The Role of Prior Knowledge in the Process of Recognizing Entrepreneurial Opportunities

Recognizing opportunities has often been raised as a crucial aspect of the entrepreneurial process. It seems that the ability to identify, analyze and develop entrepreneurial opportunities is what differentiates entrepreneurs from those who are not. This assertion highlights the relevance of understanding in greater depth the variables that have an influence on the process of recognizing opportunities. In this context, an entrepreneur’s prior knowledge and experience, which can be broken down into three domains, have an impact on the dimensions of recognizing opportunities, such as the scope of the opportunity and the intensity of the process. Deriving from this dynamic, the objective of this study is to understand the role of prior knowledge in the process of recognizing entrepreneurial opportunities. By way of in-depth interviews with ten entrepreneurs, it was concluded that those who have limited professional experience attribute greater relevance in the process to their educational activities. When it comes to recognizing opportunities, however, these same entrepreneurs have a broader scope and approach the process in a more intense way. Entrepreneurs who have a better-defined mental framework, on the other hand, which results from their vast professional experience, tend to channel any opportunities they recognize towards the industry in which they operate and this results in fewer potential businesses.

Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case

The chapter analyzes the financial policy of corporate bond issuers in the new Italian junior bond market specifically dedicated to unlisted firms and SMEs, using a proprietary firm-level dataset on 127 first-time mini-bond issuers across 2013–2017 years jointly with a control sample of around 5200 Italian private firms that have not issued corporate bonds across the same years. Since SME access to the debt capital market is largely considered a valuable source of debt funding diversification, especially for growth firms with a prominent exposure on bank debt, we test using OLS regressions whether bond issuers are able to reduce their financial vulnerability in comparison with similar nonissuers firms. The aim is to assess the extent to which the financial choices of SMEs regarding nonequity external funding can become a key factor in facing real and financial shocks like those triggered by the current pandemic Covid-19 outbreak. Our findings suggest that the access to the junior bond market is beneficial for the Italian unlisted companies in terms of a pronounced improvement in our financial fragility indicators.