Creating entrepreneurial opportunities: an organisational and social constructive phenomenon in the creation of new businesses

432 Int. J. Entrepreneurial Venturing, Vol. 1, No. 4, 2010 Creating entrepreneurial opportunities: an organisational and social constructive phenomenon in the creation of new businesses Antti Kauppinen* and Vesa Puhakka Department of Management, University of Oulu, P.O. Box 4600, University of Oulu, 90014, Finland E-mail: antti.kauppinen@oulu.fi E-mail: vesa.puhakka@oulu.fi *Corresponding author Abstract: This conceptual study approaches the creation process of new businesses from the perspective of organisational creativity and imagination in entrepreneurial opportunity process. Currently, organisational creativity and imagination have been linked to the creative view or creation theory in the entrepreneurial opportunity process field of research. We argue that our theoretical illustration concerning the dialectical creation process of entrepreneurial opportunities describes an early phase of the creation of new businesses. According to our theoretical illustration, entrepreneurs create new unknown effects from the given means or tools (the logic of effectuation) in the creative space (called in-between). In this manner, the creative space including subject, object and community (i.e., neutral opportunities) is empty at the beginning of the entrepreneurial opportunity process, and it is completed by elements of business environment (i.e., intension-driven entrepreneurial opportunities) such as rules, tools, signs and division of labour. Keywords: creative view; creative space; logic of effectuation; neutral opportunities; intention-driven entrepreneurial opportunities; structure of human activity. Reference to this paper should be made as follows: Kauppinen, A. and Puhakka, V. (2010) ‘Creating entrepreneurial opportunities: an organisational and social constructive phenomenon in the creation of new businesses’, Int. J. Entrepreneurial Venturing, Vol. 1, No. 4, pp.432–448. Biographical notes: Antti Kauppinen works as an Assistant at the University of Oulu’s Business School. He is doing his Doctoral thesis on organisational creativity and opportunity creation processes of entrepreneurs. He is interested in the creation processes of opportunities and new businesses from the ontologically subjective perspective. The social constructivism, critical realism and narrative approaches are used as the scientific philosophical standing points of his research activities. Vesa Puhakka works as a Professor of Entrepreneurship and the Director of MBA Programme at the University of Oulu’s Business School. His research interests are emerging mechanisms of becoming an entrepreneur, opportunity-creating processes and development and change processes of organisations. The Academy of Management and the NFIB Education Foundation awarded his Doctoral dissertation for outstanding research in the fields of entrepreneurship and independent business in 2003. Copyright © 2010 Inderscience Enterprises Ltd. Creating entrepreneurial opportunities 1 433 Introduction Entrepreneurial opportunity process as a research phenomenon seems to be a considerable and continually developing research stream in understanding entrepreneurship (see, e.g., Chiles et al., 2007; Companys and McMullen, 2007; Dew et al., 2004; Shane and Venkataraman, 2000; Venkataraman, 1997). The research stream has approached the entrepreneurial opportunity process most often from the perspectives of allocative, discovery or creative view (Sarasvathy et al., 2003). Additionally, the more precise identification and development of entrepreneurial opportunities has been the focus in the current research (Ardichvili et al., 2003). The above perspectives differ significantly from each other in the theoretical premises of entrepreneurship and especially in the ontological stance of entrepreneurial opportunities (Companys and McMullen, 2007; Sarasvathy et al., 2003). Majority of the research on entrepreneurial opportunity process has approached the phenomenon from the objectivistic ontological foundations and adopted overwhelmingly variance-based methods to explain and predict entrepreneurial opportunity recognition or discovery. Present study criticises the previous studies, which have approached entrepreneurial opportunities as objectively defined phenomena (see Kirzner, 1973, 1997; Schumpeter, 1934; Shane, 2003; Shane and Eckhardt, 2003). These studies approach the phenomenon without human awareness and social constructive nature of opportunity creation as being necessary to acknowledge. We claim that the variance-based research on entrepreneurial opportunity process does not take into account that human events in social world are embedded in cultural and historical contexts, in which events do not invariably follow a determined and recurrent pattern (Bhaskar, 1998; Hedström and Swedberg, 1998). It could be put forth that although entrepreneurial opportunity process has been widely acknowledged to be central in entrepreneurship (Davidsson, 2003) there are only few studies that explicitly develop conceptually entrepreneurial opportunity process from the creative point of view and upon which can be theoretically build [see the extensive review by Alvarez and Barney (2007)]. Following the above reasoning, this conceptual study strives for build a more subjective theoretical standing point to the phenomenon. This is grounded on the organisational (e.g., Hjorth, 2004, 2005) and the social constructive (e.g., Fletcher, 2007; Holt, 2008; Sarasvathy, 2001) approaches on entrepreneurship (see also Weick, 1979, 1995). This study explores the entrepreneurial opportunity process from the developing perspective of organisational entrepreneurship (see Gartner et al., 2003; Hjorth, 2003; Sarasvathy, 2001; Steyaert and Hjorth, 2003). Theoretical perspective of this study is suggested to be important and novel. In this, we lean on Hjorth’s (2004) notion that most of the previous research has emphasised rather micro (e.g., individual traits, motivation to start a business and opportunity recognition) and macro (e.g., firm-foundation, evolution of industries and venture capital markets) orientations on the phenomenon than approached entrepreneurship as cultural-historically embedded creative activity (Holt, 2008; Steyaert and Hjorth, 2003; see also Engeström, 2001). The central concept of this study is entrepreneurial opportunity. This ontologically controversial concept (see Alvarez and Barney, 2007) defines also the research gap of this study. Neoclassical economics sees the whole concept of entrepreneurship and therefore entrepreneurial opportunity process as well, as an allocation problem (the allocative view), while entrepreneurial opportunities are understood to be objective 434 A. Kauppinen and V. Puhakka phenomena. The second perspective called discovery view or discovery theory (cf. Alvarez and Barney, 2007; Sarasvathy et al., 2003) is headed by Schumpeter (1934) and Kirzner (1973, 1997). The supporters of this perspective see the entrepreneurial opportunities, as well, as objectively existing phenomena without human awareness of these opportunities being necessary. In the present study, we adopt the third approach, namely the creative view or creative theory (see Alvarez and Barney, 2007; Holt, 2008). Supporters of the creative view argue that neoclassical and Austrian schools have failed in showing that entrepreneurial opportunities exist objectively and are waiting to be recognised or discovered before their creation (see Sarasvathy et al., 2003). Purpose of this study is to increase theoretical understanding of the entrepreneurial opportunity process from the creative point of view. To reach this goal we set the following research question: ‘What is the theoretical nature of entrepreneurial opportunity process?’. We follow the scientific philosophical principles of critical realism (Bhaskar, 1998; Fleetwood, 2005) meaning that there are some universal concepts (entrepreneurial opportunities) which represent faithfully the realities that are not universal (the creation process of new businesses). Our main emphasis in this study is to develop an understanding in what is happening in a cultural-historical activity system when entrepreneurial opportunities as behavioural objects are constructed by organisational creativity (see Hjorth, 2004, 2005) and imagination (see Sarasvathy, 2001). In our analysis, Weick’s (1979) as well as Hill and Levenhagen’s (1995) concepts of sense-making and sense-giving are in use. Theoretical framework of this study is grounded on Engeström’s (1987) cultural-historical activity theory on human activity. Contribution of this study is suggested to be the integrated and subjective conceptualisation of the dialectical (see Van de Ven and Poole, 1995) creation process of new business. In this paper, Engeström’s (1987, 2001) cultural-historical activity theory, as well as entrepreneurial opportunity process literature consisting of allocative, discovery and creative view, are discussed next (Section 2). After that, the cultural-historical activity theory is discussed in detail and divided into two parts (the first part includes subject, object and community and the second one rules, tools, signs and division of labour) for the analysis of entrepreneurial opportunity process (Section 3). Subsequently, entrepreneurial opportunity process as the cultural-historical creative activity is then elaborated in this paper (Section 4). Finally, this paper is concluded by proposing the theoretical and managerial implications and possible directions for the future research (Section 5). Additionally, concluding remarks are presented in the end of this paper (Section 5). 2 Theoretical approaches to entrepreneurial opportunities Organisation studies, including entrepreneurship, are facing a paradigm shift moving the research towards cultural, linguistic and postmodern premises (Westwood and Clegg, 2003). However, previous entrepreneurial opportunity process research has emphasised the objectively understandable nature of entrepreneurial opportunities. Entrepreneurial opportunities are defined by Casson (1982) as: “Situations in which new goods, services, raw materials and organising methods can be introduced and sold at greater than their cost of production” [Shane and Venkataraman, (2000), p.220]. In line with Casson (1982), Shane (2003, p.35) defines entrepreneurial opportunity as: “A situation in which Creating entrepreneurial opportunities 435 a person can create a new means-ends framework for recombining resources that she believes will yield a profit”. Additionally, Shane and Venkataraman (2000, p.220) cite Kirzner (1997) as follows: “An entrepreneurial opportunity differs from the larger set of all opportunities for profit, particularly opportunities to enhance the efficiency of existing goods, services, raw materials and organising methods, because the former require the discovery of new means-ends relationships, whereas the latter involve optimisation within existing means-ends frameworks”. In contrast, Alvarez and Barney (2007, p.15) claim that: “In creation theory, entrepreneurs do not search – for there are no mountains to find – they act and observe how consumers and markets respond to their actions”. Therefore, there is no meaning to study how, where or why entrepreneurs search for opportunities – there is nothing to be found – but instead the focus of scientific inquiry should be on the actions of entrepreneurs – ‘they build the mountains’ [Alvarez and Barney, (2007), p.15]. Table 1 Different approaches to entrepreneurial opportunity process Approaches Allocative view Discovery view Creative view Opportunity Entrepreneurial opportunities exist or have been just realised to be refined Entrepreneurial opportunities exist but some of the elements wait to be discovered Entrepreneurial opportunities are not existing but are socially constructed Refining existing Solution making Creating new realities Rational analysis Discovering the most suitable option Creating along the way Decision-making in a given problem solving space Decision-making Sense-making Process Searching inefficiencies and operating efficiently Uncertainty of the business environment Both the initial and the end situation are known Sense-giving The end is unknown but the initial situation is known Both the initial and the end situation are unknown Initial situation is unknown but the end situation is known Role of the actor (entrepreneur) End-result Improver Alert developer Challenger, web-weaver, meaning builder Past oriented Present oriented Future oriented Clear and visible solutions New solutions to existing problems New realities New applications for existing solutions No best or most suitable solution Existing realities are often difficult to perceive 436 A. Kauppinen and V. Puhakka Nevertheless, entrepreneurial opportunities are seen in all of the above approaches as situations possible to generate new economical means-ends frameworks which are recognised in the allocative view, discovered in the discovery view and created in the creative view (Sarasvathy et al., 2003; Shane and Venkataraman, 2000; Shane, 2003; Venkataraman, 1997). This study adopts the principles of creative view (see Alvarez and Barney, 2007). In the following, the allocative, discovery and creative view are shortly discussed. Table 1 illustrates the main principles of the allocative, discovery and creative approaches to the entrepreneurial opportunity process. 2.1 Allocative view In the allocative view, the phenomenon of entrepreneurial opportunity process is a statistical problem, which can be solved by calculating probabilities (see Sarasvathy et al., 2003). In this way, entrepreneurial opportunity process is based on the neoclassical approach and, thus, a linear entrepreneurial opportunity recognition process (Sarasvathy et al., 2003), in which the entrepreneurial opportunities exist objectively in the risky business environment (see Arrow, 1974; Knight, 1921). On this basis, the only relevant incentive to start new ventures or create new businesses in a perfectly competitive (equilibrium stated) market is the usage of incompletely, frequently distributed and contradictory knowledge (Hayek, 1945; see also Marshall, 1920). Therefore, the role of entrepreneurship is to allocate resources in more efficient directions. 2.2 Discovery view In line with the trait and cognitive approaches in organisation theory, the discovery view in the entrepreneurial opportunity process field of research sees that the objective entrepreneurial opportunities are discovered by entrepreneurs (but not others), who are talented or ‘alert’ enough to reach them (Kirzner, 1973, 1997). Entrepreneurs are, in this view, like instruments that are correcting the market from disequilibrium to equilibrium (Kirzner, 1997; see also Sarasvathy, 2004). Schumpeter (1934), in turn, says that entrepreneurship and therefore entrepreneurial opportunity process as well, is about ‘creative destruction’ meaning that the basic state of the market is fundamentally chaotic varying from disequilibrium to equilibrium and vice versa solidly. As a whole, the discovery view sees the market environment as complex in nature (Sarasvathy et al., 2003; see also Knight, 1921) and entrepreneurs to be the ones who alertly link pieces of information into an entrepreneurial opportunity. An example of this tradition is the studies conducted by cognitive school of entrepreneurial opportunity process (e.g., Baron, 1997, 1998; Corbett, 2007; Fiet and Patal, 2008) which have studied how entrepreneurs perceive and process information. This tradition is rich and promising but, however, the problem from our point of view is that entrepreneurs are separated from their cultural and historical contexts to be merely intellectual information processors. 2.3 Creative view The researchers of the creative view have seen the entrepreneurial opportunities as subjective phenomena (Buchanan and Vanberg, 1991; Jack and Anderson, 2002; Sarasvathy et al., 2003; see also Companys and McMullen, 2007). Their approaches seem Creating entrepreneurial opportunities 437 to emphasise, for example, organisational creativity (Hjorth, 2004, 2005) and imagination (Sarasvathy, 2001) in the creation of entrepreneurial opportunities. The entrepreneurial opportunity creation is seen to take place in a truly uncertain (see Knight, 1921) market environment in which entrepreneurs construct opportunities through their own activity (Alvarez and Barney, 2007). This is also the focus of this study. Figure 1 The structure of human activity TOOLS, SIGNS OBJECT SUBJECT RULE COMMUNITY DIVISION OF LABOUR Source: Engeström (1987) As a whole, entrepreneurship is seen in this study as a cultural-historical process of creating new economical activity (cf. Hjorth, 2004; Holt, 2008) by using Engeström’s (1987) activity theory. Holt (2008) is one of the first who has approached entrepreneurial opportunity process as cultural-historical human activity. This theoretical tradition will also be followed here. The main guiding principles of Engeström’s (1987, 2001) cultural-historical activity theory are: 1 a collective, artefact-mediated and object-oriented activity system as the actor 2 multivoicedness of the activity system 3 historicity of the actions of the system 4 contradictions as source of change and development 5 the possibility of expansive transformations of contents of the activity system (e.g., Engeström, 1987, 2001, 2004, 2005, 2006; Engeström and Blackler, 2005). 438 A. Kauppinen and V. Puhakka Engeström’s (1987) activity system presented in Figure 1 is assumed comprising the individual practitioner, the colleagues and co-workers of the workplace community, the conceptual and practical tools and the shared objects of the activity as a unified and dynamic whole which creates entrepreneurial opportunities (cf. Holt, 2008). As Figure 1 illustrates, tools (including signs, symbols and various kinds of representations) as well as less visible social mediators of the social activity – rules, community and division of labour (organising in this study) – mediate the subject’s interaction with the object (opportunity). We use the concept of organising instead of division of labour because the term organising refers more closely to organisational and social constructive phenomenon, which is the focus of this study. In this study, entrepreneurship as an event (see Hjorth, 2004) is a process of creating entrepreneurial opportunities for the purpose of new business. Engeström’s (1987) theory of the structure of human activity is a way to conceptualise this complex phenomenon. Engeström’s (1987) approach is quite close with social constructivism, in which the socially constructed reality is understood as a ‘sense-mechanism’ created in the interaction of people (see Berger and Luckmann, 1966). 3 Entrepreneurship as an event to create entrepreneurial opportunities Creative view described above fits well into the nature of contemporary and fast changing business environment, in which success factors of firms have been clearly changed. Currently, business is characterised by continuous change, which can and should be managed differently than before. Current business environment could be described as like a game, in which the rules and actually the type of that game are not clear, but they must be created during playing the game (Christensen and Raynor, 2003; see also Sarasvathy and Kotha, 2001). In the creative view, the actors of business themselves create the surrounding uncertainty and not the vice versa (Companys and McMullen, 2007). Hence, it seems to be clear that the business environment is ambiguous (Christensen and Raynor, 2003) and blurry (Johannisson, 2007) in its nature. The game metaphor discussed above works well with Engeström’s (1987) theory of human activity illustrated in Figure 1. Following subchapters describe our application of the Engeström’s (1987) theory in the creation process of new businesses. Our elaboration is twofold. Firstly, we discuss how the creation process of new businesses works in entrepreneurial opportunity process including subject-object-community triangle from Engeström’s (1987) model. Secondly Engeström’s (1987) larger triangle, consisting of rules, tools, signs and division of labour (organising in this study), is analysed in the case of entrepreneurial opportunity process from the creation process of new businesses point of view. In this study, we use Engeström’s (1987) theory as the basis for the conceptual framework. However, we acknowledge that in a broader investigation than in this study, Engeström’s (1987) activity-theoretical base (Vygotsky, 1978; Leontjev, 1977, 1981; Luria, 1979) should be analysed in more detail. 3.1 Subject-object-community In Engeström’s (1987) model, subject-object-community triangle refers to all persons (subjects individually and a community collectively) participating to construct the same Creating entrepreneurial opportunities 439 object. The main point in Engeström’s (1987) model is that a human (subject) is not constructing the object alone, but collectively (community). It is the same thing in the case of creative entrepreneurial opportunity process (Holt, 2008). The entrepreneurial opportunities as social constructions (see Berger and Luckmann, 1966) cannot be created alone, but collectively in organisational, social and creative action [see Hjorth’s (2004) description of organisational entrepreneurship]. Going away from managerial (Hjorth, 2004, 2005) and linear (Van de Ven and Poole, 1995) thinking, the creation of entrepreneurial opportunities looks more like dialectical process. In terms of Hjorth (2003, p.5): “Creativity disturbs the reigning order and, instead, also demands a new organisation”. On the grounds of Hjorth’s (2003) approach, it seems to be clear that there is a dialectical entrepreneurial opportunity process. In this study, this dialectical process is understood like Van de Ven and Poole (1995, p.517) describe the dialectical theory behind the dialectical process: “A pluralistic world of colliding events, forces or contradictory values that compete with each other for domination and control”. Van de Ven and Poole (1995, p.517) say also that: “Change occurs when these opposing values, forces, or events gain sufficient power to confront and engage the status quo”. At large, activities in this sort of process are like deviation-amplifying and deviation-counteracting loops in Weick’s (1979) approach of sense-making. From the perspective of this study, theses and antitheses together either amplify or counteract the whole process of entrepreneurial opportunity process in terms of Weick’s (1979) sense-making. But, what are, then, the roles of a subject, object and community in entrepreneurial opportunity process? In the above, we argued that the entrepreneurial opportunity process is dialectical in nature, but when subjects as people (entrepreneurs) are creating something new in this sort of process, there seems not to be any connections with the dialectical entrepreneurial opportunity process and new businesses. Actually, subject-object-community triangle seems to describe all sorts of opportunities (not only entrepreneurial opportunities). These types of opportunities have been described in the previous literature (e.g., Hjorth et al., 2003). In this study, the perspective from subject-object-community triangle is too narrow. By using it, we see that the subjects (entrepreneurs) are creating something in the dialectical opportunity (but not entrepreneurial opportunity) process. We must broaden our analysis in the larger context to see the whole phenomenon of entrepreneurial opportunity process in the creation process of new businesses. 3.2 Rules-tools/signs-division of labour (organising) The triangle consisting of rules, tools/signs and division of labour (organising) in Engeström’s (1987) model describes, in this study, the business environment, in which entrepreneurial opportunities are created. This is inevitable, because the triangle including subject, object and community discussed above illustrate only the opportunity process (but not the entrepreneurial opportunity process) activities in an organisation [compare how Hjorth et al. (2003) describe entrepreneurship and entrepreneurial opportunity process as a life style]. In the sense of entrepreneurial opportunity process, subjects, objects and community are in the crucial roles, but the meaning of the activities done is entrepreneurial. For example, making a cup of coffee is not, itself, a part of the entrepreneurial opportunity process, but selling that cup of coffee for somebody, who 440 A. Kauppinen and V. Puhakka likes to buy it, is a part of entrepreneurial opportunity process in the manner of the creation of new businesses. The difference between opportunity process and entrepreneurial opportunity process can be, thus, found from the purpose of those activities. Because the current business life and especially success factors in it are changing continuously and dramatically, it is necessary to rewrite the basic principles of entrepreneurial opportunity process as well. It is, for example, argued that Fayolian, Weberian and Barnardian principles of rationalisation and control are not valid any more, because of the growing centrality of knowledge-intensive work (Hjorth, 2004). Nowadays, there is a growing pressure to see the entrepreneurial opportunity process more as creative phenomenon, in which subjects (entrepreneurs) create new unknown effects from the given means or tools by effectuating (Sarasvathy, 2001). In effectuation, there are means or tools (e.g., coffee beans, coffee machine, etc.) to be used creatively and by imagination (Sarasvathy, 2001). The effects of this sort of working are not clear, and they cannot be seen before the entrepreneurial activities have been made (this refers also to the concept of sense-making). We see activities of sense-making in line with Weick (1979), who says that sensemaking should be understood literally. ‘Sense-making recipe’ goes in accordingly with Weick (1979) as follows: “How can I know what I think until I see what I say?”. This means that subjects (entrepreneurs) control controllable matters to create (i.e., to effectuate) something new in a business environment (see Sarasvathy, 2001), in which rules are not stable (Christensen and Raynor, 2003). Because subjects (entrepreneurs) can choose the way [division of labour as organising in Engeström’s (1987) model] they play this truly uncertain (see Knight, 1921) business game, they must seek some signs or tools to attain their objects. The nature of this sort of dialectical process is like Hjorth’s (2005) describe the concept of entrepreneurship. According to Hjorth (2005), the French term of entrepreneurship (entreprendre) includes the first part of ‘entre’ to mean the stepping into creative space called ‘in-between’ and the second part of ‘prendre’ to illustrate the grasping of opportunities in the creative space. 4 The creative (empty) space for entrepreneurial opportunities In this chapter, we demonstrate firstly our application of entrepreneurial opportunity process from the perspective of Engeström’s (1987) subject-object-community triangle. This refers to the neutral (but not entrepreneurial) opportunities. Secondly, in this chapter, this sort of creative activity is illustrated through the Engeström’s (1987) larger triangle consisting of rules, tools, signs and division of labour (organising) in accordingly with Hjorth’s (2005) description of the term of entrepreneurship. Entrepreneurship as this sort of stepping in and stepping out from the creative entrepreneurial space event illustrates our integrated theoretical illustration of the phenomenon of entrepreneurial opportunity process from the creative view. 4.1 Neutral opportunities In this study, it has been argued that subjects, objects and community do not themselves illustrate the whole phenomenon of entrepreneurial opportunity creation. Therefore, the opportunities that are created at the level of Engeström’s (1987) Creating entrepreneurial opportunities 441 subject-object-community triangle are neutral in the sense of this study. Entrepreneurial nature to the opportunities comes from the specific, business emphasised, type of environment [rules-tools/signs-division of labour (organising) triangle from Engeström’s (1987) approach]. Subject, object and community operate actively, make sense and create the opportunities in an organisation, but they do not have direct links with business environment [rules-tools/signs – division of labour (organising) triangle]. Neutrality in (entrepreneurial) opportunities is an important starting point for the creation process of new businesses (cf. Baker and Nelson, 2005). This type of neutrality can be understood as the first and very early phase of the dialectical creation process of new businesses. Creating new unknown effects from the given means or tools [i.e., effectuating in Sarasvathy’s (2001) terms] is a fundamental part of human life. For example, making a cup of coffee may be a neutral opportunity, but these neutral opportunities are often neglected as opportunities for a new business. Fletcher (2006) has, for example, described a case, when entrepreneurial process has been started by the personal experience of a specialty coffee bar. Fletcher (2006, p.429) describes by her analysis of Sahar and Bobby Hashemi’s book the beginning of the entrepreneurial process as follows: “Then, with these thoughts logged somewhere in the recesses of his subconscious, on that very day he had been out to several meetings and had been shocked to realise that you could not stop off for an even half-decent cup of coffee anywhere… The light bulb in his head turned itself on and the first step on the road to entrepreneurship was almost subconsciously taken.” In the way, when Fletcher (2006, p.429) describes the beginning of the entrepreneurial process as a: “shock to realise that you could not stop off for an even half-decent cup of coffee anywhere”, we argue that this is the early phase of opportunity, which is neutral in nature. This neutrality refers clearly to Hjorth’s (2005, p.395) description of the “stepping into the in-between”, in which the neutral opportunities are like raw materials for the entrepreneurial opportunities. The neutral opportunities take place, when entrepreneurs step into the creative space [Hjorth’s (2005) in-between], in which imagination [the logic of Sarasvathy’s (2001) effectuation] has a permission to work. This is also like Weick (1979) describes the start of sense-making as enactment (saying), which leads to selection (seeing what I say). But where do these neutral opportunities come? Or, like Weick (1979) asks: How can I know what I think until I see what I say? If the neutral opportunities are only raw materials for entrepreneurial opportunities, neutrality in the case of opportunities must refer to the creative space, which is empty in nature. Subjects (entrepreneurs) are those, who come and fulfil the creative space (in-between) by their imaginative and organisational creative action. 4.2 Intention-driven entrepreneurial opportunities According to Hjorth’s (2005) approach, entrepreneurship is about stepping into (entre) the creative space (in-between) and grasping opportunities in it (prendre). The neutral opportunities described in the previous chapter turn into the intention-driven entrepreneurial opportunities at the phase, which has been described in Fletcher’s (2006, p.429) article as: “the first step in the journey of entrepreneurship”. From the perspective of this study, the first step of the organisational entrepreneurship is not the Fletcherian (2006) first step, because the activities concerning entrepreneurial opportunity process 442 A. Kauppinen and V. Puhakka are started earlier as the neutral opportunities. The neutral opportunities are not easy to be observed, because these sorts of opportunities are fundamental parts of the activity of subjects, objects and community (e.g., a shock to realise that you could not stop off for an even half-decent cup of coffee anywhere). Engeström’s (1987) rules-tools/signs-division of labour (organising) triangle, describes a business environment involved with intention-driven entrepreneurial opportunities from the perspective of this study. This type of business environment is not neutral in a way we see neutral opportunities as fundamental parts of the activity of subjects, objects and community. This fundamental and neutral human activity must be contingent upon business environment that we are able to talk about the entrepreneurial opportunities in terms of creative view or creation theory of the current entrepreneurial opportunity process literature (Sarasvathy, 2001; Gartner et al., 2003; Hjorth, 2003, 2004, 2005; Steyaert and Hjorth, 2003). Because the rules of a business environment are not clear (Christensen and Raynor, 2003) or they are even ‘blurry’ (Johannisson, 2007), entrepreneurs (subjects) must organise [refers to division of labour in Engeström’s (1987) approach] themselves and entrepreneurial opportunities (objects) in some way to reach their targets in business. Hill and Levenhagen (1995) have proposed that entrepreneurs apply metaphors and mental models to develop a vision of how the surrounding and uncertain environment works (sense-making). Entrepreneurs also pass on this vision to others in an organisation, which refers to sense-giving (Hill and Levenhagen, 1995). The approach of Hill and Levenhagen (1995) reminds that the phenomenon of entrepreneurship is a dynamic whole such as Engeström’s (1987) model of the structure of human activity. Entrepreneurship as entrepreneurial opportunity process is not, either, free of its context and therefore environment really matters [see also Venkataraman’s (1997) weak and strong premises]. It is not possible to understand the phenomenon of entrepreneurial opportunity process only by the activities of human [subject-object-community triangle in Engeström’s (1987) approach], but these sorts of neutral opportunities also really matter. Engeström’s (1987) broader triangle consisting of rules, tools/signs and division of labour (organising in this study) matters also in the sense of uncertain business environment effectuated (see Sarasvathy, 2001) by sense-making and sense-giving mechanisms (Hill and Levenhagen, 1995; see also Weick, 1979, 1995). In this way, sense-making and sense-giving play the role of retention in basic sense-making recipe of Weick (1979). On the grounds of the discussion above, while the previous parts of sense-making recipe (enactment and selection) give neutral opportunities to the entrepreneurial opportunity process, the phase of retention controls this dynamic whole as, in Weick’s (1979) terms: “knowledge of what I said”. This sort of knowledge stops the process of new business creation. Then, the entrepreneurial opportunities are created in the organisational and socially constructed activity. In this case, a new organisation does not emerge as a new hierarchy, but in the form of new business (see Hjorth, 2003). 5 Discussion and directions for future research In this study, the following question has guided our pondering: What is the theoretical nature of entrepreneurial opportunity process? In this chapter, we contribute to the entrepreneurial opportunity process discourse theoretically and practically adapting Creating entrepreneurial opportunities 443 Engeström’s (1987) model of the structure of human activity. We claim that, opposing primarily the approaches of neoclassical economics and Austrian school from the creative view, the process of entrepreneurial opportunity process is dialectical (see Van de Ven and Poole, 1995) in nature and that the entrepreneurial opportunities are not objective phenomena, but the social and organisational constructed creations in an organisation, instead. We have illustrated in this study the Hjorth’s (2005) creative space (in-between) as a theoretical space, in which the entrepreneurial opportunities are created. 5.1 Theoretical implications Previous entrepreneurship research sees the start of entrepreneurial process, for example, as a ‘light’, which bulb into entrepreneur’s mind [see Fletcher, (2006), p.429] in the sense of idea concerning a new business. In this study, the beginning of entrepreneurial process is assumed to start much earlier as the form of neutral opportunities. Neutrality means fundamental human activity engaged with Engeström’s (1987) subjects, objects and communities. This sort of activity is not linked directly with business making. For example, making a cup of coffee may be a neutral opportunity in this sense. Neutral opportunities are theoretically like raw materials or given means/tools (see Sarasvathy, 2001) for the entrepreneurial opportunities. They are not ideas regarding entrepreneurship, but more about thoughts concerning some unknown activities, which can be turned into parts of the entrepreneurial opportunities in the future. This is linked very closely to the Sarasvathy’s (2001) logic of effectuation (creating new unknown effects from given means or tools by imagination). Neutral opportunities are created at the phase that Hjorth (2005, p.395) describes as ‘entre’. ‘Entre’ is the first part of the French term of entrepreneurship (‘entreprendre’) and it refers to the stepping into creative space called ‘in-between’ [Hjorth, (2005), p.395]. When we are talking about the creation of new businesses, the neutral opportunities and the step into creative space (in-between) are not enough. The neutral opportunities and creative space build together a possibility for something new in a process, which is dialectical (see Van de Ven and Poole, 1995) in nature. Dialectical theory behind the thinking of dialectical processes assume that the theses and anti-theses compete with each other, and the change takes place, when opposing values, forces or events gain sufficient power to confront and engage the status quo (Van de Ven and Poole, 1995). This is also the case in organisational creativity (see Hjorth, 2003, 2004, 2005). According to Weick (1979), so called ‘sense-making recipe’ is the following: How can I know what I think until I see what I say? In this way, saying refers to enactment and seeing what I said to selection. This sort of sense-making occurs in the creative space (in-between) mentioned above. Weick’s (1979) retention (i.e., knowledge what I said) is, in turn, linked with the intention-driven entrepreneurial opportunities involved with the larger environment surrounding the entrepreneurial opportunity process. When the neutral opportunities are involved with their environment (Engeström’s (1987) rules-tools/signs-division of labour (organising) triangle in the structure of human activity), we are talking about the entrepreneurial opportunities. In this way, an entrepreneurial intension (e.g., selling a cup of coffee) pushes the subjects (entrepreneurs) to meet the larger business environment, which is, nowadays, turbulent, vague and complex (Christensen and Raynor, 2003) or even blurry (Johannisson, 2007) in nature. In this sort of environment, the subjects (entrepreneurs) must organise themselves to play an 444 A. Kauppinen and V. Puhakka uncertain (see Knight, 1921) business game, which can be characterised by the continuously changing rules. The subjects (entrepreneurs) use often metaphors and mental models (see Hill and Levenhagen, 1995) to develop a vision in explaining, how the environment works (sense-making). From the perspective of this study, it seems to be quite clear that the nature of entrepreneurial opportunity process is a dynamic and context-dependent whole. 5.2 Managerial implications The phenomenon of entrepreneurial opportunity process can be seen clearly in the current business news. For example, Nokia’s acquisition of Symbian in June 2008 was a very illustrative example of that. Success factors of firms have been changed, and nowadays it is not so important any more to fight for the endowments (referring to allocative view in the entrepreneurial opportunity process discourse), but apply and exercise knowledge in a useful way. The researches of Austrian school (e.g., Kirzner, 1973, 1997) discuss, how the entrepreneurial opportunities are ready or waiting to be discovered, but we claim that the entrepreneurial opportunities cannot be discovered before their creation (see also Sarasvathy et al., 2003). In this study, we have proposed that the creation process of entrepreneurial opportunities is twofold consisting of the neutral opportunities and their more sophisticated counterparts, the intention-driven entrepreneurial opportunities. Our integrated and conceptual illustration of the dialectical process of entrepreneurial opportunity process describes how the new businesses are created from the perspective of organisational entrepreneurship as the subfield of creative view. We accept the Shane and Venkataraman’s (2000) view of entrepreneurial opportunity exploitation, which proposes that the entrepreneurial opportunities can be exploited as the creation of new firms (hierarchies) or the sale of the explored opportunities to the existing firms (markets). In this way, our organisational entrepreneurship perspective allows us to explain that the creation process of new businesses consists of a firm’s internal development as the entrepreneurial opportunity process (and its sale as the entrepreneurial opportunity exploitation) as well as the phenomenon of new venture creation. The main managerial contribution of this study considers the subjective and twofold (neutral and intention-driven) nature of the entrepreneurial opportunities. Neutrality in applications of this conceptual study refers to the seeing or observing the potential early phases of entrepreneurial opportunities (neutral opportunities) more clearly. Although all the neutral opportunities are not entrepreneurial ones (i.e., the every collective creation is not possible to be converted into a new business), imagination (see Sarasvathy, 2001) and organisational creativity (see Hjorth, 2004, 2005) seem both to be crucial in the contemporary knowledge-intensive business environment. When we see the creation process of new businesses as dialectical entrepreneurial opportunity process, the outcomes or effects are not only which matter. The dynamic and dialectical entrepreneurial opportunity process is the one, which finally causes new businesses and which really matters in the dynamic business environments. 5.3 Concluding remarks This paper approaches entrepreneurial opportunity process from the theoretically complex perspective. Many types of approaches are linked with each other. This is our way to show that the nature of entrepreneurial opportunity creation process is not Creating entrepreneurial opportunities 445 straightforward, but dialectical phenomenon, in which new businesses are created. Currently, this type of approach is needed, because the business environment and especially the success factors of firms have been changed drastically. The illustration of this paper assumes Knightian (1921) true uncertainty as its basic premise. Previous literature has discussed the concept of uncertainty in entrepreneurial opportunity creation, but the emphasis has not usually been on the processual and cultural-historically embedded social activities of entrepreneurs (see Sarasvathy, 2001). When the entrepreneurial opportunity creation process is investigated, two things should be remembered. Firstly, entrepreneurial opportunities depend always on context and time. For example, Nokia’s entrepreneurial opportunity to acquire Symbian in June 2008 would not have been relevant or even possible ten or five years ago. In this paper, Engeström’s (1987) larger triangle consisting of tools/signs, rules and division of labour (organising) conform that theoretically. Secondly, it should be seen that the creation of entrepreneurial opportunities is a process, which has a strong link with the personality of its creators (subjects), whose involvement with the community they are parts of make the objects (i.e., neutral opportunities) possible. Hence, the entrepreneurial opportunity creation process is fundamentally rooted on the basic human activities (e.g., making a cup of coffee), because in this way, and only in this way, the neutral opportunities are allowed to catch fire. 5.4 Direction for future research Empirical investigations in the field of entrepreneurial opportunity process are scarce (Companys and McMullen, 2007). Thus, it would be significant to investigate the phenomenon of entrepreneurial opportunity process empirically from the activity-based perspective adapting, for example, the Engeström’s (1987) model of the structure of human activity. As mentioned in the previous chapter, the neutral opportunities are personal creations of their creators [Engeströmian (1987) subjects] and therefore the processual activities they are doing are the most relevant units of analyses. On this ground, we propose that grounded theory types of investigations are needed in the scholarly discourse of entrepreneurial opportunity creation. By using the inductive research methodology, such as grounded theory, it is possible to see and handle the dialectical, contradictory and especially the creativity that entrepreneurs are processing in the creation of opportunities and new businesses. This study proposes a way to see the entrepreneurial opportunity process from the perspective of Engeström’s (1987) model. 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