An exploratory study of entrepreneurial opportunity recognition of small and medium sized enterprises

An Exploratory Study of Entrepreneurial Opportunity Recognition of Small and Medium Sized Enterprises Ngo Lien Thao Tran Tien Khoa Nguyen Van Phuong International University, Vietnam National University HCMC, Vietnam Abstract Small medium sized enterprises (SMEs) have been playing a crucial role in enhancing the economic development and growth in most countries The ways in which SMEs recognize their entrepreneurial opportunities need to be investigated This paper aims to explore different patterns in the processes of entrepreneurial opportunity recognition from SMEs’ founders The study adopts qualitative method and conducts 16 semi-structured indepth interviews with the founders of currently operating SMEs to identify opportunity for entrepreneurship in Vietnam As the result, a successful process of entrepreneurial opportunity recognition requires an aggregation of prior knowledge and network ties which have been nurtured for years before, along with the employment on either or both use of entrepreneurial alertness and market analysis This study proves that possessing an ability to analyze the market is as much important as staying alert toward opportunities Besides, a level of creativity of entrepreneurs will be triggered to respond to situations in which the entrepreneurial opportunities arise However, founders of SMEs generate more adaptive style of creativity than innovative one since being market driven Keywords: opportunity recognition; entrepreneurship; SMEs Introduction SMEs are an important part of an economy and bring undeniable welfare to the society In Vietnam, they account for 97% of total enterprises, of which nearly 60% are small-sized enterprises (General Statistics Office, 2017) The Provincial Competitiveness Index (PCI) 2015 survey jointly made by attempt of Vietnam Chamber of Commerce and Industry (VCCI) along the United States Agency for International Development (USAID) also presented the similar figures: Among the 8,335 domestic private enterprises responding to the PCI survey, 97.3% are small and medium sized Within such diverse business environment, SMEs are the engine of economic growth in the emerging markets and significantly contribute to national development SMEs in Vietnam occupy more than 40% of gross domestic product (GDP), contribute 31% to the total national budget and provide more than 50% of total employment (Oxford Business Group, 2017) Moreover, SMEs’ contribution to social welfare security and poverty reduction in Vietnam has been widely acknowledged SMEs are not only major sources of employment opportunity, but also foster productivity and make the environment become more dynamic and competitive (Audretsch, Thurik, Verheul & Wennekers, 2002; Westhead, Uchasaran, & Wright, 2009) Detecting and electing the appropriate opportunities are the vital activities to help create successful businesses (Stevenson, Roberts, & Grousbeck, 1985) During last 20 years, many scholars have conducted numerous researches about opportunity recognition and development from a variety of theoretical perspectives and numerous aspects like business, sociology, psychology, and economics They highly contributed to the understanding of this field; however, opportunity recognition has borne differences and conflicts causing the inhomogeneity (Ardichvili, Cardozo, & Ray, 2003) One of the reasons is that each solely focuses on only one of the various elements affecting the recognition of entrepreneurial opportunity For example, Gaglio and Katz (2001) look into the entrepreneurial alertness involved in opportunity recognition in terms of social psychology, while Shane (2000) concentrates on the essential prior experience and knowledge for successful recognition, then Dyer, Gregersen, and Christensen (2008) investigate the impact of innovation on opportunity The fact that scholars pay attention to specific elements ensue many full-scale studies about singular factors while neglecting an overview of all equally crucial elements and how they may engage together in the same subject of study Furthermore, there is little agreement on the main notions used to identify and operationalize the process (Hansen, Shrader, & Monllor, 2011) Vagueness around how founders of SMEs recognize opportunities for their business growth still appears in academic research, especially when SMEs are now confronting the fast-paced transformation of technology and the world economic integration (Thai & Chong, 2008) Disclosure of the complex developing process of opportunities recognition is the central section of entrepreneurship research (Venkataraman, 1997) This study is dedicated to focus on the phenomenon of entrepreneurial opportunity recognition by founders of SMEs at the initial start phrase of their business venture in the area of Ho Chi Minh City In terms of academic, this paper seeks to explore and contribute a throughout the process of entrepreneurial opportunity recognition by SMEs In term of practical application, this paper shows what SMEs need to have in hands and how potential entrepreneurs can recognize opportunities that can turn into a profitable business by raising deeper knowledge about determinants to opportunity recognition and its related process Literature review Entrepreneurial opportunity and opportunity-related process For many years, researchers have been disputing what genuinely institutes an entrepreneurial opportunity They brought about a broad category of different notions, sometimes ambiguous or even conflicting, which gives rise to a substantial extent of variety in prospects (McMullen, Plummer, & Acs, 2007) For instance, entrepreneurial opportunity has been identified as an idea (Davidsson, Hunter, & Klofsten, 2006), as an unexploited project (Casson & Wadeson, 2007), or a potential venture or business form (DeTienne & Chandler, 2007), or a realistic endeavor (DeCarolis & Saparito, 2006; Mueller, 2007) The business opportunity is considered as an objective occurrence which is outward to SMEs and derives from the extraneous environment (Shane, 2003) In contrast, some defines opportunity as a subjective happening inseparably connect with and spring from the individual’s own perception and activities (Edelman, & Yli-Renko, 2010; Sarason, Dean, & Dillard, 2006) And other scholars have suggested an argument that business world offers multitudinous types of opportunity (Alvarez & Barney, 2007; Sarasvathy, Dew, Velamuri, & Venkataraman, 2003) Additionally, opportunity recognition calls for not only the opportunity itself but also the discovering process operated by the related person While some have expressed opportunity is a sequel of fortuitous findings (Long & McMullan, 1984), others have said that the opportunity-related process would come clear (Bhave, 1994; de Koning, 1999), after a meticulous searching effort (Fiet, Piskounov, & Patel, 2005) In the same vein, Baumol (1993) says that in order to discover entrepreneurial opportunity, a process to detect new meansends relationships must be set up by a given change That also means entrepreneurs have to analyze and brainstorm (Gaglio & Katz, 2001), like a cognitive process (Baron, 2004) Besides, the process which leads one to opportunity has been identically considered as a process which one generates creativity (Ardichvili, Cardozo, & Ray, 2003; Dimov, 2007; Hansen & Hills, 2004), or as an extraordinary action to solve a particular problem (Harper, 2008) For instance, some operationalize business opportunity as a recently novel idea subject (DeTienne & Chandler, 2007), while the rest operationalize it as the demand from the market for a product or service that have potential to solve a particular problem (Eckhardt & Ciuchta, 2006) In some circumstances, certain entrepreneurs possess the competence to sense and spot or even create opportunities (DeTienne & Chandler, 2007; Kolvereid & Isaksen, 2006) Or some others have an innate trait like alertness, a special individual competency to detect opportunistic situations (Busenitz, 1996; Ozgen & Baron, 2007) Determinants affecting the entrepreneurial opportunity recognition With the objective to recognize opportunity and start a venture formation, SMEs must proactively involve in entrepreneurial activities from scratch Founders of SMEs are likely perceived as entrepreneurs in the process of pursuing new business and profit which will lead to enterprise formation (DeTienne & Chandler, 2007; Gilmore, 2011) Approaching from the behavioral aspect of entrepreneurs, entrepreneurial opportunity search includes knowledge, alertness, intuition, creativity and social interaction By searching the pattern of adopted activities of owners, the process evolves into opportunity recognition Since the more turbulent and complicated the marketplace is, the more opportunities entrepreneurs are granted; entrepreneurial opportunity recognition may also come into existence from a complex series of phenomena with different distinct parts such as innovative insight, idea exploration, informal evaluation and concept development (Webb, Ireland, Hitt, Kistruck, & Tihanyi, 2011) Or through the argument by Ardichvili, Cardozo, and Ray (2003), entrepreneurs undergo a process from observing underemployed resource or market need to disclosing a ‘match’ between specific market need and certain resources; then formulating a fresh ‘match’ between the need and resources in the specific context of their businesses And the main determinants influencing the above processes as well as contributors to entrepreneurial opportunity recognition that are in need of further exploration include prior knowledge, entrepreneurial alertness, market analysis, creativity, network ties and situational elements Prior knowledge Knowledge plays an indispensable role to reach any sound and substantial decision-making as well as to spot business opportunities Shane (2000) claims that because of prior knowledge, owners can perceive the value of new information, which leads them to the recognition of new opportunity Venkataraman (1997) also declares that entrepreneurs recognize opportunities which are concordant with information that they have already possessed Since information is developed through singular life experiences, everyone owns different stocks of knowledge and information It is believed that distinctive pack of prior knowledge can form a “knowledge corridor,” which enables one to spot some certain opportunities instead of the rest (Venkataraman 1997) Shane (2000) claims that there are three main aspects of prior knowledge which are customer problems, principles of the markets, and the means to benefit from the markets In another way of classification, two types of prior knowledge are postulated by Sigrist (1999) The first is knowledge in a field of entrepreneurs’ special interest so that they will spend a tremendous amount of time and effort learning, which helps advance and deepen their abilities, thereby gain esoteric knowledge in that specified field The other type of knowledge, which is a result of rational choice, will be accumulated over the years, while owners constantly work in a certain job Whether derived from education or working experience or by fluke and any other ways, prior information makes a huge difference in the ability of entrepreneurs to obtain, interpret and make the most of new information in the way which those in short of that prior information cannot duplicate (Roberts, 1991) Based on Austrian economists, the key to open, the entrepreneurial opportunity is within the combination of knowledge and alertness (Murphy, 2011; Vaghely & Julien, 2010) As mentioned, when and where disequilibrium between market needs and the means to satisfy those needs arises, opportunities are just around the corner For such reason, the Austrian believes that alert individuals can gain new opportunities when their knowledge about market needs to be aligned with knowledge about the means to meet those needs (Kirzner, 1997; Shane, 2000) However, even though numerous empirical evidence embodies that prior experience have a substantial influence on the process of opportunity recognition and development, some entrepreneurs still successfully sense and go after opportunities that they possess no related prior experience before (Cooper, 1990) Entrepreneurial alertness Kirzner (1979, 1985), who is the first one to present the term ‘alertness’ into the entrepreneurship literature, describes it as “the ability to notice, without search, opportunities that have been hitherto overlooked” or as “a motivated propensity of man to formulate an image of the future.” It is implied in the first interpretation that one can spot opportunities even when the person doesn’t intentionally seek for those In fact, when individuals possess high alertness, they may experience “passive search,” a condition in which they are sensible of opportunities, without conducting any formal, systematic search On the other hand, the second interpretation means ability to “connect the dots” that empowers one to notice the nexus among the changes or turbulence in the marketplace and to perceive those as significant, regardless the fact that the cause and effect of opportunity at the moment are not evident yet (Leff Bonney, & Williams, 2009) Therefore, the comprehensive dimension of alertness can be determined as the capacity of entrepreneurs to generate a holistic depiction of the surrounding marketplace by assembling all of its constituents and knowing their meanings (Endsley, 1995) In fact, entrepreneurial opportunities may be recognized and captured by some particular individuals instead of the rest These dissimilarities result from the heterogeneity in people’s sensitiveness to opportunities to create as well as to deliver new solutions (Ardichvili, Cardozo, & Ray, 2003), which origins from differences in people’s innate ability, background and experience, and also the amount and sort of information they own in a specific scope aligned with the opportunity Endsley (1995) asserts that some individuals are so sensible of market gaps or problems that in any environment they find themselves, they can constantly identify possibilities of creating new products or services Besides that, Gaglio and Kats (2001) also contribute to entrepreneurship literature that alert individuals possess a greater deal of knowledge and information within the marketplace than non-alert individuals who may neglect or disregard fluctuations within the marketplace Market analysis Actively searching for information is broadly acknowledged as a vital step during the process of entrepreneurial opportunity recognition Nevertheless, lately, many scholars have debated if entrepreneurs seek for opportunities and how the process of value recognition due to the incoming of new information happens to them (Ardichvili, Cardozo, & Ray, 2003) Kirzner (1997) disclaims that “What differentiates discovery (related to hitherto unknown profitable opportunities) from successful search (related to the intentional generation of information which one knew one had fallen short of previously) is that the former includes the unexpected that accompanies along the manifestation that one had omitted something in fact readily available from the beginning.” Koller (1988) also affirms that most entrepreneurs “recognize,” rather than “look for” opportunities of their enterprises Still, the possession of being market-driven or a marketing orientation is believed to be crucial to business success (Hult, Ketchen, & Slater, 2005) SMEs which intensely depend on the professional expertise and experiential knowledge of the founders, along with a limited operational budget, have to be flexible to adopt suitable tradition marketing procedure which is logical and well thought out, but not entail immense funding (Hulbert, Gilmore, & Carson, 2015) From marketing literature, founders of SMEs can take advantage of some tools such as PEST analysis (Fifield, 1992), situation analysis, SWOT analysis (Ansoff, 1969), marketing audit, Ansoff’s (1975) product-market matrix, Porter’s (1979) five forces model… Cravens and Piercy (2003) perceive the benefit of such evaluation tools is to clarify opportunities and gap in performance as well as to commence activities to capitalize on those opportunities Despite the confinement by impact and size, limited resources, and expertise, founders of SMEs can still manage to run their business, make sound decisions and present their market offerings to the marketplace by less formal, but more intuitive and predictive strategic planning processes (Gilmore & Carson, 2007) Network ties Networking is an essential business aspect, especially when SMEs have to operate along the resource constraints and impediments (Deakins, 1991; Gilmore, Carson & Grant, 2001) Hills, Lumpkin, and Singh (1997) also say that the network ties of entrepreneurs are momentous to opportunity recognition In reality, networking activities revolve around the way that entrepreneurs operate their businesses, which refers that it can be spontaneous, casual and opportunistic (Gilmore, 2011) Consequently, the network can also be haphazard and disjointed, including bilateral or multilateral connections among different individuals in some specific situations Based on Granovetter’s argument (1977), network consists of both strong and weak ties Weak ties, which comprise easygoing acquaintances, are more likely to yield distinctive knowledge and ideas than close friends since most people tend to possess more weak ties than strong ones in their lives Chetty and Holm (2000) express that entrepreneurs who have broad network can improve their chances to encounter various opportunities, receive new information, learn from other ones’ experiences, and gain values from the reciprocal effect of knowledge and resource current Moreover, social and business networks expand the horizon of SME owner-managers, offering the means of approaching to new and different kinds of information that would otherwise be faced (Wilkinson & Young, 2005) They not only support the access and co-function of different resources for further development and exploitation on entrepreneurial opportunities but also help back up on risks management as well as the uncertainties involved (Wilkinson & Young, 2005) Furthermore, maintaining interactions with individuals in social network and looking for information exterior the close social group will also bring about creative or unconventional idea formation (Perry-Smith, 2006) Creativity Creativity has been seen as a central organizational competency and a ground-breaking factor to future business success, especially within SMEs (Palus & Horth, 2002; Bridge, O’neill & Cromie, 2003) Amabile (1997) explains entrepreneurial creativity as “the construction and implementation of novel, yet appropriate ideas to set up a new venture.” Individual creativity within a business pays a tremendous contribution to organizational innovation as well as a general competitive advantage (Hirst, Van Knippenberg & Zhou, 2009) Creativity involves one’s sensitiveness to the environmental change, inducing promotion of a high or low frequency of creative effort However, for many instances, entrepreneurs have a tendency to get higher score results in different creativity tests than other individuals Schumpeter (1934) is the first scholar to put forward the argument that because of creativity, entrepreneurs can benefit from the opportunities that the rest cannot In reality, creativity is best obtained while one is in the flexible and non-predetermined state (Amabile, 1983) Meanwhile, Fillis and Rentschler (2006) claim that creative solutions not have to be complicated since relatively primary responses are capable of leading to the business success Timmons (1994) adopts a viewpoint that raising a good idea is the initial step in the process of turning an entrepreneurial opportunity into an actual business Moreover, founders of SMEs are believed to display either an innovative or adaptive style of creativity (Filipczak, 1997) Innovative creativity refers to activities of inventing new and different ideas, while creativity relates to the modification of existing ideas and concepts Besides that, an appropriate environment or climate can facilitate and flourish entrepreneurial creativity from interactions between the situation and the individual (Lee, Florida & Acs, 2004; Hunter, Bedell & Mumford, 2007) Situational elements In many cases, the situation that entrepreneurs involve around can be the game-changing factor leading the whole process of opportunity recognition Hulbert, Gilmore, and Carson (2015) say these external factors include serendipity or luck when things happen at the right moment or the right place, which is favorable towards entrepreneurs Getzels and Jackson (1962) suggest the differentiation between entrepreneurial opportunities can be clarified by the origins and developing level Various sources for new opportunities emerge when there is an understanding of the market, along with the business climate in which that market functions To be more specific, sources of business opportunity can directly or indirectly derive from crisis or fluctuation in the macro-environments such as society, politics, economics or technological revolution and so forth or from the dynamic changes within the market that SMEs operate in (Hulbert, Gilmore, & Carson, 2015) Methodology Exploratory qualitative research is adopted to fully discover the determinants affecting the entrepreneurial opportunity recognition process by founders of SMEs and the inter-relationships among those determinants The benefit of using a qualitative approach is from its capability to seize the most of the meaning and nature of opportunity recognition process from ways of looking by the research participants instead of an assessment about the frequency of events or responses This approach will accommodate a framework which is driven by the research participants and allow researchers to explore the complexities and the depth of phenomena and providing valuable and insightful material regarding the recognition of entrepreneurial opportunity (Bamberger, 2000; Bryant, 2006) Besides that, such type of study is implicitly 03, 09 and 13 closely These founders sensed the potential enlargement in demand for products and services related to computers and technology solution in both B2C and B2B markets And it is crucial to choose the correct time interval since the market needed to reach a level of maturity to be ready to accept technology into the daily life as well as business operation, while the entrepreneurs were still forerunners to catch the opportunities in their fields Conclusions This study intends to explore the determinants and their inter-relationships that have an impact on the process of opportunity recognition of SMEs from the first place It can be concluded that six determinants including prior knowledge, entrepreneurial alertness, market analysis, network ties and situational elements have their particular role during the process Prior knowledge and network ties that founders accumulated from previous work and study appear to be the fundamental determinants which all founders of SMEs have to possess before startup Then comes the practice of entrepreneurial alertness and market analysis Founders of SMEs exhibit to tend to take advantage of either or both determinants Entrepreneurial opportunity can be recognized through a scrupulous market analyzing either the mechanism or being alert to turbulences within the environment or maybe by a combination of both two determinants, along with the help from expertise and network The process of entrepreneurial opportunity recognition also requires SMEs to employ a certain level of creativity Products or services of SMEs tend to show more adaptive style of creativity than innovative style of creativity since being market driven And last but not least, sources of opportunities arising from market dynamics and changes in the environment, so entrepreneurs who can quickly approach and respond to the situation will gain opportunity and bloom Due to the complexity and the depth of this research, it hopes to contribute to the framework building of entrepreneurial opportunity recognition by SMEs However, further researches with bigger sample size in different contexts of cultures as well as economies need to be conducted to affirm, broaden and validate the findings Limitation of research Despite the attempt to avoid impediments, this study still bears some limitations Firstly, the research respondents are only SMEs within Ho Chi Minh City area, which is the most dynamic and prosperous city of Vietnam Secondly, this study is written in English Thus, transcriptions from interviews in Vietnamese may not comprehensively convey all ideas and expressions of the respondents 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An integration of marketing activities, the entrepreneurship process, and institutional theory Journal of the Academy of Marketing Science, 39, 537– 554 Westhead, P., Uchasaran, D., & Wright, M (2009) Information search and opportunity identification: The importance of prior business ownership experience International Small Business Journal, 27, 659–680 Wilkinson, I F., & Young, L C (2005) Toward a normative theory of normative marketing theory Marketing Theory, 5(4), 363-396 Table – Prior knowledge, entrepreneurial alertness and network ties are of high importance; market analysis is of low importance Firm Background of business Findings 01 Healthcare product from Lingzhi mushroom Age of company: years Experience/qualifications of founder(s): Degree in Education Used to be founder of a private kindergarten in years; then entered the functional food industry by working for Vision Been in the functional food industry for years Prior knowledge – high importance – ‘I have had years working in the functional food industry and got training by many professors and doctors about the benefits and methods to proactively maintain selfhealthcare’ Entrepreneur alertness – high importance – ‘I can clearly see around a cherished trend in using healthcare products such as mine which are made from Lingzhi mushroom’ Network ties – high importance – ‘I got support from a group of close friends who are also entrepreneurs One is CEO for some big corporations One is an owner of a graphic design studio And some others also involved They all considered this business as their “brainchild” and contributed to its development even though they are not owners in terms of legal… Besides, from the scratch, most customers who were willing to buy and introduce my products to others were from my long-term relationships from previous works’ Market analysis – low importance – ‘I didn’t formula 02 Termite and pest control services Age of company: 15 years Experience/qualifications of founder(s): Degree in Plant Protection Engineering Been working in the industry for 20 years Started as a business development executive then became Prior knowledge – high importance – ‘I applied what I learned in Hanoi University of Agriculture… Also, I worked in this industry for years at different positions for a pesticide supplier, which helped create a solid base’ Entrepreneur alertness – high importance – ‘At the time, the Northern had already developed this service, but Saigon was still a new market for termite control People simply thought that they could buy insecticide to terminate it, but they didn’t understand behaviors of termite And that was my entrepreneurial opportunity’ Network ties – high importance – ‘I had friends who had already established their own companies providing this service in the Northern, and they made profits They suggested I should develop this market in Saigon and gave me advice since they agreed this was a huge opportunity’ Market analysis – low importance – ‘I didn’t conduct any market analysis at the beginning since I didn’t learn about business; I was in technical major… My business development manager for a pesticide supplier in Hanoi 07 Media consultancy to real estate companies Age of company: years Experience/qualifications of founder(s): Bachelor in Banking and Finance Started career in banking and strategic restructuring position at DongA bank Then worked Prior knowledge – high importance – ‘Working at that position in DongA bank helped me build constructive ideas about startup and how to run a business…’ After that he was in media industry for 2.5 years as a general assistant and found himself with ability to connect people and take advantage of their competencies Entrepreneur alertness – high importance – ‘For me, to business is to see the ability to make profit from a certain problem or gap I saw the gap in the media, especially the media for real estate, so I as for in 2.5 08 10 a director assistant a company operating communications for years Network ties – high importance – ‘If a company cannot build relationships in media industry, then it cannot survive As well as my forte is finding and assembling the right people who are good at their expertise, so they will best accomplish the job assigned’ Market analysis – low importance – ‘This business was so young at the beginning, so I basically didn’t pull out any strategy since we needed to focus on daily operation… I worked in this field long enough, I had experience, there was no need to conduct Travel agency Age of company: 19 years Experience/qualifications of founder(s): Bachelor in Business Administration Prior knowledge – high importance – ‘During my time working in the media industry, I worked on the principles of human and information management, communication and clients… After that, I joined a 3year course about tourism by Pacific Asia Travel Association of America (BATA) I also attended many seminars about tourism before open up this business’ Entrepreneur alertness – high importance – ‘Despite the fact that at the beginning, I didn’t completely foresee, but I sensed that a travel industry should be exploited’ Network ties – high importance – ‘I have to admit that I considered previous relationships from VGP news and government made it easier for me to approach different sources of potential customers’ Market analysis – low importance – Founder already recognized this is a fruitful market; thus, he did not conduct any analysis or formulate any strategy at the beginning Started career as an editor for a government newspaper, VGP News and responsible for the section of economic news Accidentally ran into the traveling field after taking part in a course about tourism by Pacific Asia Travel Association of America (PATA) because he Homely Vietnamese restaurant Age of company: years Experience/qualifications of founder(s): Studied in School of Tourism and Hospitality Saigontourist Degree in Restaurant Management Started career working for Vietnam Airline and then InterContinental Saigon in a following year 12 Environmental science and technology Age of company: 12 years Experience/qualifications of founder(s): Prior knowledge – high importance – ‘I helped my parents with their small food stall since I was 14 years old’… ‘What I learned from Saigontourist and InterContinental gave me an overview about the F&B industry and helped me set my own standard in my own services, products and how I trained my staffs’ Entrepreneur alertness – high importance – ‘When I was 22 year old, I noticed that my parents’ traditional food stall consumed too much energy, so I needed to change that Although I subjectively made every decision, I believe that I had a sense that enabled me to create a homely restaurant like no others at the time’ Network ties – high importance – Founder disclosed that he wanted to open his chain of restaurant outlets because of his family’s tradition in selling Vietnamese foods He also got strongly supported by all members during the first days His mother passed on her food recipes, while his father and elder brother helped daily tasks to keep the business run smoothly Market analysis – low importance – Founder decided business activities based on his own intuition ‘The only Prior knowledge – high importance – Because of knowledge and experiences collected through academic studies as well as working with other scholars and professors in institutions to solve practical problems for government and private enterprises, founder could confidently establish his 66 Ph.D in Environmental Engineering Been having more 23 years of experience Used to be director of another science institute and lecturer in a few universities and colleges Entrepreneur alertness – high importance – ‘A great deal of construction enterprises and power plants were set up back then; however, there were few of specialists who could consult or implement wastewater treatment My opportunity was right there, so I captured it’ Network ties – high importance – ‘I built up this company with some colleagues who were working in the same field I also received quite a few pieces of advice from professor and scholars before doing on my own business… And I already had a certain number of clients who trusted my expertise during my time working at different institutions’ Market analysis – low importance – ‘My colleagues and I are all scientists We had experience, technique and a wide network, so we knew there was high demand Table – Prior knowledge, market analysis and network ties are of high importance; entrepreneurial alertness is of low importance Firm Background of business Findings 03 Technology solutions Prior knowledge – high importance – Founder has had more than 10 years of experience… And he emphasized that ‘It is important to continue to learn from practical experience, reading, following the trends of technology development’ Market analysis – high importance – ‘I built 1-year, 3-year and 5-year plans as well as strategies for my products… The business was small and I had limited resources, I used basic tools to evaluate and position the target market segment, to decide how to develop an appropriate products for Vietnamese customers, and to understand my rivals and avoid direct competition’ Network ties – high importance – ‘I always welcomed constructive opinions from different people with different backgrounds, especially people who were better than me, since they all provided helpful information and different viewpoints challenging my stances and critical thinking’ Entrepreneur alertness – low importance – Founder used his own knowledge and experience along with the process of observing and evaluating the industry to detect his business opportunity Age of company: years Experience/qualifications of founder(s): Bachelor in Computer Science and Engineering Been working in technology industry for 11 years Started career from IT staff to IT manager then project manager for a high-tech company 05 Safety labor training and inspection Age of company: years Experience/qualifications of founder(s): Bachelor in Mechanical Engineering Been in the inspection and safety training industry for 10 years Used to hold positions such as Head of Pressure, Prior knowledge – high importance – ‘All knowledge that I learned from university and experience I collected from previous works hugely contributed to the process of opportunity recognition in terms of technique’ Market analysis – high importance – ‘Every or years, the government will revise and adjust law for inspection, so we need to build and make adjustments for our business strategy annually At the beginning, we hired a specialized marketing agency to build our brand… We also classified our categories of customers to offer suitable services… We 06 Head of Laboratory for some state-owned enterprises and a trainer for the Department of Labor Safety evaluation on our competitors in terms of technical skills and team of sellers’ Network ties – high importance – ‘There are members in board of directors We have different strengths, which helps complement one another… And I consider everyone within my network as a seller, whom can help expand the company reputation and maybe income…’ Besides that, owner admitted that inspectors from government had certain support for his company Entrepreneur alertness – low importance – ‘We have to study and carefully analyze our market frequently There is no way to instinctively run a business in this Interior and graphic design Age of company: years Prior knowledge – high importance – Owner has passion for design, aesthetics and perceives opportunity as “something attached to one’s forte and vocation” She also claimed that her graphic design skill and aesthetic creativity was from the time she spent in university, plus experience during her previous works Market analysis – high importance – ‘After research, one will be well-equipped with information in a specific field, they will be more knowledgeable and see things that outsiders cannot We identified our market segment The most profitable projects were spacebased commercial businesses such as restaurants and coffee shops My husband was in charge of market research by using Google analysis tools, building strategies and professional promotion for the company Thanks to his effort, I knew we could expand our market to the North’ Network ties – high importance – ‘Current design employees are friends and colleagues who have been together before the company was established… My husband manages online marketing, which helps find 70% of total client number’ Entrepreneur alertness – low importance – Founder did not see any specific trends or expect to open her own business While offered a lot of projects, founder felt “positive” about Experience/qualifications of founder(s): Director: Bachelor in Interior Design Working in this industry for almost 10 years Started career by working for some design and construction consulting companies, then busted out being a lecturer at Saigon Technology University and working freelance Co-founder (husband): Bachelor in Business Information Technology Responsible for online marketing of 11 Construction design and consultancy Age of company: years Experience/qualifications of founder(s): Bachelor in Civil and Industrial Construction Working in the industry for more than 17 years Started as construction engineer, then became manager and vice director for some corporations about construction real estate and Prior knowledge – high importance – ‘To me, knowledge is 30% of what I got from school and 70% left is from experiences I gained from years working in construction corporations before establishing my own company… My prior knowledge served as fundamental base for me to consider something as entrepreneurial opportunity’ Market analysis – high importance – Founder used his experience working for big corporations before to conduct a formal marketing plan to identify appropriate business opportunity Network ties – high importance – Founder considered network was the determinant factor in the construction industry as ‘No one will trust you and hand you a project unless they have already known you; or their close acquaintances know you’ Entrepreneur alertness – low importance – ‘I planned to be employee for a couple years to gain experience and build network then busted out and started off my own company because I wanted to be 14 Solar energy equipment supplier Age of company: 14 years Experience/qualifications of founder(s): Director: Master in Industrial Electrical Engineering After graduate, became a lecturer for Can Tho University; then worked for a representative office of a Taiwan company about solar water heater for years Been having nearly 20 years of experience in this industry Co-founder (husband): Bachelor in Business Administration Used to be business Prior knowledge – high importance – ‘As a businessman, my husband has knowledge about sale and product marketing, while I take care of technical aspects, update information and comprehend the system and specification of the products’ Market analysis – high importance – ‘Even though we didn’t conduct anything professionally, but we did identify our competitors to evaluate their offerings When bidding, we studied our potential partners in terms of the relevant projects and their specific demands We also participated in some technical fairs and made report programmes associated with television station to promote our brand as well as the trend of using solar water heater’ Network ties – high importance – ‘I am lucky to have my husband as my business partner since day one He is an excellent salesman and great teacher for the sales staffs…We discuss every project or problem and seek out the best solutions for the company Because of him, I could run this business’ Entrepreneur alertness – high importance – Founder did not plan to establish any business ‘We did not see this as an opportunity from the scratch We carried some unfinished contracts from the previous workplace and we decided to finish what we were Table – All four elements prior knowledge, entrepreneurial alertness, market analysis and network ties are of high importance Firm Background of business Findings 09 Software development Age of company: years Experience/qualifications of founder(s): Director: Worked for technology Prior knowledge – high importance – ‘I used to be an assistant for the CEO of a technology company, so I understand how to operate a technology company Besides that, I have knowledge about Vietnamese cultural and market My husband is a Finnish businessman with more than 20 years of experience He is responsible for technical support and has a hope to bring advanced technology from Europe to Vietnam’ Entrepreneur alertness – high importance – ‘Being alert to opportunity is very important while doing business We saw the shortcomings SMEs had and realized they needed a system that could help them manage their business better Many SMEs still manage their company by excel or books Meanwhile, today's modern technologies can help them reduce book- keeping and costs, simplify and optimize management process’ Market analysis – high importance – ‘Initially we went to survey and evaluated the market to find out specific needs of SMEs and whether they were ready to accept technology to create the most appropriate line of products and services… We used SWOT, product and service life cycle analysis, and outline a 1-year and 3year term strategies for the company’ Network ties – high importance – ‘Since we felt information companies as an assistant of CEO Having 7-year experience in technology industry Responsible for daily management and operation of the firm Co-founder (husband): technical consultancy Career in solution and programming Used to be programming security director of Nokia Finland Having more 67 somewhat operation of the firm 13 Software and telecommunications equipment supplier Age of company: years Experience/qualifications of founder(s): Working in the industry for 20 years Bachelor in Computer Science and Engineering After graduate, worked for some international technology corporations with highest position as director Prior knowledge – high importance – ‘All my experience collected daily through work, through failures The most important thing is that all accumulated experience could enable me to determine whether I should exactly develop one opportunity or not’ Entrepreneur alertness – high importance – ‘Business opportunity is when there is a juncture to easily dominate the market and get benefit from it I saw the scarce in IT services as well as IT products And the potential development was very high, so it was right to start off a company specialized in these services’ Market analysis – high importance – Founder emphasized that it was important to update information on technology regularly and find opportunities through market research activities since those helped define the demand of customers to meet Network ties – high importance – Founder believes that ‘more heads are better than one’ and ‘ learn from the experiences of others and himself, but always filter 15 BTL Marketing agency Age of company: years Experience/qualifications of founder(s): Bachelor in International Relations Had 13 years of experience in the industry Stared working from junior year at Cattiensa Media Group After graduate, worked for one marketing agency only in years before open his own business The highest position ever held was account director, under management of general director only Prior knowledge – high importance – ‘In this industry, you have to be clever in the way of behaving and understanding your customers, and how you can anticipate their expectations and thoughts And all of that I learned in 13 years by doing the best of every project assigned’ Entrepreneur alertness – high importance – ‘Opportunity is at the very moment that everything falls into place… The last project I did at previous workplace was to help Honda launch a new sport racing car with the top technology, holograms The client was so satisfied with my work, so I realized that I could more… There was also a high demand of marketing services from agencies So I knew that was an opportunity to challenge myself more and explore my potential’ Market analysis – high importance – ‘I evaluated my “unique selling points” (competitive advantages), analyzed the market, the tastes of clients as well as my capacity to meet their requirements I set out a strategy that the first year is for branding, building appropriate service packages and a core team After years of operation, I have had a certain amount of clients, so now I plan to build up human resource After years, the company will probably grow and expand into specialized service branches’ Network ties – high importance – ‘By having certain relationships with a number of big clients as well as partners associated with my previous work, I could maintain the business at the beginning… To survive in BTL marketing, you need to know how to connect many things together When you create an event for 16 Freight delivery Age of company: years Prior knowledge – high importance – ‘I have had more than 10 years of experience learning by doing in this industry… Yes, the Experience/qualifications of founder(s): Bachelor in Education Psychology However could not find a job related to his study Started to work for some logistic corporations as an administrative staff, then became manager, and finally got promoted as an area director of outlets in Central Vietnam Been in the same industry for the best part of 20 years knowledge I acquired at university, which is a completely different field, served like a foundation to my logical thought and action’ Entrepreneur alertness – high importance – Founder referred a businessman as a person who has ability to detect problems around and gain profits by providing sound solutions for such problem And he said ‘Opportunity in logistics is numerous’ Market analysis – high importance – ‘You need to understand your market, your position in the market and the gap between what you want to achieve and your resources at the time… My services are specialized to served groups of customers only (target segments): healthcare, baking and education… I am confident that even large corporations cannot compete with my services for these customer groups’ Network ties – high importance – Founder expressed that long- term customers who confided on his competency in this field from former workplaces helped him maintain a certain source of initial income Table – Entrepreneurial alertness, market analysis and network ties are of high importance; prior knowledge is of low importance Firm Background of business Findings 04 Take-away Entrepreneur alertness – high importance – ‘I recognized the need for clean coffee from myself first, and I observed that people around me were in the same situation’ Market analysis – high importance – ‘I planned shortterm and long-term strategies In the first 3-5 years, the company will operate along the criterion of “a survival” In the next 5-10 years, the company gets into orbit After 10 years, I will rapidly expand the scale of outlets and maybe become a franchiser…’ Besides that, he emphasized ‘You have to be aware of your strengths and limitations, know your main competitors and main customers’ Network ties – high importance – ‘Mentors from my CEO courses and my best friend who is co-founder of Oceancons gave me incredibly valuable advice and opinions about my business model and strategy… Even this is an entirely different industry, but the principles to run a business are likely similar to one another So it is always a good choice to listen to other viewpoints to expand your knowing’ Prior knowledge – low importance – Founder spent career working in an entirely different business before entering into the coffee industry ‘Before coffee distribution Age of company: years Experience/qualifications of founder(s): Bachelor in Business Administration Working in construction industry approximately 10 years and running another business in the field of construction, Oceancons Table – Adaptive style of creativity Firm Source of opportunity Analysis 01 Dynamic marketplace – Change in customer needs and tastes: Vietnamese people started using organic and healthcare products Founder created bottle of Lingzhi drinking tea, which is more convenient and affordable than pure Lingzhi mushroom and its sporangium This SME also offered Lingzhi gift boxes customized as customer requirements 02 Dynamic marketplace – Gap (unmet need): At the time, the South had very scarce number of termite and pest control services Founder was the first generation to run a termite and pest control services in the South He applied what he knew about pesticides from previous works in Hanoi to educate Southern people and solve their problem Founder used adaptive creativity due to different area climates and different behaviors of termite 03 Environmental change – Technology revolution and development This SME provided a wide range of international technology solutions from software to hardware and cloud computing, but modified them to suit different management systems of the users 05 Environmental change – Change in politics: Vietnam government issued new law which privatized the safety labor training and inspection in 2008 After privatized, this field offered plenty opportunities and also became more competitive The firm had to adjust the offering services and be creative in way of finding new sources of customers to compete against state-own enterprise as well as other private enterprises 07 Dynamic marketplace – Fluctuation in real estate industry towards positive direction Founder saw the absence of promotion activities for a profitable market like real estate, so he grasped the opportunity by providing specialized marketing services for this industry and adapted to the need within the market 10 Dynamic marketplace – Gap (unmet need) between customers’ expectation and what Vietnamese restaurants provided Founder managed to provide meals from hygienic food sources along with friendly customer services and cozy ambience 11 Environmental change – Change in economy: Enterprises received monumental FDI for construction and real estate after Vietnam became a member of WTO in 2007 This company had capability to cover a whole project throughout from construction consulting to designing and implementing with a guarantee ‘on time and in budget’ to its customers 67 12 Environmental change – Changing in politics and economy: The government amended the Law on Environment Protection in 2005 This company did researches on each plant power system then modified and applied the appropriate waste-water technology and treatment 13 Environmental change – Technology revolution and development This company provided equipment and different service packages related to computer maintenance at house of users Founder claimed that his company had the most affordable offerings for customers 14 Dynamic marketplace – Dynamic marketplace – Potential growth in demand for solar water heater This company provided customized solar systems for different types of projects from households to restaurants, hotels, factories and constructions… 15 Dynamic marketplace – Growth in demand of outsourcing marketing services This company modified and synthesized single service packages into an entire BTL marketing project for its clients 16 Dynamic marketplace – supply chain The founder developed his business into 3PL logistics services provider and specialized the services for customer groups including banking, healthcare and education only Change in Table – Innovative style of creativity Firm Source of opportunity Analysis 04 Dynamic marketplace – Gap (unmet need): The market was in shortage of clean coffee, while the demand of coffee drinkers in Vietnam was very high This firm was among the first pioneers to apply the take-away coffee model with unflavored coffee products Founder also invented and used his own mobile coffee barrels by plastic to carry coffee and ingredients 06 Environmental change – Change in economy: Numerous F&B businesses opened and flourished such as coffee shops, milk-tea and small restaurants… This company was one of the few companies which could provide a complete service package from branding to design and marketing based on distinctive requests from each creative project for each F&B customer 08 Environmental change – Change in politics and economy: The government promulgated Law of Enterprise, which private enterprises were legalized in 1991 and tourism started to develop The tourism industry was quiet a new market and people did not really regard how they should travel This was the first travel agency to create various travel packages such as team-building tours and caravan tours based on criterion ‘happy and unique’ of the founder 09 Environmental change – Technology revolution and development This company provided tailor-made ERP systems for different sorts of business They also invented a management program called Hurapos for retailers 675 ... experiences, and gain values from the reciprocal effect of knowledge and resource current Moreover, social and business networks expand the horizon of SME owner-managers, offering the means of approaching... participants and allow researchers to explore the complexities and the depth of phenomena and providing valuable and insightful material regarding the recognition of entrepreneurial opportunity. .. alertness and network ties are of high importance; market analysis is of low importance Six cases illustrated the application and significance of prior knowledge, entrepreneurial alertness, and network