Opportunity Recognition in Inner-City Markets: An Exploratory Study

Abstract

We argue that inner-city markets pose a challenge for business managers and entrepreneurs because many do not understand how to address significant social and institutional factors that exist in these markets. These factors around inner-city business opportunities may lead entrepreneurs with limited knowledge and experience in these markets to overlook or undervalue viable business opportunities. We propose that the combination of entrepreneurs' inner-city experience and social and institutional factors around business opportunities will explain patterns of opportunity recognition. This paper describes a study of 146 subjects that experimentally tests this hypothesis along two dimensions: the evaluation of business opportunity and the entry decision.

Opportunity Evaluation as Future Focused Cognition: Identifying Conceptual Themes and Empirical Trends

“…For instance, an individual with a high level of education and previous work experience may perceive an opportunity that has a potential payoff of US$50,000 as non‐attractive, whereas the same opportunity may seem extremely attractive for someone with lower levels of education and work experience. In this vein, Robinson and Hayes () assert that perceptions of opportunities in the inner‐city may differ based on higher crime rates and lower income and education levels. This suggests that researchers need to do a better job of working with entrepreneurs in the proper context, so that variations in individual differences do not artificially drive empirical results.…”

Introduction

“…In a recent concrete example (no pun intended), Robinson and Hayes (2012) tested the proposition that experience and social and institutional factors explain patterns of opportunity recognition. They shot video of a broken-down, graffiti-ridden, boarded-up store front on a corner in Harlem, New York.…”

The Social Entrepreneur as Trailblazer: A Non-Normative Role for Social Enterprise in a Market Economy

“…Previous research has noted that these factors may prompt social entrepreneurs to recognize an opportunity whereas the uncertainty surrounding the opportunity may lead neoclassical entrepreneurs to either undervalue or completely ignore the opportunity (Robinson & Hayes, 2012). For example, social entrepreneurs' empathy for the distress suffered by particular group may encourage them to focus on environmental trends that differ from the ones that their neoclassical counterparts consider (Mair & Noboa, 2006).…”