Te Study on Identifying te Relationsip between Opportunity Recognition and Sustainability in Small Business in Sri Lanka H.R.L Perera, K.T.J.C.M. Perera, B.K.U.P Rodrigo, K.M. Gunawickrama, P.V.H.N.D Perera, R.D.M. Ranasinge, K.A.D.C.A. Nanayakkara, P.S. Rajakaruna, M.N.A Prasanna, S.A.G.L Suraweera Abstract Supervised by Ms. W. A. D. S. Wijetunge Entrepreneursip nowadays is one of te fastest developing and expanding fields in te modern economic settings. Present in every industry and on bot corporate and small business level, entrepreneurs are often regarded as te driving economic force for improvements and expansion. Neverteless, wit bot scolars and practitioners increasingly recognizing te importance of tis field and related researc areas, an aspect receiving te most attention is te opportunity recognition and idea generation process. Tis study intends to identify weter ig level opportunities mediate te relationsip between opportunity recognition and firm s sustainability. Te key constructs wic give more concern in te researc are sustainability & opportunity recognition. A questionnaire will be used to collect data as a metodology of te researc. 150 samples of entrepreneurs are to be selected & descriptive statistics will be used to analyze data. Te study will generate new factors wic will restrict to identify ig level of entrepreneurial opportunities for Sri Lankan entrepreneurs. Keywords: Sustainability, Opportunity Recognition, Levels of Opportunity Recognition Paper Type: Researc Proposal Introduction Entrepreneurial individuals are success driven, and ence are more likely to engage in te rigt kind of opportunity recognition to ensure tat tey are successful. Entrepreneurial opportunities are believed to exist wen individuals ave a special understanding of te value of uncommon opportunities and act upon tis understanding, wic results in entrepreneurial income. Some of te various definitions of opportunity recognition given are, (Lumpkin & 83
Lictenstein, 2005 July) te ability to identify a good idea and transform it into business concepts tat add value and generate revenue and also Te discovery, evaluation, and exploitation of opportunities is a defining feature of entrepreneursip (Sane, Prior knowledge and te discovery of entrepreneurial opportunities, 2000); (Sane & Venkataraman, Te promise of entrepreneursip as a field of researc, 2000).Tese definitions make an empasis tat opportunity recognition is an inseparable part of entrepreneursip. Even wit suc recognitions, one can argue tat tere are still insufficient confirmed relationsips between recognized ig level/low level opportunity recognition and sustainability of selected opportunity. Opportunities come from many sources, for startups business it can be current or past work experiences of te entrepreneur, Hobbies tat grow into business or lead to inventions, suggestions by friends or family and cance events. For establised firms it can be needs of te existing customers, suggestions by suppliers and tecnological development tat lead to new advancements. An entrepreneur migt discover tese opportunities spontaneously or unexpectedly, wen first become aware of a new business concept or may occur as te result of deliberate searc for new venture projects and creative solutions to business problems. Discovered opportunity can be low level recognition or ig level recognition. Opportunities are situational. Some conditions under wic opportunities are spawned are entirely idiosyncratic wile at oter times tey are generalized (Timmons, 1994) Hig level opportunity may ave factors suc as attractive, Time, Durable and value creating. But still a low level opportunity can sow good results. How far te sustainability of a business relies on te level of opportunity recognition? For tousands of years, business existed only at te fringes of society. Society tougt little of people in business, and people in business expected little of society. Profit was teir only reward because power, social status, and even social acceptability were closed to tem. In tis context te idea tat making a profit was te only goal of business migt ave some sense (Solomon & Hanson, 1983). But in a time wen te values of te business world largely influence te values of society as a wole and te possibilities of future generations, te purposes and goals of business canged. Many small businesses emerged. 84
Tis study pays attention on identifying te relationsip between ig level/low level opportunity recognition and sustainability in small business. Tis proposal focus on te Researc problem, Researc questions, Researc objectives, ypotesis of te study, literature review, conceptual framework, Researc metodology and Time plan. Researc Problem Te people wo typically excel at opportunity recognition are te rigt-brain creative type people. Tese people are clever and look at te same situations tat everyone else does, but envision someting different. Tey see new angles, new possibilities, and new ways to do tings. Firms often engage in entrepreneursip to strengten performance and furter growt troug strategic renewal and te creation of new venture opportunities (Stevenson & Jarillo, 1990). Terefore opportunity recognition can be considered as te eart of an entrepreneurial firm. Recognition of opportunity level depends on te knowledge and experience of entrepreneur. Tere are many entrepreneurial opportunities exists in Sri Lanka but, te recognition of tose opportunities are at lower level. Altoug, tere are two types of opportunities tat namely ig level/lower level of opportunities. In order to success entrepreneurs must recognize te ig levels of opportunities. Organizational learning can strengten a firm s ability to recognize opportunities and elp equip tem to effectively pursue new ventures. (Lumpkin & Lictenstein, 2005 July). Tey can start te business but te succession of te business may be subjective oterwise it goes to fail. Te present context many small businesses are being started te opportunities in relation to tese newly started business are low level of opportunities. Tere is a problem arise tat wy Sri Lankan entrepreneurs cannot identify ig level of opportunities. In accordance wit te Sri Lankan context, we could observe tat it does not ave sufficient gazzells because te failure rate is very ig due to poor levels of opportunity recognition. A very few entrepreneurs in Sri Lanka as identified ig level of opportunities suc as Mr. Wagapitiya & Mr. Jayasekara etc are some of examples. Tese entrepreneurs ave good knowledge about te present business environment as 85
well as & at te beginning of teir business started. Te businesses conducted by tem are sustainable & do a uge impact to te national economic conditions. Tat s wy tey conduct teir businesses wit adding new tings in relation to teir fields. Due to lack of good education plus oter factors, tere may be a lack of recognizing ig level of opportunities. Tat s wy many small businesses fail witin 5 years. In order to find te reasons for inability to identify ig level of opportunities, we ave to conduct tis researc. It is not sufficient to find te reasons as well as at te final stage tere sould be some suggestions ow we eliminate te problem of inability to recognize te ig level of opportunities. Tis study pays attention on identifying te relationsip between ig level/low level opportunity recognition and sustainability and ow far te sustainability of a business relies on te level of opportunity recognition? Researc Questions 1. Wat is te level of opportunity recognition among small entrepreneurs? 2. Up to wat extent sustainability is ensured among small entrepreneurs? 3. Wat is te relationsip between te level of opportunity recognition and sustainability? Researc Objectives 1. To identify te levels of opportunity recognition among Sri Lankan small entrepreneurs. 2. To measure te sustainability level tat is ensured. 3. To identify te relationsip between opportunity recognition level & firms sustainability Hypotesis of te study H 1: Hig level of opportunity recognition is positively affected to te firm s sustainability. H 1a: Entrepreneurs prior knowledge positively affect to te ig level opportunity recognition. 86
H 1b: Entrepreneurs social ties positively affect to te ig level of opportunity recognition. H 1c: Entrepreneurial activeness and alertness positively affect to te ig level opportunity recognition. H 2: ig level opportunities mediate te relationsip between opportunity recognition and firm s sustainability. Literature Review Opportunity Recognition In te field of Entrepreneursip, opportunity recognition is te eart of te field. It is te first step of te entrepreneurial process. Opportunities can be defined as situations in wic new goods, services, raw materials, and organizing metods can be introduced and sold at greater tan teir production (Casson, 1982) (Sane & Venkataraman, 2000) and terefore, empasizes te importance of personal economic gain financial profit for te entrepreneur for recognizing opportunities. Tere are many factors tat affect opportunity recognition. Namely prior knowledge (Sane & Venkataraman, Te promise of entrepreneursip as a field of researc, 2000)(Kirzner, Perception, Opportunity, & Entreprenersip, 1979), social ties (Ozgen & Baron, 2007), entrepreneurial activeness and alertness (Sane, Prior knowledge and te discovery of entrepreneurial opportunities, 2000), (Kirzner, Entrepernerial Discovery & Te Competitive Market Process; An Austerian Approac, 1997) & motivation. Individual person recognizes te opportunities in accordance wit teir previous life experience (Baron, 2006). Prior knowledge in association wit ig-level cognitive capabilities is important in identifying and pursuing an opportunity (Baron, 2006), (Sane & Venkataraman, Te promise of entrepreneursip as a field of researc, 2000). Te extent of an entrepreneur s social network is positively related to opportunity recognition. Social ties serve as conduits for te spread of information concerning new opportunities ((Burt, 2004); (Granovetter, 1973). Te active role of entrepreneursip te searc for new information is important in opportunity recognition (Baron, 2006), (Hills & Scrader, 1998). Found tat for entrepreneurs, an active searc for opportunities troug personal contacts was regarded as more beneficial tan te identification of opportunities from public information sources, suc as magazines and newspapers. 87
Tese are te factors wic will decide te opportunities weter tey are ig level or low level opportunities. Growt objectives (Donckels & E, 1991), avoid risks(claver, L, & D, 2008),desire to borrow from external sources to facilitate international expansion (Graves & Tomas, 2006), financial capital (Gallo & C, 1996). Toug tere are two types of opportunities wic are ig level & low level opportunities, most of te Sri Lankan entrepreneurs fail to identify ig level of entrepreneurial opportunities in many circumstances. Opportunity recognition is a multidimensional penomenon sligtly focused in academic researc (Fatima, iqbal, & Reman, 2011). Toug tere are many opportunities exist in accordance wit Sri Lankan context, 90% of newly started ventures are being failed. Terefore, tis researc is being performed in order to find reasons for tis matter. Sustainability A growing number of companies worldwide ave engaged in serious efforts to integrate sustainability into teir business practices (Jones, 2003).But most of te firms ave neglected te term Sustainability from teir business strategies & policies. Sustainability can be defined as meeting te needs of te present witout compromising te ability of future generations to meet teir own needs. Sustainability means meeting te needs of te present witout compromising te ability of future generations to meet teir own needs (Commission, 1987). A Sustainable opportunity consists wit economic, social & environmental benefits simultaneously. Sustainability can be measured by using financial as well as non-financial metods. Most firms ave kept te question of sustainability separate from considerations of business strategy and performance evaluation, areas tat are often dominated by purely economic performance indicators (Clarkson, 1995) However according to (Petrini & Pozzebon, 2010) managers ave to take into consideration not only increased sales and profits and/or decreased costs, but also te sustainable development of te business itself and te surrounding context. Measuring business sustainability (Falsaw & Glaister, 2006), we cose to retain two types of complementary measures: financial measures and nonfinancial measures (Hart, 1992), (Hitt & Hoskisson, 1990), te financial performance is measured using a scale of tree items developed and validated by(ramanujam & Venkatraman, 1987). Tis scale was used in oter several studies (Papke-Sields, Malotra, & Grover, 2006). To measure financial performance, respondents were asked to evaluate and compare sales growt, 88
profit growt and return on investment of teir companies versus teir direct competitors. As for non- financial performance, it is measured by a scale we ave built by inspiring from previous works (Srivastava, Moanty, & Lake, 2006). Tis scale for measuring non-financial performance correspond to evaluation by respondents of te satisfaction of owners, satisfaction of customers and satisfaction of employees of teir firms versus teir direct competitors. According to above findings tey ave researced Te discovery, evaluation, and exploitation of opportunities is a defining feature of entrepreneursip (Sane, Prior knowledge and te discovery of entrepreneurial opportunities, 2000); (Sane & Venkataraman, Te promise of entrepreneursip as a field of researc, 2000) it sows opportunity recognition is more important. Many successful companies worldwide ave integrated sustainability into teir business practices (Jones, 2003). Terefore tere is a positive relationsip between opportunity recognition and sustainability. Conceptual Model of te study Level of Opportunity Prior Knowledge Social Ties Opportunity Recognition Firms Sustainability Activeness and Alertness Financial Non-Financial Metodology Sample: Te population of te study tat te small & medium size entrepreneurial firms wic consist 2-100 of employees. But te number of population is unknown. As per te study purpose, 150 samples will be selected. Unit of analysis is firms wic include a person or a company. Data collection metods: Tis study plans to collect primary data by interviews. Close-ended questions will include into te questionnaire in order to get relevant feedback from Entrepreneurs. Te questionnaire was designed to cover one dependent variable as well as independent variables. 89
Data analysis: Data analysis is very crucial in a researc study. After collection of data wit te elp of appropriate tools & tecniques, next step is to analyze & understand data in order to arrive at a practical situation. If tere are any wrong in analyzing data, entire interpretations will be miscarried. Tus, tis is a quantitative researc; descriptive statistics metods will be used. Significance of te study Being entrepreneurial is vital for a country to ensure te growt of te economy as well as te sustainability. Sustainability is depending on te entrepreneurial firm s succession. If te entrepreneurial firms can recognize te ig level opportunities to perform teir business it gives positive effect to sustainability. In tis study evaluates te levels of opportunity recognition and firms sustainability. Tere are several reasons for tat study, one is in Sri Lankan context tere is iger rate of firm s failure. Tis study intends to identify te relationsip between opportunity recognition and firms sustainability. Results of te study gives wic level of opportunity is more effective to a firm as well as wat are te factors affect to opportunity recognition and ow to measure te firm s sustainability. Expected contribution to te body of knowledge Opportunity recognition is very important in ensuring te sustainability of any venture. In order to acieve sustainability of ventures, entrepreneurs must identify viable opportunities. Also opportunities can be divided into two categories. Tey are ig & low level of opportunities. Tus, entrepreneurs sould recognize ig level of opportunities in order to identify sustainable opportunities. It sould be very important to empasis tat ig levels of opportunities are subjective. If one entrepreneur tinks tat e identified a ig level of opportunities but anoter may identify tat opportunity as a low level of opportunity. Most of te small & medium size entrepreneurs in Sri Lanka sould recognize ig level of opportunities in order to sustain in te local market as well as in foreign. 90
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