Proposing Social Resources as the Fundamental Catalyst Toward Opportunity Creation

• Published date: 01 June 2015
• Date: 01 June 2015
• DOI: http://doi.org/10.1002/sej.1195

PROPOSING SOCIAL RESOURCES AS

THE FUNDAMENTAL CATALYST TOWARD

OPPORTUNITY CREATION

NEIL TOCHER1*, SHARON L. OSWALD2, and DIANNE J. HALL3

1College of Business, Idaho State University, Pocatello, Idaho, U.S.A.

2College of Business, Mississippi State University, Mississippi State, Mississippi,

U.S.A.

3College of Business, Auburn University, Auburn, Alabama, U.S.A.

The growing body of research on the creation view of opportunities suggests that social

processes between potential entrepreneurs and interested parties often account for why many

technically brilliant business ideas are abandoned sometime between conceptualization and

market launch. Surprisingly though, few studies have comprehensively examined the different

roles various categories of social resources play at different stages of the opportunity-creation

process. Hence, the present article fills this gap by outlining how the unique resources of social

capital and social competence facilitate entrepreneurs’ ability to guide imagined ideas through

the multistage, path dependent, socially complex opportunity-creation process. Copyright ©

2015 Strategic Management Society.

INTRODUCTION

Nano Engine is an emerging long-lived, lightweight,

reliable power solution technology developed and

beta tested at a western U.S. university. The Nano

Engine is expected to deliver orders of magnitude,

more energy and power densities than any existing

long-lived battery technology in a package that is

low weight, virtually undetectable, ultracompact,

safe, and reliable. The technology is based on a sci-

entific process that fabricates large single crystals of

semiconductor-quality actinide oxide materials

(including uranium oxides) using a proprietary

process. These robust semiconductor materials are

capable of withstanding extreme temperatures and

radiation levels.

The Nano Engine developer wishes to commer-

cialize this technology. He believesit has a variety of

market applications, particularly within the military

sector. Other applications, however, include power-

ing single-family homes and automobiles and

serving as the base technology for mobile power

generators. On the surface, this technology’s poten-

tial seems endless. However, the developer must

determine the economic viability of the Nano Engine

before he can convince stakeholders to provide the

requisite funding for a product launch (Choi and

Shepherd, 2005; Dimov, 2011;Wood and McKinley,

2010). One of his viability questions concerns the

point of entry that would provide the most profit

(e.g., Holt and Macpherson, 2010)?

Unfortunately, despite its market potential and

regardless of the technology’s viability, it is quite

probable that the Nano Engine will never be com-

mercialized or even exit the laboratory (West and

Noel, 2009). Past research estimates that for every

3,000 new conceptualized business ideas, only four

will advance to the market, two will generate profit,

and one will become a market leader (Zien, 1998;

Zien and Buckler, 1997; Zimmerer, Scarborough,

and Wilson, 2008). These daunting statistics beg the

Keywords: social capital; social competence; opportunity; cre-

ation; entrepreneurs

*Correspondence to: Neil Tocher, College of Business, Idaho

State University, 921 S. 8th Ave., Stop 8020, Pocatello, ID

83209, U.S.A. E-mail: tochneil@isu.edu

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Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 9: 119–135 (2015)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1195

Copyright © 2015 Strategic Management Society

question: Are all the rejected ideas technologically

infeasible? If not, why do so many technically viable

business ideas never make it to the competitive mar-

ketplace? Undoubtedly, many feasible technologies

are simply more complicated, more expensive, and

less effective than the eventual market solution.That

said, the growing body of research on the creation

view of opportunities sheds some light on this quan-

dary by suggesting that social processes between

potential entrepreneurs and interested parties often

account for why many technically brilliant business

ideas are abandoned sometime between conceptual-

ization and market launch (e.g., Dimov, 2007, 2011;

Foss et al., 2008; Klein, 2008). Surprisingly though,

few studies have comprehensively examined the dif-

ferent roles various categories of social resources

(social capital and social competence) play at differ-

ent stages of the opportunity-creation process.

Hence, the present article fills this gap by outlining

how the unique resources of social capital (goodwill

that exists within one’s network relationships (Adler

and Kwon, 2002)) and social competence (overall

ability to interact effectively with others (Baron and

Markman, 2003)) facilitate entrepreneurs’ ability

to develop imagined business ideas into market

realities.

The creation view posits that opportunities are

developed over time through a multistage, path-

dependent, socially complex, and iterative interac-

tive process between entrepreneurs and interested

parties (Alvarez, Barney, and Anderson, 2013;

Dimov, 2010, 2011; Haynie, Shepherd, and

McMullen, 2009). Creation can be contrasted with

the more established discovery view of opportunity

recognition, which holds that opportunities originate

independent of entrepreneurs via structural changes

within industries or markets and are, thus, waiting

for highly alert individuals to exploit them (Shane

and Venkataraman, 2000; Shane, 2003). Therefore,

while discovery suggests that social resources are

highly valuable within new venture creation because

they provide entrepreneurs access to critical infor-

mation on existing opportunities (e.g., Stam and

Elfring, 2008), creation implies that social resources

are quite possibly the stimulus that allows certain

entrepreneurs and not others to advance conceptual-

ized business ideas into market offerings (Foss et al.,

2008). Creation scholars conjecture that business

ideas originate within the entrepreneur’s imagina-

tion after which the entrepreneur engages in a

socially complex sensemaking process with knowl-

edgeable others resulting in the business ideas either

progressing to market entry or being abandoned due

to unresolved uncertainties (McMullen and

Shepherd, 2006; Dimov, 2010, 2011). As such, the

creation perspective suggests that opportunity cre-

ation requires entrepreneurs to successfully navigate

their ideas through multiple developmental stages

(e.g., Haynie et al. (2009), each of which require

different social proficiencies (e.g., Choi and

Shepherd, 2005; Zimmerman and Zeitz, 2002). For

example, during opportunity objectification (process

of validating that a conceptualized idea has market

viability (Wood and McKinley, 2010)), social capital

is essential because it allows entrepreneurs to lever-

age the goodwill they possess with knowledgeable

others to help them gain needed feedback about the

viability of their ideas. Conversely, during opportu-

nity enactment (the process of building stakeholder

support sufficient enough to transition an objectified

idea into an operating business (Schoonhoven,

Eisenhardt, and Lyman, 1990)), entrepreneurs must

use their social competence (variety of interpersonal

skills) to both effectively distribute key information

about the proposed business and sell stakeholders on

the opportunity’s viability (e.g., Baron, 2007;

Lounsbury and Glynn, 2001).

Given the above arguments, we build on Wood

and McKinley’s (2010) three-stage model of oppor-

tunity creation (opportunity conceptualization,

opportunity objectification, opportunity enactment)

to assert that social capital facilitates opportunity

objectification by providing entrepreneurs a base of

knowledgeable peers to engage during the

sensemaking process. Once objectified, we further

posit that social competence facilitates opportunity

enactment by helping entrepreneurs reduce stake-

holders’ opportunity-related uncertainty during the

consensus-building process. Finally, we assert that

social competence positively moderates the social

capital objectification relationship by helping entre-

preneurs leverage bridging ties, whereas social

capital positively moderates the social competence

idea enactment relationship by increasing entrepre-

neurs’ sources of potential stakeholders.

Such assertions progress the literature beyond

arguing that social resources expedite the entrepre-

neur’s ability to identify existing opportunities, to

instead asserting that social resources are the catalyst

to creating new opportunities. Fundamental to our

argument is the idea that social resources help entre-

preneurs create new businesses which, without the

influence of these resources, would likely never

come to fruition. Correlatively, we further contend

120 N. Tocher, S. L. Oswald, and D. J. Hall

Copyright © 2015 Strategic Management Society Strat. Entrepreneurship J.,9: 119–135 (2015)

DOI: 10.1002/sej