a realist perspective of entrepreneurship: opportunities

Q Academy of Management Review2016, Vol. 41, No. 3, 410–434.http://dx.doi.org/10.5465/amr.2014.0281

A REALIST PERSPECTIVE OF ENTREPRENEURSHIP:OPPORTUNITIES AS PROPENSITIES

STRATOS RAMOGLOUUniversity of Southampton

ERIC W. K. TSANGUniversity of Texas at Dallas

The idea that entrepreneurial opportunities exist “out there” is increasingly under attack byscholars who argue that opportunities do not preexist objectively but are actively createdthrough subjective processes of social construction. In this article we concede many of thecriticisms pioneered by the creation approach but resist abandoning the preexisting realityof opportunities. Instead, we use realist philosophy of science to ontologically rehabilitatethe objectivity of entrepreneurial opportunities by elucidating their propensity mode ofexistence. Our realist perspective offers an intuitive and paradox-free understanding ofwhat itmeans for opportunities to exist objectively. This renewed understanding enables usto (1) explain that the subjectivities of the process of opportunity actualization do not con-tradict the objective existence of opportunities, (2) acknowledge the category of agency-intensive opportunites, (3) develop the notion of “nonopportunity,” and (4) clarify the waysindividualsmightmake cognitive contactwith opportunities prior to their actualization. Ouractualization approach serves as a refined metatheory for guiding future entrepreneurshipresearch and facilitates the revisiting of subtle conceptual issues at the core of entrepre-neurial theory, such as the nature of uncertainty and “nonentrepreneurs,” as well as therole played by prediction in a scientific study of entrepreneurship.

We live in a world of propensities, and . . . this factmakes our world both more interesting and morehomely than the world as seen by earlier states ofthe sciences. . . . [Propensities] are not mere possi-bilitiesbutarephysical realities. . . . The future is, inthisway,activelypresentat everymoment (Popper,1990: 9, 12, 20).

According to the leading theoretical perspec-tive of entrepreneurship, the possibility of entre-preneurial profit requires the preexistence ofentrepreneurial opportunities waiting to be dis-covered (Casson, 1982; Kirzner, 1979; Shane &Venkataraman, 2000). This foundation for the“discovery approach” is increasingly under fireby scholars expressing their dissatisfaction withthe idea that opportunities exist objectively “outthere” in ways visible to potential entrepreneurs(Alvarez, Barney, McBride, & Wuebker, 2014;Davidsson & Wiklund, 2009; McMullen, Plummer,& Acs, 2007). Moreover, a growing contingent ofscholars forming the “creation approach” deniesthat opportunities are preexisting entities in the

external world and argues that opportunities arecreated endogenously through entrepreneurialagency (Korsgaard, 2011; Sarasvathy, 2001; Wood& McKinley, 2010).In this article we advance the “actualization

approach”—which theorizes opportunities asunactualizedpropensities—asanalternative thatmaintains a commitment to the objectivity of op-portunities but does not have the shortcomingsplaguing the discovery perspective. Explicit meta-theoretical attention to underpinning ontologiesis key to the realization of this novel theoreticalniche. Discovery scholarship’s treatment of op-portunities as “physically observable objects”(Alvarez et al., 2014: 227) subscribes to an empiri-cist ontology (Ramoglou, 2013a). This realizationindicates the potential for rectifying the objec-tivity of opportunities alongside the sophisti-cated blueprint of reality as advanced by criticalrealist metatheory (Bhaskar, 1978; Lawson, 1997;Searle, 1995),whichwe refer toas realismhereafter.Realism facilitates the move away from the

deep-seated empiricist idea that opportunitiesare present at the actual but undiscovered do-main of reality and toward the view of opportu-nities as absent from the actual but present inthe deeper domain of existence. To state that

Many thanks are due to former editor Roy Suddaby for hisinsightful guidance, three reviewers for their constructivecomments, Tony Lawson,MarkGatenby, Stephen Pratten, andStelios Zyglidopoulos for their valuable feedback,andTyrahLifor her assistance.

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http://dx.doi.org/10.5465/amr.2014.0281

opportunities exist “out there” is—to paraphrasePopper (1990) in the opening epigraph—to ac-knowledge that the future lies within the unac-tualized but no less real layers of the presentworld. Against this background we define en-trepreneurial opportunity as the propensity ofmarket demand to be actualized into profitsthrough the introduction of novel products orservices. Although our primary aim is to providean ontological analysis of the “core puzzle of en-trepreneurship research—where entrepreneurialopportunities come from” (Suddaby, Bruton,& Si, 2015: 1), we also illuminate and organizeaspects of the entrepreneurial cognition asthey emerge within our propensity frameworkof opportunities. We accordingly spell outthree fundamental modes for making cognitivecontact with possibly real yet empirically unac-tualized propensities: imagining, believing, andknowing.

This article is organized as follows. In the nextsection, which serves as a background for thewhole article, we discuss the nature of meta-theoretical research, followed by a discussion ofthemajor challenges that the discovery approachfaces. We then advance our actualization ap-proach in four sections, covering such importantissuesasopportunities’propensitymodeofbeing,the role of agentic effort in opportunities’ actual-ization, the space of the impossible, and keydistinctions between entrepreneurial and non-entrepreneurial actions and opportunities. In thefollowing two sections we show how our recon-ceptualization of opportunity addresses critiquesof the discovery approach, on the one hand, andclarifies conundrumssurroundingentrepreneurialcognition, on the other.We next discuss a uniquestrength of the actualization approach in pro-viding a deepunderstanding of uncertainty thatis missing from both the discovery and creationapproaches. Finally, we present research andpedagogical implications.

EMPIRICIST, CONSTRUCTIVIST, ANDREALIST METATHEORIES

One of the greatest advances in contempo-rary entrepreneurship scholarship comes frommetatheoretical studies into the fundamentalconceptual blocks of entrepreneurial discourse,as demonstrated by the influence of Shane andVenkataraman’s (2000), Sarasvathy’s (2001),McMullen and Shepherd’s (2006), and Alvarez

and Barney’s (2007) contributions. Since we alsointend to contribute on this level of analysis, inthis section we discuss and contrast the basics ofmetatheoretical research as driven by empiricist,constructivist, and realist philosophiesof science.

Metatheoretical Research

Metatheories are essentially worldviews. Theycomprise sets of understandings regarding thenature of the basic entities forming a field ofscholarly interest and the ways these entities in-terrelate. More specifically, metatheories are thelogically interconnected sets of conceptual pre-suppositions forming the frame against whichpictures of a more substantive nature will bepainted (Harre, 2002; Tsoukas & Knudsen, 2003).All substantive research presupposes meta-theoretical commitments in the form of funda-mental theoretical structures in response toabstract questions regarding the nature of theworld (ontological), possibility of knowing (epis-temological), and methods of knowledge acqui-sition (methodological; Lawson, 1997; Suddaby,2014a). These commitments may exist only sub-consciously, even in a state of confusion or in-ternal tension (Kilduff, Mehra, & Dunn, 2011;Lawson, 2009).Metatheoretical interventions represent

scholarly efforts to promote scientific progresswhen substantive inquiry cannot sufficientlyadjudicate the truth, soundness, or validity of(a set of) empirical propositions. Metatheoreticalwork comprises underlaboring efforts to aidsubstantive research by clearing the ground ofwhatever obstacles are deemed to be stand-ing in the way of progress (Bhaskar, 1998).Since metatheoretical research antecedes sub-stantive inquiry, it is neither falsifiable norverifiable. However, the chief contribution ofmetatheoretical interventions lies in the sys-tematic organization, clarification, defense,and/or development of the fundamental theo-retical structures underpinning more substan-tive research (Calas, Smircich, & Bourne, 2009;Suddaby, 2014a).The compass guiding the orientation of meta-

theoretical interventions is the presupposedphilosophies of science. In the following dis-cussion we compare realism and empiricism(supporting the discovery approach), as well as re-alism and constructivism (supporting the creation

2016 411Ramoglou and Tsang

approach). We briefly summarize this comparisonin Table 1.1

Realist Reaction to Flat Empiricist Ontology

By stressing the importance of sensory experi-ence for acquiring certain knowledge, empiricistsequate the knowable with the empirically ob-servable. They accordingly tend to treat theworldas reducible to its material dimensions andground analyses on an ontologically flat concep-tion of the world. Causation lies in the constantconjunction between empirical events, whilediscourse on powers is treated as unscientificmetaphysical speculation. Moreover, empiricistsworking within the so-called positivist wings ofsocial science are often keen to rely on knowinglyunrealistic models as long as they offer “objec-tive” (i.e., quantifiable) measures that aid pre-dictive purposes (Friedman, 1953: 3–46). Overall,empiricists endeavor to purge scientific discoursefrom the “sophistry and illusion” (Hume, 1993: 114)that supposedly come from metaphysical in-vestigations, while trusting that empirical re-search is the ultimate solution to all scientificproblems (Quine, 1969).

In stark contrast, realists prioritize the study ofreality via systematic ontological reflection(Harre, 2008). They stress that ontological consid-erations should invariably antecede other ele-ments of the metatheoretical chain, and theymaintain that to go the other way around is totrigger a “meta-theoretical disaster” (Fleetwood,2014: 187). For instance, realist philosophers ofsocial science point out that econometrictechniques—sophisticated as they may be—areby and large unfit for the study of ontologicallycomplex systems comprising unpredictable human

and social behavior (Lawson, 1997). Instead, theyuphold the methodological superiority of thecultural and historical analytical tools cherishedby institutional and evolutionary economists(Hodgson, 2001).Realists argue that the empiricist fixation with

certainty fallaciously excludes from legitimatescientific discourse the fallibly knowable yet no-less-real domains of the world. They accordinglyseek to remedy empiricist ontological distortionsby countering that the world is irreducible to theactualized,material, and, in principle, observablemodes of being. Unactualized powers are neverdirectly observable but no less real, and (undercertain conditions) they canbe evidenced throughtheir effects. The empirically observed is onlya subset of the actual, which is itself only a subsetof the real (comprising variously and complexlyinteracting causally powerful structures andgenerative mechanisms; Bhaskar, 1978).By rejecting the actualist metaphysics of

empiricism—that is, thepresupposition that “onlythe actual is possible” (Ayers, 1968: 6)—realismeffectively acknowledges that the most funda-mental and interestingproperty of ourworld lies inits unrealized propensities (Bhaskar, 1978). EvenKarl Popper, a preeminent foe of metaphysics,came to appreciate near the end of his life that hisempiricist preoccupations had blinded him to thereality of propensities (Runde, 1996). He emphati-cally acknowledged that propensities are physi-cal realities and “not mere possibilities. They areas real as forces” (Popper, 1990: 9).Realists maintain that propensities may re-

main unactualized because powers may not betriggered and, when triggered, need not be evi-dent, either because countervailing factors mayconstrain their empirical realization or becauseadditional enabling factors might be absent. Insuch occasions unobservable tendencies are saidto operate transfactually. For example, gravityoperates constantly, although its effects are notalways evident: the active tendency of a cup ona desk to fall is countered by the desk (Lawson,2009; Tsang & Kwan, 1999).

Realist Incorporation of Constructivist Insights

The tensionbetweenconstructivismandrealismin entrepreneurship research is unnecessary(Ramoglou & Zyglidopoulos, 2015). Realism, inprinciple, is not contradictory to social con-structivism, and the key insights of the latter are

1 Our intention with this table is to capture the basic pointsof tension between empiricism, constructivism, and realism,as well as to communicate the thrust of each philosophicalperspective. It would be simplistic to presume that (1) theboundaries among the three perspectives are clear-cut or (2)each perspective represents a set of homogeneous or evenharmoniously coexisting positions. For the first point, there isan epistemological overlap between realists and (moderate)constructivists (i.e., those who do not a priori rule out the pos-sibility of objective knowledge), with respect to such state-mentsas “water ismadeupofH2O”and “WorldWar II ended in1945.”For the secondpoint, there canbe considerable variancein the form of argumentation and respective conclusionsreached by philosophical schools of thought clustered underthe banner of empiricism (see Van Fraassen, 2008), construc-tivism (see Hacking, 1999), or realism (see Collier, 1994).

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accommodated within the former (Kwan& Tsang,2001). Realists accept the socially constructed na-ture of social reality and only reject extreme con-structivist views that tend to taboo the notions of“reality” and “objectivity” (Bhaskar, 1998).

Realists acknowledge that social reality is de-pendent on the ways we think about it, but theycaution against the implication that social realitydoes not exist. The subjective underpinnings of so-cial realityonly implythatsocial reality (1)wouldnotexist in theabsenceofhumansand (2) exists inwaysqualitatively different from the “stuff” studied bynatural scientists. Without a doubt, “if we all wokeup tomorrow and no longer believed that moneyexisted, money would no longer exist (leaving onlyrelatively useless bits of paper andmetal)” (Alvarezet al., 2014: 227). However, this does not mean thatmoney does not exist objectively “out there.” It onlymeans that its objectivity is of a different kind byvirtue of the more ontologically complicated natureof being money (as opposed to paper).

Searle (1995) argued that we ought to draw a dis-tinction between ontological objectivity and onto-logical subjectivity. Although dollar bills may existonly insofar as they are perceived by human

subjects asdollarbills, theirontologicallysubjectivenature does not diminish their existential weight. Itmerely underlines the multiplicity of the modes ofexistence inherent inourworld.Moneymaynotexistin the samemanner as ordinary pieces of paper, yetit can be studied objectively, albeit as an ontologi-cally subjective entity. It could not have existedwithout humans. But it is a crude matter of fact thathumans exist and have created the institution ofmoney that has very real powers and effects.Overall, in response to the constructivist tendency

tosubjectivizediscourseonreality, realistsmaintainthat realitymust, tosomeextent,exist independentlyand irreducibly from thewayswemight think aboutit. For the realist, the single most important stage inthescientificadvancementofascholarly field lies inclarifying the mode of existence and independenceof the entities posited at the foundations of the field(Brock&Mares, 2007; Devitt, 1997), particularlywhentheir objectivity is under dispute.

CHALLENGES TO THE DISCOVERY APPROACH

The most influential contribution to the discov-ery approach is ShaneandVenkataraman’s (2000)

TABLE 1Brief Comparison of Empiricism, Constructivism, and Realism

Dimension Empiricism Constructivism Realism

Ontology The world exists objectively“out there,”with anemphasis on materialexistence. Things that existmust be empiricallyobservable. Causation isindicated by the constantconjunction of empiricalevents.

The idea of an objective worldis an illusion; reality isultimately reducible tosocial constructions. There isno single way the world is orcan be. Agents can willinglycreate their own realities aslong as they regard them asreal.

The world exists objectively,albeit in various modes ofbeing. The real is broaderthan the domain of theempirically observable.Tendencies areunobservable and operatetransfactually.

Epistemology What can count as scientificknowledgemust be basedonsensory experience, testableby observation andexperiment. The objectivityof research outcomesrequires the elimination ofsubjective interpretations.

Contradictory interpretationsof external reality can beequally valid. There are noobjective criteria forassessing the truthfulness ofsome categories ofknowledge claims,particularly those that relateto social or culturalknowledge.

We can know the worldindirectly. Our observationsare theory ladenand fallible.Wemay use our imaginationin explaining phenomena,but reality imposesconstraints on what shouldbe accepted as plausibleknowledge.

Conception of entrepreneurialopportunities

Discovery: Entrepreneursdiscover opportunities thatpreexist independently ofentrepreneurs asempirically undiscoveredentities.

Creation: Opportunities do notexist until they are createdendogenously byentrepreneurs.

Actualization: Opportunitiesare propensities that existindependently of potentialentrepreneurs, in the form ofunmet or possible marketdemand that can beactualized into profits.


article, “The Promise of Entrepreneurship As aField of Research” (often referred to as “Promise”).Shane and Venkataraman took seriously thecomplaint that entrepreneurship “has becomea broad label under which a hodgepodge ofresearch is housed” (2000: 217). Drawing onSchumpeter’s (1983) and Kirzner’s (1973) as-saults against the opportunity-free economicworldview at the heart of neoclassical economics,Shane and Venkataraman maintain that the de-fining feature of entrepreneurial phenomena is“the discovery and exploitation of profitable op-portunities” (2000: 217). They recommend that theobjective existence of entrepreneurial oppor-tunities offers the sturdiest foundation for en-trepreneurship as a distinctive subject of study,stressing that the nexus between individualsandopportunities constitutes themost promisingresearch topic.

Entrepreneurship researchers often remark thatthe discovery approach is grounded in realist on-tology (e.g., Alvarez & Barney, 2013; Calas et al.,2009; Roscoe, Cruz, & Howorth, 2013). In sharpcontrast, our metatheoretical backdrop suggeststhat the positing of some “force exerted by the op-portunities themselves” (Shane, Locke, & Collins,2003: 269) or the attribution of challenges to prog-ress to the “lack of instruments for measuring en-trepreneurial opportunity” (Dahlqvist & Wiklund,2012: 185) does not reveal the realist but, instead,the empiricist leanings of the discovery approach(see also Ramoglou, 2013a). Before developinga genuinely realist concept of “entrepreneurialopportunity,” we review the challenges to thediscovery approach that gave rise to the con-structivist movement, along with the concomi-tant rejection of the notion of opportunities asobjectively existing realities.

Constructivist Reaction

Although Shane and Venkataraman’s (2000)framework defines contemporary entrepreneur-ship research, there is increasing disillusionmentregarding its promise to meaningfully driveentrepreneurship research forward. Even Ven-kataraman has considerably distanced himselffrom this framework and joined forces with therising constructivist reorientation (Sarasvathy &Venkataraman, 2011; Venkataraman, Sarasvathy,Dew, & Forster, 2012).

First, we still lack a predictively successful en-trepreneurship theory and do not know why only

some individuals can see and/or respond to op-portunities (Arin, Huang, Minniti, Nandialath, &Reich, 2015; Roscoe et al., 2013). Second, the dis-covery approach has revived the notorious re-search quest for the “entrepreneurial difference”(Gartner, 1989) in response to the puzzle that onlya few individuals respond to the presence of op-portunities, and Shane himself leads the conten-tious research concerning the genetic makeupof enterprising individuals (Nicolaou, Shane,Cherkas, Hunkin, & Spector, 2008; Shane &Nicolaou, 2013).Moreover, there is an assault on discovery

scholarship for portraying entrepreneurs with“superior cognitive capabilities” (Shane, 2003: 45)that supposedly allow them to foresee opportu-nities in an otherwise uncertain world (Chiles,Bluedorn, & Gupta, 2007; McMullen & Shepherd,2006). Yet the most troubling aspect of the dis-covery approach lies in the elusiveness of theopportunity construct (Dimov, 2011; Gartner, 2014):“opportunities are assumed to simply exist . . .without any real clarity as to what this wouldmean” (Gorling & Rehn, 2008: 101).Given theseproblems, it isunderstandablewhy

a growing contingent dismisses the core of thediscovery approach—that opportunities are ob-jectively existing entities. Moreover, Alvarez andBarney’s (2007, 2010) systematic development ofthe creation approach harbors promise in pro-gressing entrepreneurship research alonga different path. According to this ontologicalreorientation, the discovery approach cannoteither detect opportunities or predict entrepre-neurial events because these are only sociallyconstructed “entities” that do not exist in-dependently of the ways entrepreneurs thinkabout them (Alvarez et al., 2014; Spedale &Watson, 2014). We should break free from thenotion of exogenous opportunities waiting to beseized and adopt a view of opportunities asendogenously constructed (created, made, fabri-cated, or manufactured) through human agency(Baker & Nelson, 2005; Bruyat & Julien, 2001; Santos& Eisenhardt, 2009; Sarasvathy, 2001).In relocating the locus of causality from

“ethereally existing opportunities” (Alvarez &Barney, 2010: 562) to human agency, constructiv-ist scholarship neatly sidesteps the conceptualproblems associated with the objectivist treat-ment of opportunity. The constructivist reactionalso strengthens the theorization of entrepre-neurial phenomena by paying due attention to


the creative aspects of the entrepreneurial pro-cess, such as reconfiguring the value chain,manufacturing a new product, and raising therequired capital (e.g., Baker & Nelson, 2005;Cornelissen & Clarke, 2010). The role of crea-tive entrepreneurial agency, in fact, sits un-comfortably in a world where opportunities existas dollar bills simply awaiting discovery. Asstressed by McMullen, this static worldview“neglects the importance of agency in entrepre-neurship . . . [and] opportunity becomes a de-terministic and overly structural concept” (2015:663). Moreover, skeptics of the discovery per-spective are right to remark that treating oppor-tunities as entities awaiting discovery does notallow a meaningful conceptualization of thetemporal and uncertain aspects of the entrepre-neurial process (Klein, 2008; McMullen & Dimov,2013).

Toward Realism

Constructivists have surely made importantcritiques and pioneered promising conceptualadvances. Nonetheless, from a realist standpoint,entrepreneurial theory has experienced an oft-documented pattern in the social sciences sincethe mid-twentieth century—namely, an over-reaction to ontologically problematicmetatheoriesencouraged by empiricism, resulting in skepti-cism toward the treatment of social reality as“mind-independently existing”or “real” (Fleetwood,2014). As discussed, realism is not incompatiblewith constructivism. In fact, it allows the theori-zation of subjectively constituted entities as realentities that can be objectively studied as long aswe acknowledge their qualitatively distinctivemode of existence. Realism encourages the for-mation of rich ontological landscapes through themeaningful metatheoretical organization of var-ied commitments to existence (Harre & Madden,1975; Searle, 1995).

Our realist backdrop suggests thatwe shouldnothastily dispense with an objectivist intuition thatmay be waiting to find its proper ontologicalarticulation—beyond empiricist reifications. More-over, putting aside philosophical considerations,we do find the thesis that opportunities exist “outthere” in some objective sense (i.e., they existindependently from potential entrepreneurs orentrepreneurship researchers) intuitively ap-pealing. Is it not compelling to say that RichardBranson exploited a number of “Virgin-branded”

opportunities? Relatedly, there are cases thatclearly contradict the creation approach’s argu-ment that “opportunities do not exist until en-trepreneurs create them through a process ofenactment” (Alvarez, Barney, & Anderson, 2013:307). Take, for example, the opportunity to profitthrough the production of T-shirts and apronswith the “Je suis Charlie” slogan (translation:“I am Charlie”) following the terrorist attack atCharlie Hebdo in Paris on January 7, 2015(Moulai & Paysant, 2015). The opportunity itselfwas by no means created by those who pro-duced the T-shirts and aprons, despite any ele-ments of creativity involved (cf. Sarasvathy,Dew, Velamuri, & Venkataraman, 2010: 92). Theopportunity unquestionably came into existencebecause of the terrorist attack.Our task in thenext sections is to systematically

develop a realist theorization of entrepreneurialopportunities. This theoretical alternative willenable us to stay committed to the objectivity ofopportunities while withstanding the challengesdiscussed above.

A REALIST ACCOUNT OFENTREPRENEURIAL OPPORTUNITIES

We have seen that there are “two dimensionsof realism” (Devitt, 1997: 14) required for assert-ing the reality of a disputed entity—namely, thedimensions of existence and independence(Brock & Mares, 2007). The second dimension isfairly straightforward: that opportunities existindependently means that without their pre-existence it is impossible for an entrepreneur toprofit. Regardless of opportunities’ form of exis-tence, any genuinely realist position requiresthat an opportunity’s agent independence beconsistently acknowledged. We will elaboratethe independence dimension below when we the-orize the space of “nonopportunity” (Dimo Dimov,personal communication).In this section we probe the first dimension by

unpacking the propensity mode of being viarereading Kirznerian analysis in a realist light.This is crucial for the task of moving beyond theidea that in order to be objective, opportunitiesmust be, “in principle, observable” (Alvarez &Barney, 2007: 13), yet without having to deny theirobjectivity by asserting that “opportunities aresocial constructions that do not exist independentof entrepreneurs’ perceptions” (Alvarez & Barney,2007: 15).


Neoclassical Actualism and theKirznerian Intuition

Physicists study phenomena occurring withinthe contexts of tight experimental control. Inthe desire to emulate the research practices ofphysical scientists, neoclassical economiststreat economies as fairly simple and highly pre-dictable systems that exist in states of equilib-rium (Arrow &Debreu, 1954; Walras, 1954). Basedon such methodologically convenient yet onto-logically oversimplified models of reality, sup-ply and demand supposedly equilibrate andtheir “nexus” manifests in prices.

The most noticeable way in which these staticmodels fail tomatch theworkingsof the realworldis that they cannot explain change (Schumpeter,1983). From a realist point of view, however, theproblems with the notion of equilibrium rundeeper and exceed the limitation of accountingfor changes observed in the empirical layers ofreality. The core concern pertains to the actualisttreatment of nonchange. In a conception of theworld lacking underlying powers and tenden-cies, what is absent from the face of the world issimply impossible. The neoclassical worldvieweffectively presumes that the possible is in syncwith the actual (Arrow, 1974) and is ultimatelydevoid of the propensity at the heart of realistontology (Lawson, 1997).

In stark contrast, realism endorses the recog-nition of propensity even in themost (empirically)stable of situations. In spite of the lack of relevanttheoretical vocabulary, Kirzner (1979, 1997) in-geniously grasped this realist insight in appreci-ating that equilibrium-based economics fails tocapture the deeper workings of real-world econ-omies. His insistence that unexploited profit op-portunities exist essentially is an emphaticrejection of the actualist thesis that existing op-portunities must be instantly exploited. Opportu-nities exist at “each and every moment” (Kirzner,1997: 82), even in the most seemingly stable of sit-uations. No change isnecessary for their existence.Kirzner attributed the existence of unexploitedopportunities to the scarcity of the “entrepreneur-ial alertness” (purportedly) required for their dis-covery (see also Hayek, 1945). For Kirzner, “it isentirely possible for an individual to pass up anavailable opportunity for pure gain, withouttaking advantage of it. . . . [We ought to] grapplewith the very real possibility of unexploited op-portunities for profit” (2006: 262). The seemingly

minor correction of the presumption—in their pres-ence, opportunities are inevitably exploited—hasenormous metatheoretical ramifications. It en-tails commitment to thedepth ontologyadvocatedby realism.

The Ontological Status of Opportunities

Realist philosophy can provide a direct answerto the question, “What is the ontological status ofthe opportunity e.g. Kirznermentions?” (Gorling&Rehn, 2008: 96), which Kirzner himself acknowl-edged as a “profound philosophical question”(2009: 150). The opportunities that analyticallyemerge in response to Kirzner’s (instinctive) re-jection of the neoclassical worldview’s actualistmetaphysics belong to the ontological categoryof propensity. They exist akin to the unactualizedpropensity of seeds. Unlike undiscovered archeo-logical artifacts, they do not qualify as empiricallyunidentified objects of the world. It is thereforemisleading to discuss their discovery, since theword “discovery” connotesperceptual contactwithactualized entities (or events).From a realist standpoint, as introduced ear-

lier, entrepreneurial opportunity can be definedas the propensity of market demand to be actu-alized into profits through the introduction ofnovel products or services. These products orservices do not have to be novel to the globalmarket but, rather, new only for the target mar-ket. When the introduction of novel products orservices dovetails with profits, then an opportunityqua propensity is said to have been actualized. Weaccordingly call our conceptualization of entre-preneurial opportunities the actualization ap-proach, and distinguish it from the discoveryapproach. Table 1 presents a brief comparison ofthe conceptions of entrepreneurial opportunityunder empiricism, constructivism, and realism.Kirzner not only did not develop his realist in-

tuition far enough but also inadvertently allocatedopportunities to an ontologically unfit category:from the category of unactualized propensitiesto that of actualized but undiscovered realities.We already noted that strong reliance on theinapt word “discovery” may be a linguisticbarrier to grasping the reality of opportunitiesqua propensities. This seemingly innocent lin-guistic malpractice alone might entrap ourtheoretical imaginationwithin the bounds of theontologically erroneous category, bewitchingus into inferring that opportunitiesmust exist as


actualized entities that canbe somehowobserved(Wittgenstein, 1958). Our realist analysis none-theless allows us to break free from the counter-intuitive yet deep-seated picture of opportunitiesexisting “like dollar bills blowing around on thesidewalk” (Casson & Wadeson, 2007: 285). Ouranalysis additionally facilitates the appreciationthat opportunitiesaremore like the (unobservable)intrinsic power of a seed’s propensity to germinateinto a flower—versus the flower itself.

Up to this pointwe have explicitly identified theontology of entrepreneurial opportunity througha realist reconstruction of Kirzner’s critical en-gagementwith ontologically neglectful studies ofeconomies. In doing so,weafford ananswer to therecalcitrant puzzle of entrepreneurial theory(Kirzner, 2009; Suddaby et al., 2015), offer a realistdefinition of entrepreneurial opportunities, anduncover a category mistake in the foundation ofentrepreneurial theory. An in-depth realist ac-count of opportunities, however, requires us tomove beyond analogies borrowed from the natu-ral world (Birkinshaw, Healey, Suddaby, & Weber,2014; Lawson, 2003) and reflect on the ways op-portunities may be plausibly said to exist in hu-man societies where entrepreneurial actions takeplace.

Entrepreneurial opportunities must have vastontological differences compared with the crudepropensities of the natural world; for one, thevery meaningfulness of the word “opportunity”presupposes the background existence of sub-jectively set and socially conditioned goals. Evenin the rudimentary example of a seed’spropensityto actualize into a flower, this propensity cannotbe said to exist as an opportunity without thepresumption that it can make the satisfaction ofagricultural goals possible. Moreover, althoughprofit is customarily treated as an “objectiveoutcome” motivating entrepreneurial action, in-dividuals will typically have various evaluativereactions to publicly describable outcomes(McMullen, 2015: 655). The level (or duration) ofprofitability judged as “adequate,” as well as theact of measuring profitability (e.g., in choosingaccounting vis-a-vis economicmetrics; McMullen& Dimov, 2013: 1494, 1508–1509), is inevitably asubjective matter.

Despite the subjectivity of goals, the condi-tions of their satisfaction lie in the objectiveconditions of the world. To more closely scruti-nize the nature of the propensity that makesthe satisfaction of entrepreneurial subjectivities

objectively possible, we face the question, “Whatis the fundamental nature of the ‘seed’ of marketdemand thatmust preexist for the goal of profit tobe a genuine ontological possibility?”

EXISTENCE AND ACTUALIZATION OFENTREPRENEURIAL OPPORTUNITIES

In this section we deepen our theorization ofopportunities through (1) the identification ofdesire as the core ontological ingredient of op-portunities qua latent market demand and(2) the recognition of the role of enhanced agenticeffort in actualizing ontologically demandingopportunities.

Realist Theorization of Unmet Market Demand

In theneoclassicalworldview there is “noscopefor pure profit” (Kirzner, 1997: 69), and the idea ofunmet demand is intrinsically paradoxical (seealso Sarasvathy et al., 2010). Demand is synony-mouswithpurchasingbehavior—“What couldbe,is” (Martin, 2009: 519)—and there is no ontologicalspace for demand that is both real and simulta-neously absent from market transactions. A re-alist conceptualization of demand requires anontological deepening capable of analyticallydisjoining it from actual consumer behaviors (seeMcMullen, 2011, and Schumpeter, 1983). The cat-egory of desire is crucial for conceptualizingademand that is out of syncwith overt consumingbehaviors. It satisfies the requirement of realistphilosophy of science for ontological depth(Danermark, Ekstrom, Jakobsen, & Karlsson, 2002)and is also central to the realist philosophy ofmind (Searle, 1983).The concept of desire most typically refers to

transfactually operating tendencies. It exists asan unobservable and ex ante nonevident forcethat can nonetheless produce observable effectsunder appropriate circumstances. Take as anexample the behavior of prisoners who do not tryto escape. The absence of escape attempts byprisoners does not imply an absence of the desireto escape. Desire captures an existing dynamismunderlying even the most empirically stable ofsituations; prisoners’ desire to break free is out ofsync with the compliant behavior observed ona quiet day in the prison.Consider the currently absent yet highly de-

sired cure for HIV as an example of a desireforming the core component of an objectively


existing profit opportunity. This desire operatesas a transfactually existing tendency that willmaterialize into consuming behavior once apharmaceutical company offers the cure. Withrespect to the opportunity to profit throughT-shirts and aprons with the “Je suis Charlie”slogan, that opportunity fundamentally existed inthe active desire of people to express repulsionfor the terrorist attack at Charlie Hebdo. Con-sider also an example in which no technologi-cal breakthrough or environmental change isnecessary for the existence of a transfactual op-portunity: profiting by opening a Mediterraneanrestaurant in a city where no similar restaurantspreviously existed. In the first two cases, desire isarguably manifest or easy to discern before theproduct actually enters a market. In contrast, thisneed not be the case with the Mediterraneanrestaurant. Thedesire for suchcuisineneednot beknowable by an entrepreneur, or even customersthemselves before encountering exotic tastes notpreviously on offer.

Finally, it is worth noting that unmet marketdemand need not exist in the desire for concreteproducts or services. For instance, desire is nottargeted at a specific HIV-curing substance ora particular slogan such as “Je suis Charlie.” De-sires typically exist in the abstract (e.g., the desireto cure oneself of the HIV virus or to protestagainst religious terrorism), and novel productsand services can be suitable candidates for theirsatisfaction.

Differentiating Mode of Actualization from Modeof Existence

Up to this point we have demystified the kind ofpropensity intuited by Kirzner in his reference tounfulfilled tendencies toward equilibrium or“ready-made” opportunities awaiting discoveryby “passive” agents. However, skeptics object tothis static view of opportunities because it fails toacknowledge the salience of entrepreneurial ef-fort and agency (McMullen, 2015). Suddaby et al.astutely recognize that it is empirical cases ofintense entrepreneurial effort fueling the creationperspective’s rejection of the notion that opportu-nities exist objectively:

When Steve Jobs created the iPhone . . . he recog-nized that he could create and promote a productthat consumers did not even realize they wanted.Similarly, when Edison created the electric lightbulb, he supplemented the innovation effort with

a tremendous effort to legitimize the product—i.e., to socially construct the conditions for con-sumer acceptance of a product that had no priorcontextual understanding or awareness in themarketplace (2015: 3).

We agree that transfactually existing opportuni-ties cannot capture the totality of opportunities.However, this premise does not lead to the con-

clusion that “opportunities are social constructs”(Barreto, 2012: 360) that “do not exist as inde-pendent realities” (Spedale & Watson, 2014: 761).We resist the polarization between objectivelyexisting opportunities and subjectively con-structed opportunities by explaining that there isno genuine tension between the constructivistintuitions animating the creation approach andthe objectivity of opportunities. With subtle con-ceptual adjustments, our actualization approachcan accommodate constructivist intuitions with-out surrendering commitment to their objectiveontology. In keeping theirmode of existenceapartfrom theirmode of actualization,weacknowledgethe ontology of opportunity types animating cre-ation theory’s reaction as agent-independent op-portunities whose actualization is neverthelessagency intensive.

Agency-Intensive Opportunities

Schumpeter discerned the insufficiency ofproduct development for the successful re-alization of business goals by noting that con-sumers often ought to “be taught to want newthings . . . [or] educated by . . . [producers] ifnecessary” (1983: 65; see also Penrose, 1995: 80).For example, “it was not enough to producesatisfactory soap, it was also necessary to in-duce people to wash” (Schumpeter, 1939: 243).ThomasEdison’s case isparticularly instructive.

In hindsight, electric lighting looks like a techno-logical inevitability. However, the developmentof a product that could be a superior solution tousers’ needs was alone insufficient for the suc-cessful venture realization. It took Edison re-markable effort to overcome the resistance andskepticism toward this innovation, such as hiseffort in working out design details that invokedfamiliarity with widely used technologies of thetime (Hargadon & Douglas, 2001).While creation theorists correctly acknowledge

the elements of creativity and skillful entrepre-neurial engagement, they unnecessarily throwthe baby out with the bathwater by denying the


objectivity of opportunities. Instead,we can retaincommitment to their objectivity by acknowledg-inga type of desire that does not exist inways thatthe cure for HIV does but that can exist in thepresence of appropriate desire-eliciting efforts.What we can potentially desire may not operateactively. Imagine, for example, a situation inwhich an individual meets a person who at firstsight seemsuninteresting, but the individual thengradually develops a desire for this person’scontinued presence. A desire to own a sports carafter watching a compelling advertisement canemerge in someone who does not currently havean active desire to buy an automobile. In thecase of a transfactually existing desire, the verysupply of a product can prove sufficient for therealization of profits. In contrast, in the case ofadesire that canemergebut isnot activeatagivenpoint in time, the actualization of a related oppor-tunity is unlikely without appropriate marketing,advertising, and/or legitimating efforts (Suddaby& Greenwood, 2005; Webb, Ireland, Hitt, Kistruck,& Tihanyi, 2011).

If in the examples of the iPhone and the electriclight bulb the very fact that they eventually led toprofits testifies to the objective preexistence of therelated opportunities, wemay also consider whatappears to be a yet-to-actualize opportunity thatnonetheless does not seem to be readily exploit-able. Janicki Bioenergy recently produced a ma-chine that generates clean water out of humanexcrement. Although there is a strong desire forsanitized water in many regions of the world, notmany individuals would desire to drink waterpoured from this machine. It arguably takes in-genious effort, such as having Bill Gates drink thewater (BBC News, 2015), to actualize the opportu-nity inquestion. The imageofGates carries strongsymbolic power with potent reassuring effectsregarding thesafety of thisnew technology.Onanontological level, eradication of fears that counterthe desire for this technological solution is a pre-requisite for success.

Just as the blossoming of a flower may requireefforts aimed at realizing the flower seed’s pro-pensity to blossom, the possibility of entrepre-neurial success may require a multitude ofcreative endeavors aimed at the actualization ofa preexisting opportunity (see also Ramoglou& Zyglidopoulos, 2015). Still, the existence of en-trepreneurial opportunities remains independentof the thoughts, imagination, or actions of anygiven entrepreneur, entrepreneurial team, or

entrepreneurial organization. Edison did notcreate or design the opportunity. To deny thisagent-independence premise is to accept thatlimits to the possible are ultimately determined bycreative agency and that Edison could effectivelyuse his entrepreneurial resourcefulness to suc-ceed in any entrepreneurial undertaking.

UNPACKING THE INDEPENDENCE DIMENSION

In acknowledging the causal role of creativeagency in realizing entrepreneurial goals, we runthe risk of violating the above-mentioned realistdimension of independence. Here we show thatour position is consistent with this dimension,thus guarding against the tendency of portrayingentrepreneurial agents as limitlessly powerfulsuperagents (see also Suddaby, 2010a). The theo-rization of the nonopportunity space is key totackling the metaphysics of possibilism, as pre-supposed by exaggerated portraits of creativeentrepreneurial agency (e.g., Garud & Karnøe,2001; Venkataraman, 2011).

Pitfalls of Possibilism

The actualist resists granting ontologicalplausibility to currently absent and only imagin-able states of the world. In sharp contrast, thepossibilist asserts that “what is thinkable is pos-sible too” (Wittgenstein, 1922: 3.02). If for theactualist the absent is impossible, then the pos-sibilist commits the diametrically opposite fallacyby failing to acknowledge ontological limits to thepossible. Possibilism translates into a worldviewin which entrepreneurs have the power to createthe future they dream of. This implies that onecan successfully realize the goals motivatingentrepreneurial actions as long as one tries hardenough.By denying the existence of objective opportu-

nities, the creation approach subscribes to themetaphysics of possibilism. If “an opportunity isan epistemological construct [and its] ontologicalstatus is irrelevant” (Venkataraman, 2011: 106), itis logically inevitable that the market demandrequired for the realization of successful out-comes must be reducible to agentic social con-struction processes. There are simply no limits tothe possible in a world in which opportunitieshave no agent-independent existence. In statingthat creation theorists posit a failure-free world,we do not imply that they do not acknowledge the


possibility of failure. Rather, wemean that failureis treated as a mere possibility.

Space of the Impossible

In a possibilist frame of mind, Stevenson andJarillo seminally defined opportunity as a “futuresituation which is deemed desirable and feasi-ble” (1990: 23). In contrast, we conceptualize op-portunity as the objectively existing propensitythat makes ontologically possible a future situa-tion deemed desirable and feasible. We drivethe agent independence of opportunity home byunderscoring the category of nonopportunity nextto the domain of unactualized opportunities. Theontological domain of nonopportunity is one thatlacks the objective conditions necessary for profitactualization. Like watering soil where no seedsexist, venturing in this domain cannot be profit-able, regardless of the level of effort or entrepre-neurial resourcefulness.

Schumpeter captured this intuition by stating,“contra to conventional wisdom,” that, in theproductive process, there is “in general no realleader, or rather the real leader is the consumer”(1983: 21, emphasis added). In fact, Schumpeterwent so far as to assert that the “peoplewhodirectbusiness firms only executewhat is prescribed forthem by wants or demand” (1983: 21, emphasisadded). We do not rule out the power of creativeagency to alter the course of events. The pre-ceding section demonstrates how the propensityframework allows us to resist deterministicconceptions regarding the actualization of pro-pensities, acknowledging that it often takesconsiderable effort to stimulate demand. Thisacknowledgment nonetheless does not contra-dict the thesis that an opportunity must be eitherpreexistent or absent; it is “aneither/or occurrence.Something iseitherpossible, ornot. . . . Therearenoshades of grey” (Gartner, 2014: 28). Whether anentrepreneurial action can dovetail with profits ispredetermined, although whether a potentiallyprofitable entrepreneurial action will dovetail withprofits is not.

In contemporary entrepreneurship researchthis insight is best expressed by McMullen andDimov, who stress that “there is no entrepre-neurial opportunity without customer demand”(2013: 1494). Their argument is that

the entrepreneur can be in the right place at theright time, but what makes this place and time“right” is the presence of a customer who is willing

and able to pay the entrepreneur’s asking price.Without this demand, no opportunity exists(McMullen, 2011). The entrepreneur may engage inhard-sell tactics in an aggressive attempt to influ-ence the customer, but ultimately the choice to en-gage in an exchange is the customer’s to make(McMullen & Dimov, 2013: 1494).

The notion of nonopportunity arguably resonateswith what the layperson accepts as plausible.Potential entrepreneurs, whether business stu-dents (Keh, Foo, & Lim, 2002) or prison inmates(Patzelt, Williams, & Shepherd, 2014), typicallyface few difficulties in coming up with ideas forprofitable ventures. We are nonetheless awarethat our ideas need not be consistent with realityand may be nothing but a figment of our willfulimagination.People’s desire to travel to the moon, for in-

stance, has existed from time immemorial. How-ever, current aerospace technology would renderthe commercialization of moon travel an un-profitable venture because of the insurmountablefinancial costs involved. It is likewise unrealisticto believe that one can profit by selling Mercedesin places where the desire for luxury might existbut the median income does not exceed a fewthousand U.S. dollars (Shane et al., 2003: 262).Consider also the spectacular failure of FordMotorCompanywith the Edselmodel in the 1950s,which could not have been averted regardless ofany marketing approach Ford might conceivablyhave deployed (Brooks, 1963). The design andpricing of the Edsel in the 1950s were arguablya nonopportunity.Institutional insights can also shed valuable

light on the ways historical contingencies limitthe boundaries of the possible (DiMaggio &Powell, 1983; Sydow, Schreyogg, & Koch, 2009).For instance, it is arguably impossible to runa profitable venture by selling dog or horse meatin certainmarkets. The cultural schema that dogsand horses share human properties, coupledwiththe script “edibility is inversely related to hu-manity,” simply makes their consumption un-thinkable inmany regions (Sahlins, 1976: 174–175).In addition to cases of nonopportunity for all in-terested agents (e.g., it is impossible for anybodyto profit in market X), the boundaries of the pos-sible can also vary along the contextual positionsin which individuals find themselves (Lawson,2003; Stinchcombe, 1983). Although a profit op-portunity can exist objectively, it need not be anopportunity for anyone not suitably positioned to


take advantage of it (see McMullen & Shepherd,2006, for a distinction between first- and third-person opportunities). For instance, an organiza-tion might not have the opportunity to profit bybringing an otherwise desirable product to themarket if it lacks the required reputation or if theproduct can be easily copied by competitors whocan produce it at an improved quality or reducedcost (George, Chattopadhyay, Sitkin, & Barden,2006; Schumpeter, 1983).

As mentioned, academic possibilist disposi-tions are at odds with what laypersons are pre-disposed to accept as possible, since prospectiveentrepreneurs are arguably better attuned to therealist intuition that the realm of the naturallypossible is a subset of the thinkable. The lack ofreflective and systematic theorizing, as well asthe intrinsic recalcitrance of the opportunity con-struct, may well explain the strong possibilisttendencies of entrepreneurshipdiscourse. Searle’sexplanation of the counterintuitive tendency todownplay the limitations of the real world is ofpotential relevance as well:

It satisfies the basic urge to power. It just seems toodisgusting, somehow, that we should have to be atthe mercy of the “real world.” It seems too awfulthat our representations should have to be an-swerable to anything but us (1998: 17).

Unexciting as it might be, our realist analysisforces us to categorically acknowledge thatfailure is a necessary and unavoidable stateof the world when venturing into the domainof nonopportunity—no matter how hard onemight try.

CONSTRUCT CLARITY

In thissectionweclarify some logicaldimensionsof entrepreneurial opportunities by delineatingthem from nonentrepreneurial actions and oppor-tunities. Such discussion is imperative for the taskof eloquent theory development (Suddaby, 2010b),given theconsiderable conceptual stretch that theentrepreneurial and opportunity constructs haveundergone (Gartner, 1990; Hansen, Shrader, &Monllor, 2011).

Boundary Conditions of Innovative andEntrepreneurial Action

Being entrepreneurial is being innovative, be-cause “if entrepreneurial action is always abreak

with the status quo, then it is likely to involvesome degree of innovation for the individuals in-volved” (McMullen, 2015: 671). Yet what exactlymakes an action “sufficiently” innovative cannotbe determined by means of philosophical analy-sis and inevitably involves subjective evaluation.If being innovative is doing “things that are notgenerally done in the ordinary course of businessroutine” (Schumpeter, 1983: 7), then the logic of theinnovative construct is essentially contrastive: itdoes not lie in the nature of the activity but, rather,in the departure from the established ways ofdoing things. The very same practice can bevaryingly innovative against the backdrop ofdifferent reference points. A corporation can in-novatewithaproduct that hasnot appeared in theglobal market before (e.g., Apple with the iPad),an individual can innovate by introducing a nov-elty to one market that is nonetheless ordinary inother regions of the world (e.g., Howard Schultz’sintroduction of the Italian “coffee experience” tothe U.S. market with Starbucks), and an organi-zation canalso innovate against its past practicesthrough the implementation of total quality man-agement techniques.Moreover, whether a practice is counted as

innovative will vary for different scholarly com-munities. While some will view as innovativeonly high-impact Silicon Valley venture types(e.g., Guzman & Stern, 2015) or immensely prof-itable businesses (e.g., Henrekson & Sanandaji,2014), others may follow Schumpeter and frameas innovative deedsas “trivial”as the decision to“change pigs with cows” (1983: 79). Such defini-tionalmatters eventually boil down to subjectivepreferences, local norms, and intersubjectiveconsensus.For our metatheoretical purpose, there is noth-

ing precluding an action from counting as entre-preneurial as long as it is deemed to be somehownovel from a market’s point of view. Changingpigs with cows can be considered an entrepre-neurial act if the departure from past practicesleads to the offering of a new product to the targetmarket. The level of technological sophistication,degree of inventiveness, or realization of profits(or lack thereof) are all inconsequential to ourconceptualization of entrepreneurship.Although the boundaries of what can be

counted as innovative are fairly broad in thisrespect, our definitional criterion of novel in-teraction with a market entails that entrepre-neurial activities are a subset of innovative


activities. Entrepreneurship must be somehowinnovative, but the reverse does not necessarilyfollow. Not all innovations lead to the offering ofa novel product or service. An obvious exampleis cost-cutting innovations, such as more effi-cient organizingmethods or cheaper ingredientsfor the production of the same product. Cost-cutting efforts can certainly contribute to aventure’s profitability by increasing profitmargins or boosting revenues. Analytical pre-cision nonetheless requires that we guardagainst their analytical conflation with entre-preneurial innovations.

Entrepreneurial Opportunities vis-a-visOpportunities for Entrepreneurial Action

The single most important source of confusionin discovery theory lies in the interchangeableuse of opportunities for profit with opportunitiesfor entrepreneurial action (e.g., Davidsson, 2015;Dyer, Gregersen, & Christensen, 2008; Martin &Wilson, in press; Shane & Venkataraman, 2000;Shook, Priem, & McGee, 2003; Short, Ketchen,Shook, & Ireland, 2010). Consider, for instance,Shane’s (2012: 16) somewhat synonymous useof “technological opportunities” and “profit op-portunities” in his recent example of the oppor-tunity to commercialize aviation when airplaneswere invented. Using these two constructs in-terchangeably conflates them. The invention ofaircraft gave rise to the opportunity to act entre-preneurially by introducing the aviation in-novation in the transportation market. However,the opportunity to profit was determined by mar-ket factors. In the example of electric lighting,there was a gap of approximately seventy-fiveyears between the invention of electric lightingand its profitable commercial exploitation byEdison (Hargadon & Douglas, 2001: 482–486).

“Situations in which new goods, services, rawmaterials, markets and organizing methodscan be introduced” (Eckhardt &Shane, 2003: 336)are interrelated but ontologically distinct fromentrepreneurial opportunities. It is thereforeimperative that we embrace “a distinction be-tween opportunities to realize an event outcome(e.g., profit)—i.e., ‘an opportunity to succeed’—and opportunities to engage in action—i.e., ‘anopportunity to try’” (McMullen, 2015: 660). Thepropensity framework facilitates this distinc-tion well: the introduction of novel products orservices into amarket is themeans of triggering

the actualization of profit propensities, butthe opportunities for the introduction of novelgoods and services are not themselves entre-preneurial opportunities. Venture opportuni-ties lie in the conditions making the supply ofnovel products possible through technologicaladvances, access to financial and social capi-tal, and so on (see also McMullen, Wood, &Palich, 2014). These market offerings might, inturn, trigger the actualization of profit oppor-tunities, which nevertheless involves marketdemand.For conceptual precision, we should also re-

frain from naming the opportunity to create socialvalue as entrepreneurial opportunity (cf. Lee &Venkataraman, 2006: 110), in spite of the fact thatsocial value canemerge (intentionally ornot) fromprofit-seeking activities (see also Baumol, 1990:897–898). It is otherwise tempting to cursorilyframe Mark Zuckerberg as motivated to createsocial value when attempting to actualize a profitopportunity via Facebook (versus being moti-vated to making profits alone). Confoundinggoals with their side effects unintentionally en-courages the idea that entrepreneurship is an actof altruism, and it inadvertently conflates for-profit actions with social entrepreneurship (seealso Austin, Stevenson, & Wei-Skillern, 2006).

REVISITING THE CHALLENGES PLAGUING THEDISCOVERY APPROACH

We revisit below the challenges to the discov-ery approach and show how they are addressedby the actualization approach. We specificallyfocus on issues related to time and uncertainty,along with the puzzle of real but unexploitedopportunities.

Time and Uncertainty

Klein questioned the sensibility of referring toopportunity existence prior to the realization ofprofits, because “gains (and losses) do not comeinto being objectively until entrepreneurial ac-tion is complete” (2008: 181), echoing Kaish andGilad’s concern that “in intertemporal markets,the opportunity does not yet exist to be discov-ered” (1991: 46). From a complementary view-point, Korsgaard, Berglund, Thrane, and Blenkerassaulted the idea that opportunities may beobjectively present by stressing that “futuremarkets do not yet exist” (in press). In a similar


vein, Buchanan and Vanberg (1991) embracedShackle’s thesis that “the content of time-to-comeis not merely unknown but inexistent” (1983: 33),in an attempt to expose the absurdity of theKirznerian idea that opportunities may alreadyexist “out there” in a future that has “yet to becreated” (Buchanan & Vanberg, 1991: 178).

Tensions stemming from the temporalities ofthe entrepreneurial process do not refute theobjectivity of entrepreneurial opportunities. In-stead, they underscore the need to embrace theirpropensity mode of being and to pay closer at-tention to subtle logical intricacies. These ten-sions fade away once we differentiate betweenthe twomeaningsof existenceassociatedwith thetemporal transition from propensity to actuality:

• at Stage A, the existence of the propensityitself (propensity to actualize into profitswhen the opportunity is successfully exploi-ted), and

• at Stage B, the existence of empirical events(i.e., profit realization) that manifest the pro-pensity’s preexistence.

It is important to note that the second meaningof existence does not refer to propensities but,rather, to events that convey knowledge re-garding preexisting propensities. There are twodiscrete kinds of existence at play, and contra-dictions emerge only when this subtle ontolog-ical distinction is overlooked. The transitionfrom Stage A to B is typically uncertain sincethere is no metaphysical guarantee that ven-turing will result in profit making (McMullen &Dimov, 2013).

AlthoughKleinwas correct in noting that profits“do not come into being objectively until entre-preneurial action is complete” (2008: 181), he un-necessarily questioned the objective existence ofentrepreneurial opportunities, since profits areontologically distinct from opportunities. Profitsrelate epistemologically to opportunities: whenprofits are realized, we know that the related op-portunities exist. However, opportunities are on-tologically irreducible to profits, and, therefore, itdoes make sense to discuss opportunities as pro-pensities prior to the realization of profits. To alsorespond to Kaish and Gilad’s (1991) concern, al-though opportunities exist, what does not existprior to their actualization is our knowledge oftheir existence. It is profits but not opportunitiesthat can be discovered. The preexistence of op-portunities can be retrospectively inferred when

profits are realized, but it is not entirely accurate tosay that opportunities themselves are discovered.Moreover, given that the ontological transi-

tion from Stage A to Stage B requires the pas-sage of time, propensities do not actualize at thevery moment they come into existence. This de-mystifies Popper’s prima facie paradoxicalproposition that the “future is, in this way, ac-tively present at every moment” (1990: 20). Anysense of paradox surrounding notions of “pre-existing futures” disappears once we clearlygrasp that “future” refers to events yet to actu-alize,whichnonetheless currently exist in a stateof propensity.Consider, additionally, Shackle’s thesis that

“the content of time-to-come is not merely un-known but inexistent” (1983: 33), as endorsed byBuchanan and Vanberg (1991), Venkataraman(2011), and Korsgaard et al. (in press). On the onehand, these scholars are right to assert that thefuture is inexistent, in the sense that it is absentfrom the present world. On the other hand, theyoverlook that the present reality of opportunitiescan be meaningfully maintained once the objec-tivity of opportunity is viewedwithin a propensityframework. The proposition that “future parts ofa market simply do not exist; they are, by defini-tion, not present” (Buchanan&Vanberg, 1991: 176)holds water only on a blueprint of existence thatlacks the ontological depth brought to promi-nence by propensity-based realism.

Reconsidering a Core Puzzle

Discovery theorists cannot resolve the puzzlethat “so many people ‘miss’ opportunities thatliterally stare them in the face” (Baron, 2006: 115)without drawing a deep ontological dichotomybetween entrepreneurs and so-called non-entrepreneurs, who are treated as either “essen-tially blind” (Gartner, Carter, & Hills, 2003: 107) orgenetically unsuitable (Nicolaou et al., 2008; seealso Ramoglou, 2013b). For the actualization ap-proach, the puzzle of asymmetrical opportunityperception is a nonissue. Once we realize thatopportunities do not exist like dollar bills or lostluggage and are not supposed to be “discovered”as such, we are in a better position to appreciatethe uncertainties of the entrepreneurial process(McMullen & Shepherd, 2006). We abandon theexpectation that opportunities will inevitablybe perceived at the moment of their emergenceor will be exploited at the moment they are


perceived. Opportunities might exist unper-ceived and unexploited, similar to potent seedsthat remain unperceived and their propensity tobecome flowers unactualized.

The actualization approach also overcomes theassociated idea regarding the presence of somecausal “nexus” between opportunities and in-dividuals (McCaffrey, 2014). Opportunities do nothave any sort of causal interaction with in-dividuals. They exist as the background againstwhich the realization of profits becomes objec-tively possible (akin to nourishment that does notstand causally to life but, rather, is an ontologicalprecondition for the possibility of life). In realistterms, opportunities exist as ontological condi-tions of possibility.

ENTREPRENEURIAL SUBJECTIVITIES IN THEACTUALIZATION APPROACH

In the previous section we addressed chal-lenges concerning the objectivity of opportunitiesthat plague the discovery approach. In this sec-tion we discuss the subjectivities of the entrepre-neurial process by demonstrating the natureof the interplay between entrepreneurial sub-jectivities and opportunities qua propensities.

Whether the subjective perception of opportu-nities contradicts notions of objectivity is a pe-rennial source of tension between creation anddiscovery scholars (e.g., Alvarez & Barney, 2013;Eckhardt & Shane, 2013). Here we explain how thesubjectivity of “opportunity perception” can bemeaningfully conceptualized in parallel with theobjectivity of “opportunity existence” within theactualizationapproach. If propensities areabsentfrom the world’s actualized domains, they lack“the sharp-edged reality of all things which wehave seen and experienced” (Schumpeter, 1983:85), and the possibility of making cognitive con-tact with them—at the bare minimum—requiresthat they be seen as a “figment of our imagina-tion” (Schumpeter, 1983: 85; see also Shackle,1979). Yet what imaginative content could, withinreason, bring about an individual’s attempt tograsp an opportunity? Can the “dreaming ofthings that do not yet exist” (Gaglio, 2004: 533),such as the “imaginary combination of product/service offering” (Davidsson, 2015: 683), qualifyas imagining opportunities? For example,wouldan individual perceive opportunity in imaginingoneself producing “Je suis Charlie” T-shirtssimpliciter?

Ifactivitiesare themeans toward thesatisfactionof goals—but are not opportunities themselves—the imaginative inception of an entrepreneurialcourse of action alone cannot describe an in-dividual’s imaginative contact with a possibleopportunity. Instead, it is in the imaginativeprojection of a favorable state of the world tofollow a course of action that we may say that anindividual makes imaginative contact witha possible opportunity. This conceptualizationentails two key distinctions—(1) between imagi-nation and belief and (2) between belief andknowledge—suggesting, effectively, three waysof “seeing” opportunities.For the first distinction, using the word “oppor-

tunity” connotes confidence that one is makingcontact with something not merely imaginablebut in an important sense real. However, thereexists a subtle ontological distinction betweenthe medium of imagination and the structure ofbeliefs (Searle, 2001); imagination is more ofa neutral cognitive projection into the future thatneed not be accompanied by positive (phenome-nological) experiences (see also Popper, 1963).Wecan imaginewinninga fortunebygambling in thecasino ormakingbillions by starting a far-fetchedentrepreneurial venture. Yet we do not typicallyexperience such projections as anything morethan the offshoot of a playful imaginative en-deavor. We are aware that what can (objectively)be the case is considerably narrower than whatwe can (subjectively) imagine as possible. Imag-ining “if X, then Y” future scenario types mightoffer the raw material or stimulus (see McMullen,2015, on the stimulus problem) for making cogni-tive contact with opportunities, but such imagi-nation is insufficient for offering the experienceone has when believing one has recognized anopportunity. One must additionally trust that theimaginative projection corresponds to a naturallypossible world state.The second distinction concerns the fact that

even if an individual claims to know that he orshe has recognized an opportunity, we (qua re-searchers) cannot share this confidence priorto opportunity actualization. “Individuals canonly believe (not know) that they have recognizedentrepreneurial opportunities under uncertainty”(McMullen, 2015: 657); hence, the (epistemologi-cally) neutral “opportunity belief” should replaceexpressions such as “opportunity recognition” or“opportunity identification” (McMullen & Shepherd,2006). Just as imagining scenarios is ontologically


different from believing that they correspond togenuine possibilities, the belief in imagined fu-ture projections is ontologically distinct fromknowledge concerning the genuinely possible. If“in an uncertain world, expectations may bedisappointed” (Kregel, 1976: 209), as seminallymaintained by Keynes (1936), beliefs regardingopportunities can also be disappointed.

To summarize, we have discussed three waysthroughwhich an individual canmake cognitive“contact” with opportunities qua propensities.The vague construct of “entrepreneurial alert-ness” (Kirzner, 1997) can therefore be meaning-fully replaced by three types of seeing thatcan appear sequentially in an entrepreneurialprocess: imagining (S1), believing (S2), andknowing (S3):

• S1: imagining the state of the world in whichone makes profits after engaging in an en-trepreneurial course of action;

• S2: believing this state of the world as onto-logically possible; and

• S3: after the realization of profits, knowingretrospectively that an opportunity was trulythere.

Although objective knowledge of opportunities’existence can be gained only retrospectively (S3),this recognition is not at odds with the objectiveontology of opportunities. Moreover, their objec-tive existence does not negate the meaningful-ness of discussing purely subjective ways ofmaking sense of them prior to their actualization(S1 and S2).

If the perception of objectively existing “stuff”strictly concerned the ways we perceive dollarbills or mountains, it would be right to deny no-tions of opportunity objectivism and assert that“opportunities are subjectively imagined ratherthan objectively existing” (Korsgaard et al., inpress). Yet the (otherwise sensible) urge to sub-jectivize opportunities can relax once we adoptthe propensity reasoning that transcends the ei-ther subjectively perceived or objectively existingdichotomy. It is perfectly intelligible to maintainthat objectively existing opportunities are sub-jectively imagined and believed in.

A REALIST THEORIZATION OF UNCERTAINTYAND FAILURE

In the previous two sections we demonstratedhow the actualization approach addresses chal-lenges to the discovery approachand, at the same

time, takes into account the subjectivities of theentrepreneurial process. In this sectionwediscussa unique strength of the actualization approach—namely, a profound conceptualization of un-certainty regarding opportunity existence (1) priorto the outcomes of action and (2) in instances offailure.

A More Nuanced Treatment of Uncertainty

In looking to the future from a realist vantagepoint, we are in a state of agnosticism. We canimagine endless possibilities, but we cannotknow whether they fall within the domain ofunactualized propensities or whether our imag-ination has sidetracked into the domain of theimpossible. We know philosophically that un-actualized propensities exist in abstracto but notwhere they exist in concreto.This nuanced view of uncertainty is overlooked

in entrepreneurial discourse by proponents of thediscovery and creation approaches alike (for ex-ceptions see McMullen, 2015; McMullen & Dimov,2013; Ramoglou & Zyglidopoulos, 2015). Scholarstend to limit uncertainty to the empirical re-alization of profits, as opposed to the more fun-damental ontological uncertainty regarding theexistence of conditions capable of sustaining aventure’s profitability. It is typically presupposedthat one can succeed, and uncertainty pertains towhether onewill succeed.We explained above that in denying the exis-

tence of exogenous conditions for possibility, thecreation approach subscribes to the metaphysicsof possibilism. A worldview that presumes that“nothing we imagine is absolutely impossible”(Hume, 1985: 81) is at odds with the deep kind ofuncertainty thatweadvocate.Without thedomainof the impossible, there is no uncertainty re-garding the limits of the possible; anything is, inprinciple, achievable (see alsoArend, Sarooghi, &Burkemper, 2015).The way in which discovery scholarship trivi-

alizes uncertainty is more indirect and likelyunintentional. Specifically, epistemologicallycharged words like “discover,” “recognize,”and “identify” connote that individuals knowthey come across opportunities prior to action(whereas opportunities might only be imag-ined or believed to exist as we have argued;see also Dimov, 2011). If opportunities are ob-jectively discovered and then exploited, we un-intentionally commit to their necessary existence,


and uncertainty concerns whether they will besuccessfully exploited.

Note in this regard the sense of paradox in-herent in Shane’s claim that the

definitionof entrepreneurial opportunitiesdoesnotrequire them to be profitable; rather, our definitionsuggests only that the probability new goods, ser-vices, raw materials, and organizing methodscould be introduced and sold at greater than theircost of production exceeds zero (2012: 15).

When a person is said to discover an entrepre-neurial opportunity and then exploit it, the prob-ability of having a profitable outcome must begreater than zero (and cannot be zero). In otherwords, this profitability attribute of the outcome issupposedly known with certainty at the momentof “discovery,” before even the exercise of en-trepreneurial action. This conundrum is causedby conceptualizing opportunities as actualizedentities.

In brief, the discovery framework cannot ac-commodate themoreprofoundkind of uncertaintyenvisaged by realist metatheory. If prior to actionwe are in a state of agnosticism and cannot knowwhether a projected venture falls into the domainof nonopportunity, can we ex post truly know theexistence of opportunities?

The Indeterminacy-of-Failure Thesis

The only occasion where we can know theexistence of opportunity is at the realization ofprofits. Yet in the case of failure, we are ag-nostic. This proposition stands contrary to theassessment by objectivist scholars who ac-knowledge uncertainty ex ante but tend toinfer the absence of opportunity in the absenceof profits (e.g., McMullen, 2015; Ramoglou& Zyglidopoulos, 2015). In contrast, the actual-ization approach suggests that we can seldomrule out the preexistence of an opportunity. Ifthe entrepreneur stopped short of deploying therequired agentic effort, the opportunity mighthave simply remained unactualized. The ab-sence of anticipated profits might often be dueto wrongdoings or omissions in either the de-sign or the execution stage (Singh, 2001).

For example, Hargadon and Douglas (2001)suggested that Edison failed to profitably exploitthe phonograph innovation because of wrong-doings in infiltrating the market. Specifically,Edison offered a device with multiple functions,such as audible books for blind people and

talking dictation, whereas the market retrospec-tively showed that promoting solely the functionof music reproduction was the proper means ofactualizing this opportunity (Conot, 1979). It wasa real opportunity that was just waiting the ap-propriate mode of actualization, yet Edison hadincorrectly dismissed it as lacking “any commer-cial value” (Hargadon & Douglas, 2001: 493).In summary, a realist conception of uncertainty

entails that (1) when looking forward into the fu-ture, we know neither whether an opportunityexists nor whether it will actualize, and (2) whenlooking backward at instances of failure, wecannot typically determine whether an opportu-nity was absent or simply unactualized. In es-sence, realist ontology suggests that we are ina state of agnosticism for questions that are bytheir very nature unanswerable. Still, the fact thatwe cannot acquire knowledge of this kind doesnot mean that there are no contributions to bemade at the level of empirical inquiry. Empiricalscientists benefit not only by becoming informedregarding novel theories and research impli-cations (cf. Arend et al., 2015; Davidsson, 2015;Dimov, 2011) but also by being alerted to theo-retical dead ends and unwholesome researchorientations.Moreover, if we cannot address empirically

unanswerable metaphysical questions, we cancertainly study how individuals engage with themetaphysical uncertainties at the heart of entre-preneurship. Our sensemaking is not fully in-formed by empirical and testable theories afterall; in order to survive inan inescapablyuncertainworld,we cannot but hold tight to notions that areby their very nature untestable. As seminallyappreciated by Kant (1999), by virtue of possess-ing a humanmind, we are already metaphysicalphilosophers. The metaphysical issues elabo-rated in this article could serve as theoreticalsearchlights (Popper, 1972) into the deeper beliefs(Krueger, 2007) that individuals hold with respectto inevitably “unanswerable metaphysical con-siderations” (Tetlock&Belkin, 1996: 3).Wediscussbelow research implications along with atten-dant pedagogical possibilities.

RESEARCHAND PEDAGOGICAL IMPLICATIONS

We have argued that we can neither foreseewhereopportunities exist norknowretrospectivelywhether opportunities remained unexploited orwere simply absent. We can nonetheless try to


understand how agents make sense of thesemetaphysical puzzles. This is analogous to themove of scholars interested in empirically un-answerable questions about the existence of Godswitching from theology to the psychology of re-ligion. The following are some fruitful researchdirections constructedbasedon this spirit, coupledwith remarks toward a critical pedagogy in entre-preneurial studies (Giroux, 1988).

Making Sense of Entrepreneurial Failureand Success

Are failed entrepreneurs inclined to maintaintheir original beliefs in the existence of the pos-tulated opportunity while attributing failuresolely to mishaps during the exploitation phase?Or are they instead inclined to regret believing inthe opportunity’s existence in the first place? Thefollowing reflection by Richard Branson, follow-ing the crash of a Virgin Galactic spacecraft onOctober 31, 2014, is thought-provoking:

I found myself questioning seriously for the firsttime, whether in fact it was right to be backing thedevelopment of something that could result in suchtragic circumstances. In short—was Virgin Galac-tic and everything it has stood for and dreamt ofachieving, really worth it? . . . I got a very firm an-swer to that question immediatelywhen I landed inMojave. From the designers, the builders, the en-gineers, the pilots and the whole community whopassionately believed—and still believe—thattruly opening space and making it accessible andsafe is of vital importance to all our futures (Boyle,2015).

It seems that despite his initial doubt immedi-ately following the tragedy, Branson decided tohold on to his belief that commercializing spacetravel is a profitable opportunity. Where doeshis confidence come from? How could “narrativeattributions” shed light on underlying meta-physical attitudes (Mantere, Aula, Schildt, &Vaara, 2013)?

Howdo failed entrepreneurs resonatewith ourindeterminacy thesis? How might culture relateto different metaphysical attitudes toward theunknowable? Are individuals from cultureshigh in “uncertainty avoidance” (Hofstede, 1980)more likely to resist the agnostic mental state,or even more likely to appeal to superstitiousmeans driven by the desire for certainty in anuncertain world (Tsang, 2004)? It would also beinteresting to examine the variety of meta-physical attitudes that emerge among different

types of entrepreneurs, or the evolution of suchattitudes for individuals who face a sequenceof failures. Do the metaphysical schemata ofhighly experienced entrepreneurs differ fromthose of novice entrepreneurs? For example, arethe former, such as Branson, more aware thatexisting opportunities do not actualize neces-sarily, and that one should often persist, than thelatter, whomight be prone to quickly revise theirinitial beliefs in the absence of anticipatedoutcomes?This line of research has strong pedagogical

potential. Just as realist philosophers of sciencewarn experimental scientists about the tempta-tion of pseudo-falsification (Bhaskar, 1978), realistentrepreneurship educators could make enter-prising individuals cognizant of the dangers ofpremature opportunity abandonment. This realistattitude can also shed light on the puzzle of stan-dard economic theory regarding entrepreneurialpersistence despite the apparent unprofitability ofthe activity (Astebro, Herz, Nanda, & Weber, 2014).Persistent individuals might simply be aware ofthe ontological insight that absence of profitsdoes not necessarily mean absence of opportu-nity for profit.Conversely, patterns of persistence in the face

of failure might also be explained by unrealisticpresuppositions. For example, if one is rigidlycommitted to apossibilistworldviewanddoesnotlet failure weaken the initial belief in opportunityexistence, then one is likely to persevere, andeven to escalate resource commitment towarda probably hopeless venture. On such occasionsthe entrepreneurship educator could problem-atize deep-seated worldviews—in the style ofcognitive therapy—by encouraging enterprisingindividuals to question dogmaticworldviews thatmight be entrapping them in financial dead ends.Moreover, it would be interesting to investigate

how highly successful entrepreneurs relate to theview that their actions might have simply trig-gered the actualization of an objectively existingpropensity. For example, would Zuckerberg bewilling to accept that the “Facebook opportunity”might have been just waiting to be actualized andthat anybody in his position could have enjoyeda similar level of success?Orwould he instead beinclined to attribute the core ingredient of hissuccess to ingenious steps taken during the ex-ploitation process? In other words, would he bewilling to accept the counterfactual scenario offailure as plausible in theabsence ofhis efforts, or


would he view his success in an important senseas metaphysically predestined?

We should also be alert to the possibility thatsome entrepreneurs might tend to displaya more constructivist mindset. For example,this would be the case if Zuckerberg’s ontolog-ical presumptions resonated with popular cul-ture portraits, according to which he possessesthe supreme world-creating ability required“for changing how we live our lives” (Time,2010). Realist educators could challenge suchworld-creating convictions by offering alterna-tive explanations that do not ascribe spectacu-lar successes to “superior innovative abilities”(McMullen & Shepherd, 2006: 149) but insteadhighlight other contributing factors, such as re-lated technological advances and a favorableinstitutional surrounding. Such pedagogicaladvice could, in turn, protect successful entre-preneurs from potentially self-destructive hu-bris (Hayward, Shepherd, & Griffin, 2006).

Nonentrepreneurs

From an empiricist standpoint, if one does “notdo an action, then either . . . [one] lacks the ca-pacity or lacks the opportunity” (Ayers, 1968: 105).It is therefore unsurprising that for discoverytheory nonenterprising individuals have the op-portunity but lack the capacity to exploit it(Ramoglou, 2013b). Realism does not dismissnonenterprising individuals as helpless non-entrepreneurs. Instead, the category of non-enterprising individuals (those who could haveyet did not act entrepreneurially) emerges asa particularly interesting domain for the realistentrepreneurship researcher, given that realistphilosophy of science is “concerned essentiallywith possibilities, and only derivatively with ac-tualities” (Bhaskar, 1978: 18). Nonenterprising in-dividuals may not lack opportunity exploitationcapacities but may simply doubt that their imag-inative projections into the future correspond toontologically genuine possibilities.

Instead of asking why some and not othersare capable of exploiting the opportunitiesthey “discover” (Shane & Venkataraman, 2000)and searching for unique qualities in enter-prising individuals (Gartner, 1989; Ramoglou,2013b), a more fruitful research question wouldbe, “When facing the same imaginative sce-nario, why do individuals have vastly dif-ferent views regarding its plausibility?” The

vocabulary associated with the actualizationapproach can facilitate research along these linesby deepening our understanding of the underlyingcauses for doubt:

• D1: doubt that profits will follow (e.g., I doubtthat I will make profits by acting on thisopportunity);

• D2: doubt that profits can follow (e.g., I doubtthat this opportunity exists in the first place);

• D2a: doubt that profits can follow because Idoubt that an opportunity exists here for me;

• D2b: doubt that profits can follow because Idoubt that opportunities exist here foranyone;

• D3: doubt that opportunities exist in general;and

• D4: doubt that I possess the capability to“identify” opportunities.

This more nuanced view of doubt enriches peda-gogy as well. Individuals who believe that theylack the cognitive ability required for “identify-ing” entrepreneurial opportunities (D4) could behelped to appreciate that there need not be anyextraordinary ability involved. Entrepreneurialsuccess need not require prescience (Dimov,2011). The distance between success and failurecan also be attributed to luck: successful entre-preneurs might simply trust their imaginationand find out ex post that they were fortunateenough to pursue a course of action based on thatbelief.A strong potential for a realist pedagogy also

lies in the case of D3 as an expression of theactualist worldview cherishing the actual asnecessary—and a priori dismissing the absent asimpossible. Consider for instance the 217 of the242 potential investors approached by HowardSchultz who gave him various arguments re-garding why cafes could not be a growth industryin the United States:

Many investors I approached told me bluntly thatthey thought that I was selling a crazy idea. . . .“Why on earth do you think this is going to work?Americans are never going to spend a dollar anda half for coffee!” “You’re out of your mind. This isinsane. You should just go get a job.” . . . Americans,they insisted, could never enjoy espresso the wayItalians do (Schultz & Yang, 1997: 73, 67, 76).

When Schultz shared his vision with potentialinvestors, all of themvisualized imaginatively thevery same projection—namely, a state of theworld in which the American public’s desire forthe coffee experience sustained the profitability ofStarbucks-type ventures. Yet the majority of these


individuals not only did not experience this sce-nario as ontologically possible but forcefully dis-missed its plausibility.

The Starbucks example suggests that entrepre-neurial pedagogy could target action-hinderingbeliefs. This is not to say that one must alwaysbelieve in the existence of opportunities. Rather,possibleopportunitiesshouldnotbeautomaticallyrejected because of metaphysical dogmatism. Tothis end, we could communicate the invaluablerealist insight that the world “out there” exists inmore ways than the eye can meet, and we shouldrefrain from falling for the idea that existing pro-pensities must have been inevitably imagined,believed, and actualized. There are always op-portunities remaining unimagined, imagined yetunpursued, or pursuedbut unactualized. It is sheerepistemological superstition to believe that aslong as cognitively privileged agents possessingthe flashlight of “entrepreneurial alertness” hap-pen to be around (Kirzner, 1979), opportunities willinstantly be spotted and exploited.

Last, we should move decisively beyond theentrepreneur versus nonentrepreneur divide andthe associated static explanations of risk pro-pensity and entrepreneurial potential (Gartner,1989; McMullen & Shepherd, 2006). Instead, weshould study the (likely) evolution from doubt tobelief among enterprising individuals, and viceversa among nonenterprising individuals. Sucha diachronic mode of study could help us un-derstand why some individuals allow peer skep-ticism to undermine their confident beliefs inopportunity existence,whereas others hold tight totheir personal judgment (Metcalfe, 2004; Shepherd,2015). How do individuals make sense of this con-flict of judgments? Do they even attempt tomake rational sense of it, or are they inclined todogmatically hold on to original beliefs?

Promoting Reflective Entrepreneurship

The promotion of enterprise is an increasinglyprominent topic on the public policy agenda(Nightingale & Coad, 2014). Individuals are en-couraged to take fate into their own hands, andentrepreneurship is celebrated as the panacea tosome of our most pressing socioeconomic chal-lenges, such as poverty and unemployment.According to our realist analysis, this entrepre-neurship public policy is erected on the pre-carious metaphysics of possibilism. If we lived ina world free from nonopportunities, it would be

right to place primary emphasis on raising the“entrepreneurial spirit.” However, if our world isclose to the realist view that there is a large spaceof nonopportunity next to the domain of entre-preneurial opportunities, we should tone downthe oft-unqualified enthusiasm about entrepre-neurship and caution against the tendency tocelebrate wanderings of imagination as “oppor-tunity identification.”This is not to say that realism discourages

entrepreneurship. Rather, in promoting a morenuanced worldview, realism guards againstsimplistic and potentially irresponsible narra-tives (Calas et al., 2009), and it underscores theneed for more reflective entrepreneurs, as op-posed to more entrepreneurs simpliciter. Op-portunities surely exist. But we cannot knowwhere they exist and for whom, nor how mucheffort must be invested for their actualization.

Prediction versus Explanation

Finally, realism can soothe entrepreneurshipresearchers’ worry about lacking predictivelysuccessful theories (Shane & Venkataraman,2000). Asmentioned, predictive power is a primepositivist criterion for theory assessment. Froma realist standpoint, however, the scientific statusof a discipline is not threatened by the lack ofpredictively powerful theories. Prediction is onlyfeasible on the relatively rare occasions of exper-imental closure produced in laboratory situationsor in the study of astronomical phenomena (Miller& Tsang, 2011). But the complexity of factors af-fecting entrepreneurial activities and outcomesmakes the lack of predictively powerful theoriesfar from surprising. For example, it does notsuffice to believe in the existence of an oppor-tunity for the exercise of entrepreneurial activ-ity, for a number of reasons, such as the doubtthat the opportunity will materialize into profit(see D1 and D2a). Rather than maintaining thatprediction of entrepreneurial activities is a rea-sonable expectation, we may instead focus ourattention on explaining and understanding en-trepreneurial phenomena, as well as improvingthe effectiveness of entrepreneurial actionsthrough reflective teaching.After all, while the study of planets does not

make them alter their orbits, management re-searchers’ conceptions of reality do shapethe business world that they study (Ferraro,Pfeffer, & Sutton, 2005; Suddaby, 2014b): “Our


very understanding of the world changes the con-ditions of the changing world” (Popper, 1990: 17). Inthe context of entrepreneurship, why worry that wecannotpredict entrepreneurialeventsas longaswecan help train more reflective entrepreneurs?

CONCLUSION

Shane and Venkataraman (2000: 224) close their“Promise” by highlighting the possibility thatthey may have made some flawed assumptionsand invalid arguments, and Shane concludes hisrecent article by inviting future researchers to“identify errors and confusing points” (2012: 18).In an important sense our article responds toShane’s (2012) invitation for further meta-theoretical research by addressing prevailingpuzzles and confusion from a realist philoso-phy of science standpoint. Most crucially, byrehabilitating the objectivity of opportunitiesalong the depth ontology offered by realist meta-theory, we could more explicitly appreciate thepropensity mode of opportunity existence thathas been hindered by inadequate theorizing andoverpowered by empiricist preconceptions.

We do not imply that we have said the last wordon these foundational issues. It is likely thatweaknesseswill be revealed and new conceptualchallenges will emerge. This possibility seemseven more likely if we take into account that thesubjectmatter of entrepreneurial discourse lies atthe crossroads of some of the most intellectuallychallenging matters, such as the metaphysics ofpotentiality and the nature of human intention-ality. It would not be an exaggeration to say thatthe study of entrepreneurial phenomena toucheson some of the most demanding aspects of phi-losophy. This is readily evidenced by the fact thatphilosophers since Aristotle (including BertrandRussell and Roy Bhaskar) have often foundthemselves struggling with the task of theorizingreal yet empirically absent modes of existence.

We close by daring a novel reading into thecauses of the slow intellectual progress in the fieldof entrepreneurship so routinely documented. En-trepreneurship stands on the thin line betweenpossibility and actuality and therefore facesunique conceptual difficulties unknown to dis-ciplines studyingactualizedphenomenawithmorediscernible patterns of causality (e.g., astronomyormolecular biology). Yet despite the challengesintrinsic to the subject matter, scholars shouldnot become easily intimidated, let alone dismiss

the option of realist studies by surrendering thisdomain to ill-conceived philosophical concep-tions of scholarly research (see Suddaby, 2014b:449–453, on scientism and dustbowl empiricism).To this end, it is imperative that we fully embracethe theoretical intricacies and uncertaintiesstemming from the fact that we “live in aworld ofpropensities” (Popper, 1990: 9).

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Stratos Ramoglou ([email protected]) is an associate professor at the Universityof Southampton, United Kingdom. He earned his Ph.D. from the University of Cambridge.His research interests span entrepreneurship and organization studies, philosophy of sci-ence, and economic theory and methodology.

Eric W. K. Tsang ([email protected]) is the Dallas World Salute DistinguishedProfessor of Global Strategy at the University of Texas at Dallas. He received his Ph.D.from theUniversity ofCambridge.His research interests includeorganizational learning,strategic alliances, corporate social responsibility, entrepreneurship, and philosophicalanalysis of methodological issues.


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a realist perspective of entrepreneurship: opportunities

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