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Risk, effort, cost, returns and time as factors in the comparison of opportunity perception between entrepreneurs and non-entrepreneurs

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posted on 14.05.2020 by Shreya AGRAWAL

The concept of Entrepreneurial Opportunity (Sarasvathy et al, 2005) has developed considerably as an area of interest to researchers in the past decade. Several studies have shown that opportunity is central to entrepreneurship, essentially the first step. Yet prior research has not explored the role of perceived value of the opportunity in the entrepreneur’s decision to embark on the opportunity. Julian Simon, in his Drive Effort hypothesis, posits that the amount of effort which a person will exert depends upon two factors: (a) the opportunity that the person perceives to earn additional income, and (b) the person’s ‘need’ for additional income as measured by the person’s wealth. Simply put, he argues that an individual, firm or nation would exert less effort and display less drive as they grow older, or wealthier or both. This study essentially argues that Simon’s hypothesis may not be validated for every individual and in particular entrepreneurs. Next, according to Simon, an opportunity is accepted or rejected on the basis of the perceived return of the opportunity relative to the person’s iv accumulated wealth. However, Simon ignores other factors such as risk, financial costs, personal effort, expected returns and time for realization of the opportunity. This thesis explores the role of these factors and the entrepreneurs as exceptions to Simon’s hypothesis.

History

Document type

Master thesis

Degree awarded

MSc in Management

Year degree awarded

2013

Supervisor(s)

Tan, Wee Liang

Committee members

Gilbert TAN; CHOI Young Rok

SMU School

Lee Kong Chian School of Business

No. of pages

113

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