What is the individual-opportunity-nexus theory of entrepreneurship?
There is a long standing debate about the origins of entrepreneurial opportunities. There is a divide between scholars that think entrepreneurs create opportunities, and those that believe they merely discover them.
Scott Shane and Jonathan Eckhardt (2003) make the case that opportunities are found and discovered, not made or created. They propose that the foundation of the field of entrepreneurship relies upon the objectiveness of opportunities and would otherwise be on shaky ground.
“[W]e define entrepreneurial opportunities as situations in which new goods, services, raw materials, markets, and organizing methods can be introduced for profit.” – Eckhardt and Shane (2010)
The theory suggests that it is the constant pivoting of the entrepreneur that lands him or her on an opportunity that exists out there, objectively. Although it resembles a process of search it appears from the outside to be a creative activity, which may explain the incorrect association that entrepreneurs create opportunities. That would be like saying that if Tesla had never launched, no one else would ever have filled the space they hold today. Surely another would have come along, eventually. Therefore, first, opportunities exist, then individuals discover the opportunities, then entrepreneurs exploit the opportunities.
The theory highlights that both enterprising individuals and entrepreneurial opportunities are needed for entrepreneurial ventures to develop, hence the nexus occurring at two different levels of analysis. This olive branch to the individual’s role highlights the need for a certain mix of personality, skills, and abilities, as well as access to resources within a network. More broadly thought, there has to be someone digging for anything to get dug up.
The theory makes no prediction about the role of effort by entrepreneurs. It also assumes that different entrepreneurs might be involved in opportunity recognition and exploitation (i.e., specialization). The theory acknowledges a role for creativity, but only in the process of opportunity exploitation. Finally, success in entrepreneurship is subjective and may be informed by motivations other than profit.