The importance of attributes in entrepreneurial Opportunity evaluations: An emerging market study
Managerial and Decision Economics
Graduate School of Business Administration, Wits Business School, University of the Witwatersrand, Johannesburg, South Africa
Although prior research has established that entrepreneurs have idiosyncratic perceptions about opportunity attributes, we do not yet understand the level of importances attached to attributes when evaluating opportunities. This article uses conjoint analysis to assess how trade-offs are decided when evaluating opportunities considering both individual and business criteria. We hypothesize differences in the perceived importances of opportunities and the unique constellations therein. The results indicate that there is a significant difference in the degree of importance attached to the business sector, capital intensity, technology maturity, market potential and return on investment potential, when individuals evaluate an entrepreneurial opportunity. The business sector was identified as the principal determinant of opportunity attractiveness, followed closely by the market growth rate, which reflects emerging market conditions. By contextualizing the findings, it is suggested that emerging economies impose higher bureaucratic burdens on entrepreneurs, increasing uncertainty as well as operational and transactions costs of firms; therefore, reducing the incentive to invest in capital or technology. © 2013 John Wiley & Sons, Ltd.