Opportunity-based entrepreneurship is becoming increasingly important in today’s economy. It has been identified as a major factor in achieving economic and social development, while also taking into account the social and environmental aspects of sustainability.
Opportunity-based entrepreneurship involves exploring and taking advantage of opportunities that can bring about positive outcomes for individuals, communities, and businesses alike. Opportunity-based entrepreneurs often use creative and innovative approaches to finding solutions for problems that are not easily solved through traditional methods. This type of entrepreneurship requires an entrepreneurial spirit, a willingness to take risks, and a dedication to finding the best possible solution for any given problem.
Furthermore, Opportunity-based entrepreneurship is not just about finding solutions; it is also about creating and implementing them. Opportunity-based entrepreneurs must be willing to put in the hard work and dedication required to bring their solutions to life.
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What is Opportunity-Based Entrepreneurship?
Opportunity-based Entrepreneurship was presented by Peter Drucker in 1985 and it stated that entrepreneurs are not the ones responsible for initiating change, but rather they capitalize on the alterations caused by technology and consumer behavior. He went on to explain that entrepreneurs and entrepreneurship are characterized by a tireless search for change, where they respond to it swiftly and use it as an opportunity.
Peter Drucker and Howard Stevenson were two of the primary powerhouses behind the opportunity-based theory. This novel approach to entrepreneurship research offers a comprehensive, cross-sectional perspective (Fiet, 2002; Shane, 2000).
Drucker’s concept of opportunity centers on the notion that entrepreneurs are more inclined to recognize possibilities created by change, rather than problems. This insight is further developed by Stevenson (1990), who posits an additional component – resourcefulness – in his interpretation of Drucker’s business model.
Based on his research, the key distinction between entrepreneurial management and administrative management lies in their respective focal points. The essence of entrepreneurial leadership revolves around taking advantage of opportunities without giving heed to one’s current resources.
Elements of Opportunity-based Entrepreneurship
After thoroughly examining the literature and closely observing the entrepreneurial landscape, the following elements have been identified as potential opportunities:
Opportunities are Frequently Linked to Unique Goals and Specific Purposes
Opportunities are linked to particular intentions and conditions. Each opportunity has a specific intention, and individuals need to meet certain requirements in corresponding locations. To make the most of these possibilities, one must read books, conduct interviews, and analyze data.
Opportunities are often Multi-Faceted
Opportunity-based entrepreneurs must be able to view their opportunities from several perspectives. They should consider the implications of their potential solutions, as well as the capabilities and limitations of their resources.
Opportunities are not always apparent on the Surface
Opportunity-based entrepreneurs must be able to recognize opportunities that may be hidden in plain sight. They should look at things differently and be open to re-examining their initial assumptions. Opportunity-based entrepreneurs should also consider potential opportunities in places where others may not think to look.
Opportunities are Found in Opportunity Spaces
Opportunity-based entrepreneurs must recognize the existence of opportunity spaces. Opportunity spaces are areas of possibility, where opportunities can be found and explored. Opportunity-based entrepreneurs should be able to identify these opportunity spaces, identify their own opportunities within them, and create strategies for capitalizing on them.
Opportunities Are Endless
Life is a never-ending cycle of possibilities, as unrelenting and powerful as the waves in an ocean (Dangote 2005). The opportunities that arise for individuals or organizations can influence how quickly they grow or advance. They serve to punctuate each phase before opening up new avenues.
Opportunities are the Building Blocks of Success
Abioye (1996) proclaimed that opportunity is the spark of every greatness. Many persons who have left an indelible mark on history would not be remembered if they had never encountered such a momentous chance to reach their potential.
An Opportunity opens up to another
Harnessing an opportunity often creates even more doors of possibility. Opportunities come in all shapes and sizes, just like a house. For example, as Dangote (2005) suggests, when one door is opened it leads you to the next level where another awaits. Therefore, we should stay open to opportunities that present themselves- they may be our ticket to success!
Opportunity propels people and organizations to greater heights
Opportunity-based entrepreneurship is the key to unlocking a world of possibility and progress. Opportunity-based entrepreneurs can identify and capitalize on them, thereby propelling individuals and organizations to greater heights. Opportunity-based entrepreneurship is the fuel that drives success!
Opportunities involve risk-taking
Risk-taking can be defined as a move from the familiar to the unknown, where someone ventures away from what they already have in pursuit of something better (Schumpeter, 1934; Drucker 1985; Tushman and Nelson 1991).
Overcoming obstacles and opposition is the key to seizing the opportunity
For those who fail to capitalize on opportunities, there is no denying that the root of their problem lies in attitude. Some people choose to seize and accept what comes their way while others disdainfully reject it. To earn success, one must be able to identify and amplify strengths as well as minimize any perceived weaknesses.
Opportunity may be in form of Luck
People often say that an element of lack is involved in entrepreneurship. This, others call destiny. However, any destiny not given an appropriate drive will lie dormant and impotent. Every destiny is to be driven to its destination (Batty, 1974).
Needs-Based or Necessity Entrepreneurship vs Opportunity-Based Entrepreneurship
Opportunity-driven entrepreneurs launch a business when they recognize an opportunity in the market that is within reach for them. Needs-based entrepreneurs, on the other hand, build up their startups because it’s often the only way to make money. With such varying conditions between these two types of entrepreneurs, local support mechanisms must provide services tailored to each group for them to flourish.
In 2001, the Global Entrepreneurship Monitor (GEM) report brought to light a new concept of enterprise – ‘necessity entrepreneurship or needs-based entrepreneurship’. For this survey, entrepreneurs from 29 countries were queried to determine whether they initiated and expanded their business venture as a means of capitalizing on an unprecedented market opportunity (Opportunity Based Entrepreneurship) or due to limited options for income generation (Needs Based Entrepreneurship).
Interestingly, slightly fewer than one-third of respondents were Needs Based while just over two-thirds chose to pursue Opportunity Based options. In 2017, Stanford conducted a study on Opportunity-versus Necessity Entrepreneurship that revealed what Michigan’s Start-up Ecosystem had long suspected – business formation increases during economic downturns. When the automotive industry in Michigan experiences a recession, entrepreneurs start to flock in droves; proving the old adage “Necessity is truly the mother of invention.” Stanford researchers studied two different motivations, “opportunity” entrepreneurship and “necessity” entrepreneurship.
According to the Stanford study, a necessity entrepreneur was someone who began their own business out of need because they were previously unemployed. Necessity entrepreneurship is highly inversely correlated with the market, indicating that recessions push individuals into starting their businesses. On the contrary, Opportunity entrepreneurship appears to be positively associated with business growth and is often seen during periods of economic expansion.
Scholarship on entrepreneurship has traditionally been focused primarily on opportunity-based theories, but it is necessary to recognize the importance of broader perspectives. Necessity-driven entrepreneurship should be embraced and a greater range of views considered (Welter et al., 2017). Examining the motivations of entrepreneurs, this approach can be deemed a motivational theory. In other words, if you possess one or both of these motives, there is an increased chance that you will become an entrepreneur.
- Necessity entrepreneurs are people who launch businesses due to a lack of employment opportunities or job stability. In contrast, opportunity entrepreneurs create their success by leaving behind secure jobs in pursuit of even more lucrative entrepreneurial opportunities.
- According to research, countries with a higher ratio of opportunity entrepreneurship to necessity entrepreneurship tend to have faster rates of economic growth. It has been indicated that opportunity entrepreneurs are more creative while necessity entrepreneurism is commonly associated with redistribution (Wong et., 2005).
- Intriguingly, higher levels of income inequality are associated with greater necessity entrepreneurship (Lippman et al., 2005) – emphasizing that reducing overall inequality is paramount to curbing the need for it.
- Although necessity entrepreneurship is often criticized for morphing into opportunity entrepreneurship, there are many success stories that suggest a blend of both elements exists. Countless stories of those rising from poverty to wealth appear to validate this idea.
Drivers of Opportunity-based Entrepreneurship
Recently, the entrepreneurial sphere has been largely shaped by various dynamic factors such as novel funding options, cutting-edge technology advancements, global connections and interconnections, and specific industry economics based upon dependent and independent variables.
The world today is faced with unprecedented environmental challenges that have called for an increased focus on renewable energy and sustainability. This has created an opportunity for entrepreneurs to start businesses that are focused on environmental sustainability.
Opportunity-based entrepreneurship focuses on tackling these challenges, and this can be done by looking at the various independent and dependent variables that impact the sustainability of energy sources. For example, with an ever-expanding renewable energy source, there are numerous possibilities to reduce emissions by turning them into profits. Additionally, corporate social responsibility and environmental development can also be addressed in the energy sector strictly through entrepreneurial processes.
Thus, Opportunity-based entrepreneurship allows us to focus not only on the economic and technological aspects of sustainability but also on its social implications through the social entrepreneurial process. This includes moderate social license concerns, such as providing clean and affordable energy to communities or creating jobs that are in line with the world development indicator.
In short, Opportunity-based entrepreneurship offers an innovative approach to sustainability that can help create a more equitable and sustainable world. By leveraging the power of entrepreneurship, we can create new solutions to address the environmental challenges of today while creating economic and social opportunities for all.
The Global Entrepreneurship Monitor data provides a comprehensive view of the current state of opportunity-based digital and sustainable entrepreneurship across the globe.
This data, collected through a survey of many countries around the world and based on the Global Entrepreneurship Monitor Database, demonstrates that opportunity-driven sustainable entrepreneurship represents an opportunity for countries to achieve national economic development returns.
National entrepreneurship systems are being developed and evaluated with the help of these data sets; they focus on the independent and dependent variables in econometric entrepreneurship research. The data also reveals that having an opportunity-based strong social entrepreneurial culture is beneficial to national economic development.
In addition, the data collected from these surveys have been used to better understand and identify social entrepreneurial initiatives within countries. This has enabled the development of strategies that promote opportunity-based entrepreneurship and digital and environmental transitions.
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