Opportunity discovery, problem solving and a theory of the entrepreneurial firm

  • Hsieh C
  • Nickerson J
  • Zenger T
  • 260


    Mendeley users who have this article in their library.
  • 80


    Citations of this article.


When should an entrepreneur employ a market to help discover and exploit opportunities, and when should the entrepreneur create a firm to do so? If a firm is created, how should it be organized? In this paper we argue that opportunities equate to valuable problem-solution pairings, and that opportunity discovery relates to deliberate search or recognition over this solution space. As problem complexity increases, experiential (or directional) search via trial-and-error provides fewer benefits, and cognitive (or heuristic) search via theorizing becomes more useful. Cognitive search, however, requires knowledge sharing, when knowledge is distributed among specialists, that is plagued by a knowledge appropriation hazard and a strategic knowledge accumulation hazard. Markets, authority-based hierarchy, and consensus-based hierarchy then have differential effects on the efficiency of opportunity discovery given the complexity of the associated problem. Those entrepreneurs with exceptional capabilities of opportunity recognition can efficiently adopt authority-based governance over a wider range of complexity. We thus combine the two major modes of opportunity discovery search and recognition onto one framework that can explain different entrepreneurial organizational forms, resulting in an entrepreneurial theory of the firm.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free