Collective international opportunity recognition
An international opportunity refers to the acknowledged possibility of conducting an exchange with new foreign partners, such as customers, distributors, or joint venture partners (Ellis
2008), beyond the borders of a domestic market (Oviatt and McDougall
2005), and relates to crossing cultural, historical, social, and imaginative borders (Mainela et al.
2015). Therefore, international opportunities are often exploited in environments that are highly uncertain in comparison to local surroundings (Butler et al.
2010; Nowiński and Rialp
2015). Conceptualisations of international opportunity recognition have been presented by Zahra et al. (
2005), Ellis (
2011), Chandra et al. (
2012), and Muzychenko and Liesch (
2015), among others; however, the concept remains ambiguous (Ardichvili et al.
2003; Renko et al.
2012; Muzychenko and Liesch
2015). For instance, two dominant views distinguish between the discovery (objective) and creation (subjective) of opportunities. However, researchers are increasingly accepting that some opportunities are discovered, while others are created (Short et al.
2010), and some scholars even view discovery and creation as intertwined in entrepreneurial behaviour (Edelman and Yli-Renko
2010; Venkataraman et al.
2012; Mainela et al.
2014). Employing the subjective view of opportunity recognition, this study builds on the following assumptions. Opportunity recognition comprises a deliberate search and a discovery, and both are, in turn, involved in the process (Chandra et al.
2009). Entrepreneurs discover and evaluate international opportunities by knowing about and/or imagining them (Oyson and Whittaker
2015), and learning stimulates intentions to develop opportunities (Chandra et al.
2012; Peiris et al.
2013). On this basis, international opportunity recognition is viewed in this study as an iterative process involving aspects of search and discovery, as well as the identification, evaluation, and cognitive creation of opportunities in an international context.
As with entrepreneurship research in general, many of the studies on international opportunity recognition focus on the entrepreneur’s or manager’s cognitive qualities and characteristics. These include his or her technological and international knowledge (Nordman and Melén
2008); cross-cultural competence (Muzychenko
2008); entrepreneurial culture (Dimitratos et al.
2012); dynamic managerial capabilities (Andersson and Evers
2015); effectual and causal entrepreneurial logic (Chandra et al.
2015); linguistic skills (Hurmerinta et al.
2015); migration background (Bolzani and Boari
2018); and alertness, centre of interest, and prior experience (Santos-Álvarez and Carcía-Merino
2010). In addition, Zahra et al. (
2005) discuss entrepreneurs’ mental representations of their surroundings and suggest that their attention patterns and cognitive models are dependent on the environment and their prior experiences, thereby containing biases, mental loops, and contradictions. More recently, similar concepts have been referred to as “cognitive frames” (Andresen et al.
2014) and “prototypes” (Chandra et al.
2015). Given such mental representations, extensive international experience, for instance, may not necessarily promote the identification of international opportunities because the entrepreneur compares and connects the new information and stimuli with his or her extant knowledge (Baron and Ensley
2006; Grégoire et al.
2010) and may, therefore, focus on familiar clues while ignoring new information (Zahra et al.
2005).
In addition to the cognitive dimension, the external international environment influences international opportunity recognition. Peiris et al. (
2012,
2013) suggest that this process is influenced by environmental factors (industry, market, competition, culture, and institutions). Furthermore, Hohenthal et al. (
2003) suggest that ongoing expansive or explorative activities in international markets affect the discovery of new opportunities and that this, in turn, influences further activities. Chandra et al. (
2012) share this view, emphasising the dynamic feedback and learning processes involved in opportunity identification and development, while Santos-Álvarez and Carcía-Merino (
2010) highlight the external stimuli leading to business internationalisation. Thus, it can be argued that international opportunity recognition is a subjective process that is shaped by the characteristics of and inputs from the entrepreneur’s surroundings, which, in an international context, can be highly unfamiliar to him or her.
While international opportunities are concerned with foreign markets, collective international opportunities come to exist in foreign markets through inter-firm collaboration. Business networks constitute an important source of new information, referrals, chance encounters, and events that may lead to the identification of opportunities, as well as different paths to and paces of internationalisation (e.g. Hohenthal et al.
2003; Juho
2011; Söderqvist
2011; Chandra and Wilkinson
2017). In fact, several studies have illustrated the importance of networks in international opportunity recognition (e.g. Johanson and Vahlne
2006; Mort and Weerawardena
2006; Chandra et al.
2009; Johanson and Vahlne
2009; Kock et al.
2010; Slotte-Kock and Coviello
2010; Ellis
2011; Juho
2011; Söderqvist
2011; Andresen et al.
2014; Blankenburg Holm et al.
2015; Pereira Leite et al.
2016; Zaefarian et al.
2016; Lindstrand and Hånell
2017; Mainela et al.
2018). However, networks tend to be viewed as rather passive sources of ideas and resources for international opportunity recognition, and further research to examine team processes in the creation of opportunities has been encouraged (Arenius and De Clercq
2005; Short et al.
2010).
Chandra et al. (
2015) state that international entrepreneurship is essentially the co-exploitation of opportunities among a network of entrepreneurial actors in international markets. The processing of the entrepreneur’s opportunity portfolio is influenced by its strategic fit in relation to another actor’s (or set of actors’) opportunity portfolio(s). The co-exploitation of opportunities requires the entrepreneur to have the capability to exploit the new opportunity, as well as its compatibility (strategic fit) with the existing opportunities in his or her portfolio. Consequently, Chandra et al. (
2015) take steps towards viewing international opportunity recognition explicitly as interaction. This collective approach is supported by Andresen et al. (
2014), who highlight that entrepreneurship is often a result of collective actions in group processes which involve multiple partners embedded in network structures. According to Mainela et al. (
2014), international opportunity development is a process of interacting in relationships to create shared interests, whereby the involved actors actually become parts of the collective opportunity (Schweizer et al.
2010). For such opportunities to emerge, entrepreneurs have to mobilise other people and firms to work towards the same idea, despite them all viewing it differently in light of their own interests and resource constellations (see Ciabuschi et al.
2012). Thus, other actors in a network should be viewed not only as passive sources of knowledge, capabilities, and resources but also increasingly as playing an active role in international opportunity creation and content (see Mainela
2012; Mainela et al.
2014). The collective, inter-firm interaction
1 interface which is involved in this process remains an under-researched yet important aspect of international entrepreneurship.
Synthesising the discussions above, collective opportunity recognition is defined as several entrepreneurs jointly acknowledging the net benefits of utilising and integrating their resources collectively to establish a new business activity. In the international opportunity context, this refers to recognising the net benefits of business activity in a foreign market. This study approaches the empirical exploration of this complex, subjective phenomenon from the perspective of individual entrepreneurs and employs the concept of mental image.
Opportunity recognition and mental images
The literature on the concept of entrepreneurial opportunity has become vast and heterogeneous, and it includes various perspectives on the entrepreneur–opportunity nexus and its associated processes (Shane and Venkataraman
2000; Davidsson
2015). Following the subjective view, an emerging stream of entrepreneurship research aims to advance understanding of the individual characteristics, environmental conditions, and cognitive processes that are conducive to the generation of venture ideas. Opportunities are, as creations by entrepreneurs and representations of a stream of continuously developed and modified ideas, inseparable from the individual and intertwined with his or her beliefs and imagination (Dimov
2011). Two people who identify the same initial idea will not develop the same opportunity due to their own sense-making and differing perceptions, intentions, mental models, prior knowledge, and social contexts (Söderqvist
2011). This study builds on the subjective view of opportunity and assumes that opportunities are, at least to some extent, created in the minds of entrepreneurs, and thus, individuals and their views on opportunities cannot be fully separated. Accordingly, this study builds on the first-person perspective, whereby interpretations of opportunity circumstances are made in relation to whether there is an attractive opportunity available for “me” as opposed to generally for anyone (termed the third-person perspective) (Mitchell and Shepherd
2010; Wood et al.
2014).
Considerable effort has been put into understanding the cognitive and learning processes associated with opportunity recognition, focusing primarily on either the knowledge stocks or the behaviours of entrepreneurs (Short et al.
2010), and an increasingly topical theme that is related to this issue is mental images. Following the mental model theory, individuals process information by constructing cognitive models, or images, of the current situation and then projecting them into possible future states (e.g. Gentner and Stevens
1983; Johnson-Laird
1983). Thus, entrepreneurs create mental images of their circumstances and potential opportunities based on their experience and information, which they use to evaluate the attractiveness and feasibility of pursuing these opportunities (Wood and McKelvie
2015). The images are information structures, and different kinds of images represent information about what the actor is doing, why, and how, as well asthe kind of progress that is being made (Mitchell and Beach
1990). Mental images constitute theories about the potential reward for a particular action versus its cost, and entrepreneurs judge opportunities not by seeing them directly but by seeing changes in the variables related them (Baron and Ensley
2006; McMullen and Shepherd
2006; Wood et al.
2014). While images are built by organising information about circumstances, they also serve as a prototype against which new incoming information is compared (Mitchell and Shepherd
2010). They are relatively stable but vary in terms of accuracy and may evolve as entrepreneurs internalise new experiences and knowledge (Wood et al.
2014). Thus, images are similar to scripts and schemas, based on which entrepreneurs form expectations and decide to act (Gioia and Poole
1984). Furthermore, due to the personal nature of the images, opportunities are not equally appealing (Dimov
2011), and entrepreneurs may dismiss some that are pursued by others (Ardichvili et al.
2003).
Prior studies regarding the role of mental images in opportunity recognition seem to have focused more on their dynamics than content. However, an interesting exception is Mitchell and Shepherd (
2010), who posit that opportunities are recognised and acted upon by specific individuals based on the images of an opportunity and on the images of the self. Hence, they argue that opportunity images are distinct from images of the self. They further argue that opportunity images are related to desirability (potential value), feasibility (knowledge relatedness), and the environment (a window of opportunity and a number of potential opportunities), while images of the self relate to vulnerability (fear of failure) and capability (self-efficacy and human capital). Images of the self impact the entrepreneur’s images of an ideal opportunity, and in interaction, all these distinct images impact his or her decision to act on an opportunity. Grégoire and Shepherd (
2012), in turn, study the effects of “opportunity idea” characteristics on opportunity beliefs and their contingent relationships with individual differences. With opportunity idea characteristics, they refer to superficial and structural similarities that the entrepreneur finds between a new technology and a potential target market. Although Grégoire and Shepherd (
2012) examine the phenomenon from the perspective of general third-person opportunities (as opposed to first-person opportunities which contain evaluations that are specific to individual entrepreneurs), they provide evidence that individual differences in entrepreneurial intentions and prior knowledge moderate the entrepreneurs’ identification of similarities in technology–market combinations and their formation of related opportunity beliefs. Wood et al. (
2014) specifically study how entrepreneur-centric cognitive variables inform the mental models that underlie opportunity beliefs. They show that the entrepreneur interprets data on industry conditions in light of his or her fear of failure, prior experience with failure, and motivation to evaluate the opportunity. Mental images are subjected to an individuation process, whereby impressions are shaped by these person-specific factors.
Hence, the prior literature shows that in image development, the events and environment that are external to the entrepreneur are aligned and merged with the internal, cognitive antecedents and that different kinds of constituent factors inform these images. Thus, the process of recognising opportunities involves the objective reality of one’s context, as well as the subjective interpretations that one makes of this context and of one’s position within it (Grégoire et al.
2010). In the case of international opportunities, mental images concern specific foreign markets (Haaja
2019). Given the subjective understanding that mental images provide to investigating the recognition of opportunities in different contexts, this study builds on the mental image concept when exploring international opportunity recognition particularly in collaborative settings.