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International opportunity: a review and a research agenda

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Vesa Puhakka
Vesa Puhakka

The document reviews research on international opportunities (IOs) in international entrepreneurship. It finds that while IOs are often referenced, they are rarely defined and conceptualizations vary. The review identifies three approaches: 1) IOs as possibilities from new resource combinations; 2) exploiting arbitrage opportunities; and 3) IOs as socially constructed processes. It proposes a definition and future research agenda focused on IOs as creative, context-embedded, interaction-based, and part of entrepreneurial practice.

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The Concept of International Opportunity in International Entrepreneurship: A Review and a Research Agenda International Journal of Management Reviews (early view) http://onlinelibrary.wiley.com/doi/10.1111/ijmr.12011/abstract Tuija Mainela^, Vesa Puhakka^ and Per Servais^^ ^University of Oulu, Oulu Business School, Finland ^^ University of Southern Denmark, Department of Marketing & Management, Denmark Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Background of the study Developments in IE as a field of research an emerging field 財 discrete disciplinary area INV/BG phenomenon 財 international entrepreneurial behaviours internationalisation or entrepreneurship 財 more balanced building on both disciplines Towards international opportunities (IOs) as the core of IE research opportunity discovery as the most central function of entrepreneurship (Shane & Venkataraman 2000) opportunity development, knowledge and opportunities available through relationship networks (Johanson & Vahlne 2006, 2009) discovery, enactment, evaluation, and exploitation of opportunities - across national borders (Oviatt & McDougall 2005, p. 540) Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Purpose Facilitate the cross-fertilization and integration of the internationalization and entrepreneurship theories in IE Analyzing how the concept of the IO is built in the root fields Analyzing the variety of approaches to IOs used in IE research and our current knowledge on IOs in IE research Push the IE field further as a field focused on IOs Proposing a definition of the concept of IO in IE research taking into account both E and I Proposing a future research agenda for IE research on IOs Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Conceptualizations of opportunities in extant research Elements Types Determining characteristics Form of opportunity Innovation opportunity Creates disequilibrium in markets Arises from entrepreneurial creativity (behind it is dissatisfaction) Starts with economic invention Is driven by attitude, motivation and propensity for risk in entrepreneurial action Develops new economic value through ventures with better solutions than those existing in markets Involves new cross-border resource combinations Arbitrage opportunity Creates equilibrium in markets Arises from a failure of the market mechanism Starts with noting of demand-supply inefficiencies Is driven by entrepreneurs alert to market information Develops new economic value through exploitation of disparate knowledge as a new offering to markets Involves development of the ways the firm operates across borders Existence of Discovered opportunity Exogenously born from market/industry changes opportunity Exists without human awareness of its existence Appears as a complex entity Recognized through active search behavior Exploited through rational decision making under risky conditions Emphasizes resource allocation and use at inception of the business Created opportunity Endogenously created through the entrepreneurial action Created through human imagination and social interaction Appears as a flexible activity Results from everyday entrepreneurial practice Developed through interaction with others under true uncertainty Emphasizes gradual investment of resources and convincing others in business development Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Method of the review Selection of Journals Business and management journals 2010 ISI-impact factor >1.000 118 journals Most influential IB journals + dedicated E journals MIR & JIM added JIEN & EMJ Selection of Articles Years 1989-2012 (plus articles in press) Manual review of the titles in journals intentionally kept wide in scope cross-checked through a keyword search Manual review of titles, abstracts, keywords -> both I + E Manual review of theoretical frameworks explicitly integrated concepts from both IB & E Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Review Protocol Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Analysis Procedure Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Reviewed Articles Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Overview of IE research on IOs IO found in the reviewed research as a concept in the theoretical framework as a variable in a questionnaire as a topic in an interview guide in conceptualizing and modeling research results Many claims of importance, much less in-depth treatment only a few explicit definitions of the concept many studies seem to treat the IO as if it was a commonly-understood concept in practice significant variation in the key elements of the research and the implicit meaning of IO Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Approaches to IOs in IE research I 1. What kind of resources, capabilities and knowledge needed to exploit IOs in terms of INV establishment or business renewal? IOs as possibilities to combine dispersed, cross-border, latent resources IOs as the triggers that prompt entrepreneurs to establish an INV IOs as new products/services resulting from opportunity-related activities innovation opportunities and discovered opportunities on the basis of new resource combinations (e.g. Autio et al., 2000; McDougall et al., 1994) 2. How proactive and risk-seeking mindsets, orientations and strategies of firms allow for early international market entry? IOs as external to the firm (in the market) IO is seen as a stimulus for internationalization IO identification as the first stage of the internationalization process arbitrage opportunities in foreign markets (e.g. Crick and Jones, 2000; Crick et al., 2001; Oviatt and McDougall, 2005) Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Approaches to IOs in IE research II 3. How IOs are constructed through a process of international entrepreneurial acting? IOs socially constructed, interactive and context-embedded processes episodic and event-based nature of IO creation emerging approach covering created opportunities (e.g. Johanson & Vahlne, 2009; Chandra et al., 2009; Fletcher, 2004; Schweizer et al., 2010) Rarely an in-depth analysis of the IO as the subject of the behaviors or of those behaviors themselves Less than half of the articles provide an explicit definition of an opportunity Influence on study design? Often-implicit conceptualizations and rare operationalizations readers and respondents to decide what constitutes an IO? Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Findings on IOs in IE research I 1. Realization of IOs in INVs and MNCs exploiting an IO requires the competencies to control cross-border resources and activities the application of entrepreneurial skills to turn resources into new value the use of flexible organizing methods 2. Exploitation of international market arbitrage greater strategic opportunities the motives for international market entry exploitation of IOs requires managerial experience, competence and commitment and ability to form international partnerships entrepreneurial orientation, international growth orientation, activity and networking affect perception of IOs and accelerate internationalization exploitation of IOs range from planned strategy formation through to opportunistic responses to serendipitous encounters rapid learning valuable for the growth of INVs but not for the survival Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Findings on IOs in IE research II 3. Contexts favorable to IO development IOs arise at intersection of various, often rival or controversial, interests entrepreneurial communities of practice as the discoverers of IOs multinational and multicultural border zones bring cultural resources and practices to construct new IOs in collaborative and unorthodox ways (e.g. transnational entrepreneurship) 3. Socially constructed emerging IOs the processual nature of IOs the social and cultural determinants of IOs IOs expand over time driven by innovative managers IOs both break old institutions and create new ones 3. IOs resulting from actions and interactions in daily business IOs emerge from everyday practice IOs as created in interaction in relationships Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Future research agenda I Definition of IO An international opportunity is a situation that both spans and integrates elements from multiple national contexts in which entrepreneurial action and interaction transform the manifestations of economic activity. 1. The creative-cognitive approach to IOs in IE opportunity discovery as a process of organizing and interpreting information in order to construct a business concept human perception and an entrepreneurs cognitive models of sense-making as determinants of the IE actions an IO is about creating a meaning based on information gathered from around the world that may well be historically, culturally and socio-economically ambiguous, rather than arriving at a decision within a given decision space and based on given information adopting the cognitive process as the unit of analysis analysis of schemas, heuristics and cognitive styles Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Future research agenda II 2. The context embeddedness approach to IOs in IE opportunities as created in specific social settings integration of multiple national contexts a necessary driver of IO creation the international context as the unit of analysis data collection at the level of communities and networks to understand the dynamics 2. The interaction-focused approach to IOs in IE creation of opportunities as a dialogical process of enacting the opportunity through involving others in the development interactions in the international partnerships, customer-supplier and institutional relationships as the basis for IOs interacting in relationships to create shared interests the interaction within relationships as the unit of analysis requires collecting dyadic data Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Future research agenda III 4. The practice approach to IOs in IE entrepreneurial internationalization is the everyday practice of the entrepreneurs and managers IOs are objects of ordinary work; they are made real when key people see the challenges as a spur to new business creation, without the prerequisite of an overly-detailed or specific form the entrepreneurial practice as the unit of analysis following how normal tasks in entrepreneurs working lives lead to IOs data collection on practice necessitates getting close to international entrepreneurs to observe and record their actions everyday practice is difficult to describe outside of its actualization, which makes various integral and active dialogical methods and self-reporting appropriate in data collection Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
Suggested approaches for future research Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,

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International opportunity: a review and a research agenda

  • 1. The Concept of International Opportunity in International Entrepreneurship: A Review and a Research Agenda International Journal of Management Reviews (early view) http://onlinelibrary.wiley.com/doi/10.1111/ijmr.12011/abstract Tuija Mainela^, Vesa Puhakka^ and Per Servais^^ ^University of Oulu, Oulu Business School, Finland ^^ University of Southern Denmark, Department of Marketing & Management, Denmark Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 2. Background of the study Developments in IE as a field of research an emerging field 財 discrete disciplinary area INV/BG phenomenon 財 international entrepreneurial behaviours internationalisation or entrepreneurship 財 more balanced building on both disciplines Towards international opportunities (IOs) as the core of IE research opportunity discovery as the most central function of entrepreneurship (Shane & Venkataraman 2000) opportunity development, knowledge and opportunities available through relationship networks (Johanson & Vahlne 2006, 2009) discovery, enactment, evaluation, and exploitation of opportunities - across national borders (Oviatt & McDougall 2005, p. 540) Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 3. Purpose Facilitate the cross-fertilization and integration of the internationalization and entrepreneurship theories in IE Analyzing how the concept of the IO is built in the root fields Analyzing the variety of approaches to IOs used in IE research and our current knowledge on IOs in IE research Push the IE field further as a field focused on IOs Proposing a definition of the concept of IO in IE research taking into account both E and I Proposing a future research agenda for IE research on IOs Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 4. Conceptualizations of opportunities in extant research Elements Types Determining characteristics Form of opportunity Innovation opportunity Creates disequilibrium in markets Arises from entrepreneurial creativity (behind it is dissatisfaction) Starts with economic invention Is driven by attitude, motivation and propensity for risk in entrepreneurial action Develops new economic value through ventures with better solutions than those existing in markets Involves new cross-border resource combinations Arbitrage opportunity Creates equilibrium in markets Arises from a failure of the market mechanism Starts with noting of demand-supply inefficiencies Is driven by entrepreneurs alert to market information Develops new economic value through exploitation of disparate knowledge as a new offering to markets Involves development of the ways the firm operates across borders Existence of Discovered opportunity Exogenously born from market/industry changes opportunity Exists without human awareness of its existence Appears as a complex entity Recognized through active search behavior Exploited through rational decision making under risky conditions Emphasizes resource allocation and use at inception of the business Created opportunity Endogenously created through the entrepreneurial action Created through human imagination and social interaction Appears as a flexible activity Results from everyday entrepreneurial practice Developed through interaction with others under true uncertainty Emphasizes gradual investment of resources and convincing others in business development Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 5. Method of the review Selection of Journals Business and management journals 2010 ISI-impact factor >1.000 118 journals Most influential IB journals + dedicated E journals MIR & JIM added JIEN & EMJ Selection of Articles Years 1989-2012 (plus articles in press) Manual review of the titles in journals intentionally kept wide in scope cross-checked through a keyword search Manual review of titles, abstracts, keywords -> both I + E Manual review of theoretical frameworks explicitly integrated concepts from both IB & E Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 6. Review Protocol Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 7. Analysis Procedure Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 8. Reviewed Articles Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 9. Overview of IE research on IOs IO found in the reviewed research as a concept in the theoretical framework as a variable in a questionnaire as a topic in an interview guide in conceptualizing and modeling research results Many claims of importance, much less in-depth treatment only a few explicit definitions of the concept many studies seem to treat the IO as if it was a commonly-understood concept in practice significant variation in the key elements of the research and the implicit meaning of IO Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 10. Approaches to IOs in IE research I 1. What kind of resources, capabilities and knowledge needed to exploit IOs in terms of INV establishment or business renewal? IOs as possibilities to combine dispersed, cross-border, latent resources IOs as the triggers that prompt entrepreneurs to establish an INV IOs as new products/services resulting from opportunity-related activities innovation opportunities and discovered opportunities on the basis of new resource combinations (e.g. Autio et al., 2000; McDougall et al., 1994) 2. How proactive and risk-seeking mindsets, orientations and strategies of firms allow for early international market entry? IOs as external to the firm (in the market) IO is seen as a stimulus for internationalization IO identification as the first stage of the internationalization process arbitrage opportunities in foreign markets (e.g. Crick and Jones, 2000; Crick et al., 2001; Oviatt and McDougall, 2005) Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 11. Approaches to IOs in IE research II 3. How IOs are constructed through a process of international entrepreneurial acting? IOs socially constructed, interactive and context-embedded processes episodic and event-based nature of IO creation emerging approach covering created opportunities (e.g. Johanson & Vahlne, 2009; Chandra et al., 2009; Fletcher, 2004; Schweizer et al., 2010) Rarely an in-depth analysis of the IO as the subject of the behaviors or of those behaviors themselves Less than half of the articles provide an explicit definition of an opportunity Influence on study design? Often-implicit conceptualizations and rare operationalizations readers and respondents to decide what constitutes an IO? Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 12. Findings on IOs in IE research I 1. Realization of IOs in INVs and MNCs exploiting an IO requires the competencies to control cross-border resources and activities the application of entrepreneurial skills to turn resources into new value the use of flexible organizing methods 2. Exploitation of international market arbitrage greater strategic opportunities the motives for international market entry exploitation of IOs requires managerial experience, competence and commitment and ability to form international partnerships entrepreneurial orientation, international growth orientation, activity and networking affect perception of IOs and accelerate internationalization exploitation of IOs range from planned strategy formation through to opportunistic responses to serendipitous encounters rapid learning valuable for the growth of INVs but not for the survival Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 13. Findings on IOs in IE research II 3. Contexts favorable to IO development IOs arise at intersection of various, often rival or controversial, interests entrepreneurial communities of practice as the discoverers of IOs multinational and multicultural border zones bring cultural resources and practices to construct new IOs in collaborative and unorthodox ways (e.g. transnational entrepreneurship) 3. Socially constructed emerging IOs the processual nature of IOs the social and cultural determinants of IOs IOs expand over time driven by innovative managers IOs both break old institutions and create new ones 3. IOs resulting from actions and interactions in daily business IOs emerge from everyday practice IOs as created in interaction in relationships Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 14. Future research agenda I Definition of IO An international opportunity is a situation that both spans and integrates elements from multiple national contexts in which entrepreneurial action and interaction transform the manifestations of economic activity. 1. The creative-cognitive approach to IOs in IE opportunity discovery as a process of organizing and interpreting information in order to construct a business concept human perception and an entrepreneurs cognitive models of sense-making as determinants of the IE actions an IO is about creating a meaning based on information gathered from around the world that may well be historically, culturally and socio-economically ambiguous, rather than arriving at a decision within a given decision space and based on given information adopting the cognitive process as the unit of analysis analysis of schemas, heuristics and cognitive styles Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 15. Future research agenda II 2. The context embeddedness approach to IOs in IE opportunities as created in specific social settings integration of multiple national contexts a necessary driver of IO creation the international context as the unit of analysis data collection at the level of communities and networks to understand the dynamics 2. The interaction-focused approach to IOs in IE creation of opportunities as a dialogical process of enacting the opportunity through involving others in the development interactions in the international partnerships, customer-supplier and institutional relationships as the basis for IOs interacting in relationships to create shared interests the interaction within relationships as the unit of analysis requires collecting dyadic data Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 16. Future research agenda III 4. The practice approach to IOs in IE entrepreneurial internationalization is the everyday practice of the entrepreneurs and managers IOs are objects of ordinary work; they are made real when key people see the challenges as a spur to new business creation, without the prerequisite of an overly-detailed or specific form the entrepreneurial practice as the unit of analysis following how normal tasks in entrepreneurs working lives lead to IOs data collection on practice necessitates getting close to international entrepreneurs to observe and record their actions everyday practice is difficult to describe outside of its actualization, which makes various integral and active dialogical methods and self-reporting appropriate in data collection Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,
  • 17. Suggested approaches for future research Tuija Mainela and & Servais, 201320.11.2011 Mainela, Puhakka Vesa Puhakka,

Editor's Notes

  • #2: Mainela, Puhakka & Servais, 2013