Opportunity Evaluation as Rule‐Based Decision Making

30 Pages Posted: 15 Apr 2014

See all articles by Matthew S. Wood

Matthew S. Wood

Southern Illinois University at Carbondale

David W. Williams

University of Tennessee; Department of Managerial Sciences, J. Mack Robinson College of Business, Georgia State University

Date Written: June 2014

Abstract

We draw from cognitive science literature on rule‐based thinking to develop and empirically test a theoretical framework of entrepreneurial opportunity evaluation. We argue that entrepreneurs make use of socially constructed rules to discern the attractiveness of an opportunity, for them, specifically. Using conjoint analysis data of 498 decisions made by 62 entrepreneurs, we find that entrepreneurs' use of rules regarding opportunity novelty, resource efficiency, and worst‐case scenario significantly influences entrepreneurs' evaluations of opportunities and that individual differences in opportunity market and technology knowledge augment the effect of the rules on opportunity attractiveness. Additionally, we document that the worst‐case scenario diminishes the positive effect of other rule criteria (e.g. novelty, resource efficiency) on opportunity evaluation and that market and technology knowledge further influence the negative effects of the worst‐case scenario.

Keywords: cognition, entrepreneurship, evaluation, opportunity, rule‐based decision making

Suggested Citation

Wood, Matthew S. and Williams, David W., Opportunity Evaluation as Rule‐Based Decision Making (June 2014). Journal of Management Studies, Vol. 51, Issue 4, pp. 573-602, 2014. Available at SSRN: https://ssrn.com/abstract=2425007 or http://dx.doi.org/10.1111/joms.12018

Matthew S. Wood (Contact Author)

Southern Illinois University at Carbondale ( email )

Rehn Hall - Mail Code 4626
Carbondale, IL Illinois 62901-4515
United States

David W. Williams

University of Tennessee ( email )

Department of Management
416 Stokely Management Center
Knoxville, TN 37996-0545
United States
865-974-1666 (Phone)

Department of Managerial Sciences, J. Mack Robinson College of Business, Georgia State University ( email )

United States
404-413-7569 (Phone)

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