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The Role of Market Knowledge in Recognizing and Exploiting Entrepreneurial Opportunities in Technology Intensive Firms

Maija Renko

University of Illinois at Chicago

March 7, 2008

Kauffman Foundation Young Scholars Research

Entrepreneurial opportunity recognition is an increasingly prevalent phenomenon. Of particular interest is the ability of promising technology based ventures to recognize and exploit opportunities. Recent research drawing on the Austrian economic theory emphasizes the importance of knowledge, particularly market knowledge, behind opportunity recognition. While insightful, this research has tended to overlook those interrelationships that exist between different types of knowledge (technology and market knowledge) as well as between a firm's knowledge base and its entrepreneurial orientation. Additional shortfalls of prior research include the ambiguous definitions provided for entrepreneurial opportunities, oversight of opportunity exploitation with an extensive focus on opportunity recognition only, and the lack of quantitative, empirical evidence on entrepreneurial opportunity recognition.

In this dissertation, these research gaps are addressed by integrating Schumpeterian opportunity development view with a Kirznerian opportunity discovery theory as well as insights from literature on entrepreneurial orientation. A sample of 85 new biotechnology ventures from the United States, Finland, and Sweden was analyzed. While leaders in all 85 companies were interviewed for the research in 2003-2004, 42 firms provided data in 2007. Data was analyzed using regression analysis.

The results show the value and importance of early market knowledge and technology knowledge as well as an entrepreneurial company posture for subsequent opportunity recognition. The highest numbers of new opportunities are recognized in firms where high levels of market knowledge are combined with high levels of technology knowledge (measured with a number of patents). A firm's entrepreneurial orientation also enhances its opportunity recognition. Furthermore, the results show that new ventures with more market knowledge are able to gather more equity investments, license out more technologies, and achieve higher sales than new ventures with lower levels of market knowledge. Overall, the findings of this dissertation help further our understanding of the sources of entrepreneurial opportunities, and should encourage further research in this area.

Number of Pages in PDF File: 242

Keywords: Entrepreneurship, Opportunity recognition, Biotechnology

JEL Classification: M13

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Date posted: February 19, 2009 ; Last revised: September 29, 2013

Suggested Citation

Renko, Maija, The Role of Market Knowledge in Recognizing and Exploiting Entrepreneurial Opportunities in Technology Intensive Firms (March 7, 2008). Kauffman Foundation Young Scholars Research. Available at SSRN: https://ssrn.com/abstract=1344649 or http://dx.doi.org/10.2139/ssrn.1344649

Contact Information

Maija Renko (Contact Author)
University of Illinois at Chicago ( email )
601 S. Morgan St. (M/C 243)
University Hall 2203
Chicago, IL 60607-7122
United States
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