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

Marc Gruber, Ian C. MacMillan () and James D. Thompson ()
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Ian C. MacMillan: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
James D. Thompson: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104

Management Science, 2008, vol. 54, issue 9, 1652-1665

Abstract: 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.

Keywords: market opportunities; serial entrepreneurs; technological commercialization; new firm creation (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (136)

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