Directive Deficiencies: How Resource Constraints Direct Opportunity Identification in SMEs

Abstract

Previous studies show that resource constraints have mixed effects on innovation and opportunity identification by entrepreneurs. Sometimes, resource constraints lead to identifying more opportunities, whereas in other cases, entrepreneurs see fewer opportunities. This study explores a new approach to reconcile this inconsistency. Using a sample of 219 small‐ and medium‐sized enterprises (SMEs), we explore relationships between supply and demand constraints, on the one hand, and identifying supply and demand opportunities, on the other hand. The results show that supply constraints have a positive effect on identifying supply opportunities but a negative effect on identifying demand opportunities. Similarly, demand constraints have a positive effect on identifying demand opportunities but a negative effect on identifying supply opportunities. Thus, this study shows that resource constraints direct the entrepreneur's attention toward opportunities inside the constrained domain rather than outside the constrained domain. An important consequence for theory is that a complete explanation of the mixed effects of resource constraints should consider different types of resource constraints and different sources of opportunities simultaneously. For practicing entrepreneurs, being aware of this mechanism can prevent missing out on promising opportunities outside the constrained domains.

Factors Influencing the Identification of Sustainable Opportunities by SMEs: Empirical Evidence from Zambia

“…The dependent variable measured the number of sustainable opportunities identified in eight categories which were collapsed into two categories (low opportunity identification and high opportunity identification), which gives a dichotomous dependent variable. Linear regression becomes inappropriate for categorical dependent variables because it relies on the assumption of normality of residuals [89,90]. Consequently, hierarchical logistic regression analysis was used to test the hypotheses H1-H4c.…”

“…Future studies could focus on the type of sustainable opportunities identified (see [89]). Furthermore, we could not separate the number of sustainable opportunities identified for making an existing business more sustainable from the number of opportunities identified for starting a new sustainable business.…”

How Does Material Resource Adequacy Affect Innovation Project Performance? A Meta‐Analysis

“…Moreover, those studies that did include this variable in their models reported inconsistent results, including positive (e.g., Faraj and Yan, 2009), negative (e.g., Sethi and Iqbal, 2008), and nonsignificant (e.g., Hoegl and Parboteeah, 2006) relationships. This is in contrast to studies on the organizational level, where material resource adequacy as a focal variable was studied extensively (Garriga, Von Krogh, and Spaeth, 2013;Katila and Shane, 2005;Nohria and Gulati, 1996;Troilo, De Luca, and Atuahene-Gima, 2014;van Burg, Podoynitsyna, Beck, and Lommelen, 2012). Even more problematically, the role of material resource adequacy in innovation project performance from an academic perspective is as unclear as it is in practice, with contradictory theoretical assumptions as well as empirical findings (Hoegl, Gibbert, and Mazursky, 2008;Rosso, 2014).…”

Innovation with Limited Resources: Management Lessons from theGermanMittelstand

“…The most striking and compelling take-away is that the strong and sustained innovative and economic performance exhibited by the Mittelstand stems not from access to a sole resource but rather from participating in a highly effective context that bestows innovation and competitiveness in global markets. Any one aspect alone (whether it be a niche focus, globalization strategy, preference for self-financing, long-run mindset, superior employee relations, or community embeddedness), Resource-based view (Alvarez and Barney, 2007;Barney, 1991Barney, , 2001Foss, Klein, Kor, and Mahoney, 2008 Entrepreneurship and innovation literature (Baker and Nelson, 2005;Corbett, Covin, O'Connor, and Tucci, 2013;Sarasvathy, 2001;Stock, Zacharias, and Schnellbaecher, 2016;Van Burg et al, 2012;Williams and Wood, 2015;Zahra and Wright, 2011) and interorganizational drivers of heterogeneity in the six capabilities for innovating with limited resources? RQ #2C: Do Mittelstand firms have superior capabilities as compared to other firms?…”