2011.11.21 market opportunities - made or found?
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Dr Natasha Evers, Marketing Discipline, NUI Galway presented this seminar "Market Opportunities - Made or Found? Some Perspectives on Opportunity Recognition and Exploitation in University Spin-Outs" as part of the Break the Barrier Seminar Series at the Whitaker Institute on 21st November 2011.TRANSCRIPT
Break the Barrier Series – 21st November 2011
Market opportunities made or found? Opportunity recognition and exploitation in Irish University
Spin-outs (USOs)
Natasha Evers Marketing Discipline
Structure of presentation
• Landscape of academic entrepreneurship • What makes USOs distinct from other new ventures? • Entrepreneurship and Marketing Literature to
explain : • Opportunity recognition • Opportunity exploitation
• Cases of Irish USOs • Some conjectures for discussion
What about University Spin-outs?
• Only received increasing attention during the past few years both in the academic literature and in practice (Clarysse and Moray, 2010; Clarysse et al., 2001).
• “New firms created to exploit commercially some knowledge, technology or research results developed within a university” (Pirnay Bernard and Nlemvo, 2003, p.356)
– How do academics identify new business opportunities?
– Do they possess entrepreneurial intentions?
– What activities do they engage in for their ventures to emerge?
Academic spin-offs show some traits that make them distinct from other high-tech start-ups.
• Team of academics working in own disciplinary knowledge in closed academic circles
• Network emerge in HEI environment made up of administration and academics and the TTO support
• Organizations have commercialisable ideas in their research portfolio BUT differ in terms of: – opportunity search and how their trajectory of business
development is guided and supported.
Summary Metrics – Ireland 2005 – present
2007 2008 2009 2010 Total 2007-2010
Licence/ Option/Assign
56 67 100 93 316
Spin-outs 13 7 35 31 86
Invention Disclosures
271 407 457 431 1566
Patents Applications
124 202 148 101 575
Some Successful University Spin-outs
• Eirecomposites (NUIG) • Wavebob (NUIG) • Celtic Catalysts (UCD) • Biancamed (UCD) • Mutebutton (NUIM) • Ntera (UCD) • Miravex (TCD)
Research objective
• To explore how opportunities are identified and exploited for new venture creation in the context of university spinouts.
Recognition and Exploitation
• Entrepreneurship begins with the formation of opportunities which is the subject of the entrepreneur (Shane, 2000; Katz and Shepherd, 2003).
• Opportunity exploitation can be a process dependent on the decision of the entrepreneur and falls typically within the boundary of the firm which, through its capabilities, manifests opportunities into market outcomes (Whittaker et al., 2009).
Research questions and theoretical positioning from Entrepreneurship/Marketing literature
Research questions 1. How do USOs identify
opportunities?
2. ) How are USOs created to exploit such opportunities identified?
Theoretical premise 1) Concepts of entrepreneurial
opportunity creation and discovery
2) Theoretical Framework of Organisational Emergence (Katz and Gartner,1988)
Are opportunities identified through processes of discovery (found) or creation (made)?
– Discovery approach (Austrian economists Kirzner 1979,1997;)
• Objectively real (ex ante entities) formed exogenously • Founder’s alertness to market disequilibrium • Conscious search for market opportunities
– Creational approach (Schumpeter, 1934; Sarasvathy, 2008)
• Created, endogenously by the actions of the entrepreneur
• Creational process : “who I am”, “whom I know” “what I know” (Sarasvathy et al. 2008)
Opportunity discovery - derived from market disequilibrim
• Extant studies often make the fundamental assumption that opportunities emerge from an exogenous environment .
• May be problematic in respect to emerging markets and fast evolving industries such as biotech and lifescience - produce new markets as technologies emerge…uncertainty, volatility.
• New opportunities are the result of market disequilibrium OR the enactments of opportunities to create markets that from the outset are imperfect per se?
Are opportunities identified through processes of discovery (found) or creation (made)?
– Discovery approach (Austrian economists Kirzner 1979,1997;)
• Objectively real (ex ante entities) formed exogenously • Founder’s alertness to market disequilibrium • Conscious search via market orientation
– (Controversial) Creational approach (Schumpeter, 1934; Sarasvathy, 2008)
• Created, endogenously by the actions of the entrepreneur
• “who I am”, “whom I know” “what I know” and their Intentions (Sarasvathy et al. 2008)
Founding entrepreneurs are cognitive agents that perceive, make sense and enact their environment in turn creating entrepreneurial opportunities.
• P1: In USO creation, academic entrepreneurs create opportunities enacted through their endogenous environment rather than discovering them exogenously.
• P 2: In USO creation, the human capital of the academic entrepreneurs influences their ability to create opportunities.
Opportunities created (made)
2nd Inquiry – Opportunity Exploitation?
Research questions 1. How do USOs identify
opportunities?
2. ) How are USOs created to exploit such opportunities identified?
Theoretical premise 1) Concepts of entrepreneurial
opportunity creation and discovery
2) Katz and Gartner (1988) four properties for organisational emergence: 1. Resources 2. Boundary 3. Intentionality 4. Exchange
Realising Market Opportunity through organisational creation
Entrepreneurial Intentionality and Self-efficacy
• Intentionality is a state of mind that directs a person’s attention (and therefore experience and actions) toward a specific goal or path in order to achieve a market outcome
• Entrepreneurial self-efficacy refers to the strength of an individual’s belief that he or she is capable of successfully exploiting the opportunity, thus, it can be argued: – Intentionality of potential academic entrepreneurs
dependant on their notion of self-efficacy
Academic entrepreneurial intentions & self-efficacy
• Prodan and Drnosvek (2010) found entrepreneurial self-efficacy had the highest path coefficient among all predictors of academics’ entrepreneurial intentions.
• Entrepreneurial intentions of academics were important in predicting the dynamics in emergence of firms with high growth potential.
P 3: In USO creation, academic entrepreneurs demonstrate self-efficacy in their intention to exploit the created opportunity
Propositions to explain how opportunities are exploited for USO creation
Resources via Relational Capital
• Entrepreneurship does not occur in a vacuum, but involves economic actions between actors and builds upon ongoing interaction in social relationships (Birley, 1985).
• Being part of a closed network with a high degree of embeddedness is proposed to be advantageous.
• The ability to exploit opportunities is linked to a firm’s position in the network as well as on the nature of relationships.
Realising Market Opportunity through organisational creation
Firm boundaries and relationship with environment
• Typically, when potentially patentable knowledge is created by university employees, the university has ownership rights to this knowledge.
• However, it is in the interests of the university to drive as much IP into commercialisation in return for royalities and also academic reputation, – hence negociation of IP rights emerge as mutual and for
benefit of creating a legal entity separate from university.
Propositions for USO Opportunity Exploitation
P 3: In USO creation, academic entrepreneurs demonstrate self-efficacy in their intention to exploit the created opportunity
P 4: In USO creation, the academic entrepreneur’s access to personal and network resources influence the resourcing of the USO.
P5: In USO creation, the USO boundaries are influenced by the academic entrepreneur’s relationship with their academic environment.
P6: In USO creation, USO exchanges are mainly export-led.
Conjecture 1: Opportunities were made not found in USOs
Created endogenously and enacted meaningfully by individuals influenced by their own antecedent knowledge corridors and beliefs
Exaptive process of creating opportunities – an evolutionary process in which a given adaptation is
first naturally selected for, and subsequently used by the organism for something other than its original, intended purpose.
Conjecture 2 Notion of Self-Efficacy necessary condition for opportunity exploitation
Intentionality’ in new venture creation by reinforced by the notion of self-efficacy to create the venture.
Self-efficiacy enabled by antecedent knowledge corridors, mediated by their access to personal networks determine opportunity exploitation in USOs.
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Exploitation of Market Opportunity through organisational creation (adapted framework by Katz and Gartner, 1988)