Entrepreneurial experience and opportunity identification : the role of intuition and cognitive versatility

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Abstract

The issue of “why, when and how” some people, but not others, discover opportunities is
central to our understanding of entrepreneurship. Although there is a growing body of
research in this area, opportunity identification remains an ongoing phenomenon of interest
as many questions remain unanswered. One important question concerns the effects of
experience on opportunity identification. Research suggests that entrepreneurs become
more adept at identifying opportunities as they gain experience, but the cognitive processes
underlying this relationship remain unclear. This study explores this gap in the literature
by addressing the following research question: To what extent can the relationship
between entrepreneurial experience and opportunity identification be explained by
cognitive strategy? Guided by sound theoretical principles (Cognitive-Experiential Self-
Theory) and by a critical review of the scholarly literature, this study argued first, that
intuition is a key process that links experience to an enhanced ability for opportunity
identification, and second that intuition is most effective when used together with analysis
in a versatile cognitive strategy – an approach characterised by high levels of both intuition
and analysis, and an ability to switch between them as needed. Building on these
arguments, this study develops and tests a model in which intuition and cognitive
versatility are hypothesised to mediate the relationship between experience and opportunity
identification. Seventy-four technology-entrepreneurs completed a think-aloud protocol
analysis exercise in which they generated potential business ideas for three innovative
technologies. In addition, they completed an online survey that was designed to control for
factors which may influence intuition, cognitive versatility and/or opportunity
identification, namely cognitive style, risk perception, risk propensity, and entrepreneurial
experience. The model was tested by integrating the survey data with the coded and
quantified protocol data in a series of regression and mediation analyses. Consistent with
prior research, this study found that experienced entrepreneurs are more proficient than
novices at identifying opportunities. Extending previous research, this study shows that
intuition and cognitive versatility mediate the relationship between experience and
opportunity identification. Not only do experienced entrepreneurs use their intuition to
help them identify potentially lucrative opportunities, they also employ a process of
analysis to complement their intuition and to ensure that this intuition is not leading them
astray. Overall, these results suggest that scholars need to consider cognitive versatility,
rather than simply looking at intuition or analysis in isolation, and to think about how this
can be shaped to benefit opportunity identification.

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