In the Eye of the Beholder: How Construing Situations Affects Opportunity Recognition

Abstract

The initial cognitive representation of a situation has been determined to be an important process in many thinking efforts. The purpose of this study was to investigate whether individual ways of such problem construction play a role in how individuals interpret ambiguous, ill-defined economic situations, resulting in options of action; i.e. in opportunity recognition. Subjects who participated in this study (N=111) were asked to complete measures to identify preferences in problem construction and their ability of recognizing entrepreneurial opportunities in given situations. Solutions to the latter were rated for quality and originality. Results suggest that a promotion focus, as proposed by Regulatory Focus Theory, is positively related to opportunity recognition quality and originality. Implications of this insight for entrepreneurship theory and practice are discussed.

Keywords: opportunity recognition, entrepreneurship, entrepreneurial cognition, problem solving, problem finding, problem construction

JEL Classification: M13, D83, D89