Look Before You Leap: Market Opportunity Identification in Emerging Technology Firms

• Published in: Management science Vol. 54; no. 9; pp. 1652 - 1665
• Main Authors: Gruber, Marc, MacMillan, Ian C, Thompson, James D
• Format: Journal Article
• Language: English
• Published: Linthicum, MD INFORMS 01.09.2008; Institute for Operations Research and the Management Sciences
• Series: Management Science
• Subjects: Applied sciences; Business studies; Commercialization; Computer services industry; Corporate strategies; Datasets; Economic aspects; Emerging technology; Entrepreneurs; Entrepreneurship; Exact sciences and technology; Firm modelling; High tech industries; Industrial management; Innovation; Innovations; Management science; Market entry; market opportunities; Marketing; Modeling; new firm creation; New technology; Operational research and scientific management; Operational research. Management science; Opportunity; serial entrepreneurs; Studies; technological commercialization; Technological innovations; Technology; United States; Performance evaluation; technological commercialization; serial entrepreneurs; Entrepreneurship; market opportunities; Starting; Empirical method; Multimarket; Firm management; new firm creation; Marketing
• DOI: 10.1287/mnsc.1080.0877
• ISSN: 0025-1909

Entrepreneurs play a fundamental role in bringing new technologies to market. Because technologies are often configurable to serve a variety of different markets, it is possible for entrepreneurs to identify multiple market opportunities prior to the first market entry of their emerging firms, and if they elect to do so, to therefore have a choice of which market to enter first. The empirical results presented in this paper offer three new insights regarding this important early-stage choice in new firm creation. First, they reveal that serial entrepreneurs have learned through prior start-up experience to generate a "choice set" of alternative market opportunities before deciding which one to pursue in their new firm creation. Second, the analysis indicates that entrepreneurs who identify a "choice set" of market opportunities prior to first entry derive performance benefits by doing so. Third, the positive relationship between the number of market opportunities identified prior to first entry and new firm performance is nonlinear and subject to decreasing marginal return. The research literature has yet to acknowledge the notion of multiple opportunity identification prior to entry, and the related idea of selecting the most favorable market opportunity for the creation of a new technology firm.