discovery, enactment, evaluation and exploitation of opportunities across
national borders to create future goods and services”. Oviatt and McDougall (2005).
An Opportunity Based Approach to IE
The opportunity-based approach (OBA), suggests that the
process of internationalization itself may be viewed as the
formation and exploitation of international entrepreneurial
The OBA differs from the conventional IE approaches which
emphasize the process of firm internationalization and stages
of internationalization because the OBA focuses on the entire
process of prospection, opportunity formation, decision, and
exploitation, and regards internationalization as an end
It is the entrepreneur, using prospection, which forms
entrepreneurial opportunities and makes the decision to
exploit them through the firm
The OBA recognizes the important role of the
entrepreneur in the formation of, and the decision
to, pursue entrepreneurial opportunities.
This entrepreneurial ability to create the imagined
It is by prospection that the entrepreneur creatively
imagines the possible combinations of firm capabilities
and market opportunities to form entrepreneurial
This the imagination that creates or fabricates and
extrapolates from context, sifts out and disregards
elements from the confusing welter of experience that
would otherwise distract effort and blur focus.
According to the Webster’s New World Dictionary
(1990) an opportunity is a combination of
circumstances favorable for the purpose.
In the context of an entrepreneurial opportunity, the
combination of circumstances can be favorable for the
purpose of formation of economic value such as:
creation of future goods and
services, inputs, resources, and ways of organizing
and creating future economic artifacts.
Such circumstances must be located
inside the firm from which the (potential) economic
value is formed (firm capabilities)
and outside the firm i.e. in the market where the
economic value is realized (market opportunities).
Are opportunities like mountains just waiting to be discovered and
exploited or mountains to be built?
Creation theory (the creative view of
According to (Endres and Woods, 2007)
Opportunities, are not just discovered; they are
Topology of Entrepreneurial
Shows how an entrepreneur forms
entrepreneurial opportunities through
opportunity discovery and the dimensions of
opportunity creation, namely: opportunity
discovery, opportunity development, opportunity
construction, and opportunity creation.
See table next slide
Entrepreneurial Opportunity Formation Quadrant
Opportunity discovery (quadrant 1). The
perception by an entrepreneur of an existing
entrepreneurial opportunity (where both firm
capabilities and market opportunities exist)
CBA, a New Zealand firm to Australia on
account of Australian partners ready to
distribute its products.
Opportunity development (quadrant 2). The
development of new firm capabilities to pursue
a current market opportunity. (e.g. export order
or market demand)
Opportunity construction (quadrant 3).
The construction of a new market opportunity
when a firm has the present ability e.g SPEA
Software AG engaged in opportunity construction
to venture abroad. Relying on its capabilities to
manufacture computer graphic boards, it entered
international markets without waiting for customer
orders to be in place
Opportunity creation (quadrant 4)
The creation of both new firm capabilities and a
new market opportunity.
The impact of entrepreneurial
On opportunity decision
Quadrant 4-complex and overwhelming.
On opportunity Exploitation(Speed)
Quadrant 2-differs(depends on complexities in
developing firm capabilities.
Quadrant 3-differs ( depends on challenges in
constructing he market opportunity.
Quadrant 4 Longer.
At the heart of firm internationalization is the formation
and exploitation of entrepreneurial opportunities.
OBA views firm internationalization as dynamic
,non deterministic and non linear.
Seeks to integrate all IE approaches.
Stages/process approach (The Johanson/Vahine
1977/1990 Internationalization model).
The Network approach (Johanson and Mattson
The Resource based approach(Bloodgood et al.
The Knowledge Approach(Autio et al. 2000;
Shortcomings and criticisms to the
Some firms do not always internationalize in a
Firm internationalization is not always linear and
deterministic. Firms adopt entry modes that suit
the potential market opportunities
In order to overcome resource constraints, firms
by internationalize only parts of their value chains
(Oyson and Whittaker 2010),
Others internationalize by setting up an
international office with just one sales
staff, aggressively using the internet to solicit
foreign accounts from their home countries.
Some are pulled into foreign markets by foreign
distributors/agents in an opportunistic manner with
no experimental knowledge
In general the increasing emergence of
international new ventures (INV’s) that
internationalize at or near inception and because
of their newness they are typically not part of
industrial networks, with no or limited resources
and knowledge has led to the second theory of
internationalization i.e. the international new
venture theory -Born global. (McDougall et al.
1994; Oviatt and McDougall 1994).
Other than focusing on the process of
internationalization and its stages, the OBA goes
beyond and looks at the whole process which
includes Prospection, Opportunity
Creation, Opportunity decision, and Opportunity
Exploitation. Therefore there is a need to
understand E in IE by bringing the entrepreneur
back into international entrepreneurship, as there
can be no international entrepreneurship without
the entrepreneur for it is the entrepreneur who
discovers, enacts, and evaluates
opportunities, and who decides whether the firm
should exploit international opportunities.