Attending to the External Environment to Identify Potential Opportunities
AbstractBuilding on a recent study (Shepherd et al. in Strategic Management Journal 38:626–644, 2017), this chapter highlights the importance of noticingopportunities as an initial step toward new venture creation. Unsurprisingly, there has been considerable interest in the processes of allocating attention to notice potential opportunities arising from changes in the external environment. We know a great deal about the role of top-down (i.e., based on knowledge and experience) processes of allocating attention to the environment in forming opportunity beliefs worthy of entrepreneurial action. However, in this chapter, we illustrate how bottom-up processes, whereby environmental changes capture entrepreneurs’ attention, shape opportunity identification. Building on the notion of guided attention, we detail an attention model of forming opportunity beliefs for entrepreneurial action that includes both top-down and bottom-up processes for allocating attention. This chapter explains how entrepreneurs can allocate their transient attention to identify potential opportunities from environmental changes. This chapter also describes how allocating sustained entrepreneurial attention influences belief formation about radicaland incremental opportunities requiring entrepreneurial action.