Entrepreneurial opportunity recognition: Building and testing an information asymmetries model

Date of Completion

January 2002


Business Administration, Management




Although opportunity recognition (OR) is a pivotal concept in entrepreneurship, extant research on it is fragmented and a parsimonious predictive model has yet to emerge. Toward that end, this paper develops and then tests a model of firm level OR behavior. Informed by literatures on entrepreneurship, strategic management, the Austrian school of economics, and information systems, it is theorized that information asymmetries with respect to opportunities yield differing levels of OR, and that these asymmetries are influenced, in part, by the firm's information capabilities and, in part, by information load of the firm's industry. OR, in turn, is expected to influence organizational performance, serving as the conduit by which antecedents of information asymmetries influence organizational performance. Analyses of data drawn from 371 small-to-medium size firms using structural equation modeling confirm the proposed model. ^