2011.11.21 market opportunities - made or found?
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Dr Natasha Evers, Marketing Discipline, NUI Galway presented this seminar "Market Opportunities - Made or Found? Some Perspectives on Opportunity Recognition and Exploitation in University Spin-Outs" as part of the Break the Barrier Seminar Series at the Whitaker Institute on 21st November 2011.TRANSCRIPT
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Break the Barrier Series – 21st November 2011
Market opportunities made or found? Opportunity recognition and exploitation in Irish University
Spin-outs (USOs)
Natasha Evers Marketing Discipline
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Structure of presentation
• Landscape of academic entrepreneurship • What makes USOs distinct from other new ventures? • Entrepreneurship and Marketing Literature to
explain : • Opportunity recognition • Opportunity exploitation
• Cases of Irish USOs • Some conjectures for discussion
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What about University Spin-outs?
• Only received increasing attention during the past few years both in the academic literature and in practice (Clarysse and Moray, 2010; Clarysse et al., 2001).
• “New firms created to exploit commercially some knowledge, technology or research results developed within a university” (Pirnay Bernard and Nlemvo, 2003, p.356)
– How do academics identify new business opportunities?
– Do they possess entrepreneurial intentions?
– What activities do they engage in for their ventures to emerge?
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Academic spin-offs show some traits that make them distinct from other high-tech start-ups.
• Team of academics working in own disciplinary knowledge in closed academic circles
• Network emerge in HEI environment made up of administration and academics and the TTO support
• Organizations have commercialisable ideas in their research portfolio BUT differ in terms of: – opportunity search and how their trajectory of business
development is guided and supported.
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Summary Metrics – Ireland 2005 – present
2007 2008 2009 2010 Total 2007-2010
Licence/ Option/Assign
56 67 100 93 316
Spin-outs 13 7 35 31 86
Invention Disclosures
271 407 457 431 1566
Patents Applications
124 202 148 101 575
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Some Successful University Spin-outs
• Eirecomposites (NUIG) • Wavebob (NUIG) • Celtic Catalysts (UCD) • Biancamed (UCD) • Mutebutton (NUIM) • Ntera (UCD) • Miravex (TCD)
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Research objective
• To explore how opportunities are identified and exploited for new venture creation in the context of university spinouts.
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Recognition and Exploitation
• Entrepreneurship begins with the formation of opportunities which is the subject of the entrepreneur (Shane, 2000; Katz and Shepherd, 2003).
• Opportunity exploitation can be a process dependent on the decision of the entrepreneur and falls typically within the boundary of the firm which, through its capabilities, manifests opportunities into market outcomes (Whittaker et al., 2009).
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Research questions and theoretical positioning from Entrepreneurship/Marketing literature
Research questions 1. How do USOs identify
opportunities?
2. ) How are USOs created to exploit such opportunities identified?
Theoretical premise 1) Concepts of entrepreneurial
opportunity creation and discovery
2) Theoretical Framework of Organisational Emergence (Katz and Gartner,1988)
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Are opportunities identified through processes of discovery (found) or creation (made)?
– Discovery approach (Austrian economists Kirzner 1979,1997;)
• Objectively real (ex ante entities) formed exogenously • Founder’s alertness to market disequilibrium • Conscious search for market opportunities
– Creational approach (Schumpeter, 1934; Sarasvathy, 2008)
• Created, endogenously by the actions of the entrepreneur
• Creational process : “who I am”, “whom I know” “what I know” (Sarasvathy et al. 2008)
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Opportunity discovery - derived from market disequilibrim
• Extant studies often make the fundamental assumption that opportunities emerge from an exogenous environment .
• May be problematic in respect to emerging markets and fast evolving industries such as biotech and lifescience - produce new markets as technologies emerge…uncertainty, volatility.
• New opportunities are the result of market disequilibrium OR the enactments of opportunities to create markets that from the outset are imperfect per se?
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Are opportunities identified through processes of discovery (found) or creation (made)?
– Discovery approach (Austrian economists Kirzner 1979,1997;)
• Objectively real (ex ante entities) formed exogenously • Founder’s alertness to market disequilibrium • Conscious search via market orientation
– (Controversial) Creational approach (Schumpeter, 1934; Sarasvathy, 2008)
• Created, endogenously by the actions of the entrepreneur
• “who I am”, “whom I know” “what I know” and their Intentions (Sarasvathy et al. 2008)
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Founding entrepreneurs are cognitive agents that perceive, make sense and enact their environment in turn creating entrepreneurial opportunities.
• P1: In USO creation, academic entrepreneurs create opportunities enacted through their endogenous environment rather than discovering them exogenously.
• P 2: In USO creation, the human capital of the academic entrepreneurs influences their ability to create opportunities.
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Opportunities created (made)
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2nd Inquiry – Opportunity Exploitation?
Research questions 1. How do USOs identify
opportunities?
2. ) How are USOs created to exploit such opportunities identified?
Theoretical premise 1) Concepts of entrepreneurial
opportunity creation and discovery
2) Katz and Gartner (1988) four properties for organisational emergence: 1. Resources 2. Boundary 3. Intentionality 4. Exchange
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Realising Market Opportunity through organisational creation
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Entrepreneurial Intentionality and Self-efficacy
• Intentionality is a state of mind that directs a person’s attention (and therefore experience and actions) toward a specific goal or path in order to achieve a market outcome
• Entrepreneurial self-efficacy refers to the strength of an individual’s belief that he or she is capable of successfully exploiting the opportunity, thus, it can be argued: – Intentionality of potential academic entrepreneurs
dependant on their notion of self-efficacy
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Academic entrepreneurial intentions & self-efficacy
• Prodan and Drnosvek (2010) found entrepreneurial self-efficacy had the highest path coefficient among all predictors of academics’ entrepreneurial intentions.
• Entrepreneurial intentions of academics were important in predicting the dynamics in emergence of firms with high growth potential.
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P 3: In USO creation, academic entrepreneurs demonstrate self-efficacy in their intention to exploit the created opportunity
Propositions to explain how opportunities are exploited for USO creation
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Resources via Relational Capital
• Entrepreneurship does not occur in a vacuum, but involves economic actions between actors and builds upon ongoing interaction in social relationships (Birley, 1985).
• Being part of a closed network with a high degree of embeddedness is proposed to be advantageous.
• The ability to exploit opportunities is linked to a firm’s position in the network as well as on the nature of relationships.
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Realising Market Opportunity through organisational creation
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Firm boundaries and relationship with environment
• Typically, when potentially patentable knowledge is created by university employees, the university has ownership rights to this knowledge.
• However, it is in the interests of the university to drive as much IP into commercialisation in return for royalities and also academic reputation, – hence negociation of IP rights emerge as mutual and for
benefit of creating a legal entity separate from university.
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Propositions for USO Opportunity Exploitation
P 3: In USO creation, academic entrepreneurs demonstrate self-efficacy in their intention to exploit the created opportunity
P 4: In USO creation, the academic entrepreneur’s access to personal and network resources influence the resourcing of the USO.
P5: In USO creation, the USO boundaries are influenced by the academic entrepreneur’s relationship with their academic environment.
P6: In USO creation, USO exchanges are mainly export-led.
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Conjecture 1: Opportunities were made not found in USOs
Created endogenously and enacted meaningfully by individuals influenced by their own antecedent knowledge corridors and beliefs
Exaptive process of creating opportunities – an evolutionary process in which a given adaptation is
first naturally selected for, and subsequently used by the organism for something other than its original, intended purpose.
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Conjecture 2 Notion of Self-Efficacy necessary condition for opportunity exploitation
Intentionality’ in new venture creation by reinforced by the notion of self-efficacy to create the venture.
Self-efficiacy enabled by antecedent knowledge corridors, mediated by their access to personal networks determine opportunity exploitation in USOs.
.
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Exploitation of Market Opportunity through organisational creation (adapted framework by Katz and Gartner, 1988)