Opportunity exploitation in software startups. A human capital view

Abstract

Background – Transforming a business opportunity to a valid business case is a crucial process of an early-stage software startups. Prior literature on entrepreneurship defines two types of opportunity exploitations, opportunity discovery and opportunity creation, and proposes models describing the exploitation processes. The factors affecting startups’ abilities to conduct the exploitation are, however, addressed only to a limited extend in prior research. Aim – This research aims at increasing the knowledge on those factors by studying empirically the effects of the available human capital on the opportunity exploitation processes in software startups. Method – We conducted a multiple-case study on a group of software startups in Italy, Norway and Finland. We focused on the founders of the startups, examining their opportunity processes, their human capital, and the interdependencies between the opportunity processes and human capital. Results – Our results are in line with the findings of prior research, which point out that uncertainty is the key differentiator between the opportunity discovery and creation processes. The results reveal, however, that both process types co-exist in the early stages of software startups, independently of how the opportunity was initially recognized, and also highlight missing human capital as a key reason for the uncertainty. We conclude that in software startups the availability of human capital plays a bigger role in the exploitation of opportunities than their types, discovered or created, because even exploitation of a-priori existing opportunities turn to opportunity creation processes in case of human capital shortages.