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114 Int. J. Entrepreneurial Venturing, Vol. 2, No. 2, 2010
Copyright © 2010 Inderscience Enterprises Ltd.
The Särimner effect and three types of ever-abundant
business opportunities
Kent Thorén* and Terrence E. Brown
Royal Institute of Technology,
Department of Industrial Management,
Lindstedsvägen 30, S-100 44 Stockholm, Sweden
E-mail: kthoren@kth.se
E-mail: terrence.brown@indek.kth.se
*Corresponding author
Abstract: This article illustrates how corporate entrepreneurship links the
firm’s long term development process with the external environment. Based on
the relaxation of several of the unrealistic assumptions in classic economic
theory, it also illustrates how corporate entrepreneurship can be an important
driver of change in the firm’s environment. More specifically, the article
demonstrates that
1 one important consequence of entrepreneurship is the creation of more
business opportunities, leading to an ever-abundant availability of new
business potential
2 these opportunities can be classified into three categories based on how they
come into existence, and by whom they are exploited
3 this leads to implications regarding strategic approaches to venture selection
and pursuit.
Each opportunity type is illustrated with examples from the online computer
gaming industry. A number of preliminary managerial implications are
presented, based on differences in the creation and nature of opportunities in
each category.
Keywords: entrepreneurship; opportunity; strategy; growth; corporate
entrepreneurship; virtual economy; online gaming; Särimner effect;
entrepreneurial venturing.
Reference to this paper should be made as follows: Thorén, K. and Brown, T.E
(2010) ‘The Särimner effect and three types of ever-abundant business
opportunities’, Int. J. Entrepreneurial Venturing, Vol. 2, No. 2, pp.114–128.
Biographical notes: Kent Thorén is a Strategy and Entrepreneurship
Researcher at the Industrial Management Department at the Royal Institute of
Technology (KTH) as well as a Program Director within executive education at
the same institution. He is also the current Country Vice President for Sweden
at ECSB.
Terrence E. Brown is the former Dean of the Stockholm School of
Entrepreneurship and currently an Associate Professor in Entrepreneurship and
Innovation at the Royal Institute of Technology. Additionally, he was the
Program Director for the ICT Entrepreneurship Masters Program at KTH, a
Program Director at the prestigious Scandinavian International Management
Institute (SIMI) and the founder of the Startup Academy.
The Särimner effect and three types of ever-abundant business opportunities 115
1 Introduction
This article concerns corporate entrepreneurship over time as a process of repeated
strategic selection of ventures (Covin and Miles, 2007) and a corresponding allocation of
resources (Noda and Bower, 1996) for the purpose of influencing the firm’s long-term
development (Normann, 1977). Thereby, it relates to the ongoing efforts to uncover the
role that corporate entrepreneurship plays in strategy (e.g., Bettis and Hitt, 1995; Guth
and Ginsberg, 1990; Hitt and Ireland, 2000) and how it relies on, and affects, the firm’s
environment. It does so by proposing new ideas about entrepreneurial activities and its
interplay with opportunities.
The relevance of opportunities as a theoretical construct is well established in the
entrepreneurship literature and a substantial part of it rely on opportunity as the key
defining element of entrepreneurship (e.g., Brazael, 1999; Churchill and Muzyka, 1994;
Shane and Venkataraman, 2000a). For instance, Shane and Venkataraman’s (2000a,
p.218) define entrepreneurship research as “the scholarly examination of how, by whom,
and with what effects opportunities to create future goods and services are discovered,
evaluated and exploited”. Opportunity has proven to be a relevant construct for empirical
research as well. Attempts to gauge the extent of the entrepreneurial behaviour of firms
have successfully utilised instruments that measure firms’ attention to, and tendency to
pursue, opportunities (Brown et al., 2001).
This article suggests and exemplifies three ways of how the interrelation of activities,
environment and perception of firms lead to new opportunities that allow for continued
exploitation by economic actors. More specifically, we will discuss a particular process
through which opportunities can come into existence as a consequence of present and
previous exploitation efforts. Then we will suggest how the opportunities can be
categorised based on how they come into existence and by whom they are detected and
exploited. All these aspects have several managerial implications. For instance,
distinguishing between different types of opportunities is important, since differences in
the nature of the opportunities themselves influence the process of entrepreneurial
exploitation (Shane and Venkataraman, 2000b).
The structure of the article is as follows: First we briefly present some opportunity
definitions and typologies suggested in previous literature. In the subsequent section, we
present the assumptions and conceptual framework on which our reasoning rests. Then,
we define a number of opportunity types and illustrate them with real life examples from
the computer gaming industry. Finally, the implications and the conclusions of the
research are discussed.
2 Definitions and conceptual framework
Before entering into a discussion about corporate entrepreneurship based on the
opportunity concept, it is suitable to describe more clearly what opportunities are and
how they come into existence. Merriam-Webster Online Dictionary (2004) defines
opportunity in general terms; as a favourable juncture of circumstances. The
entrepreneurship literature includes many attempts to define the nature of such junctures
of circumstances in terms that are relevant for businesses. Kirzner (1997) primarily
conceptualise opportunities as inefficiencies in the economy where the entrepreneur’s key
skill regards the detection of unmet market needs. Nevertheless, it is possible to imagine
116 K. Thorén and T.E. Brown
several other ways in which opportunities can occur (cf. Drucker, 1985). For instance,
many authors rely on a Schumpeterian perspective and argue that actors might discover
ways to combine resources into new solutions that gives them a more valuable form
(Schumpeter, 1934). This perspective hence regards opportunities with the starting point
of possibilities on the supplier side.
Singh’s (2001) proposes a broader definition of opportunity as a feasible,
profit-seeking, potential venture that provides an innovative new product or service to the
market, improves on an existing product or service, or imitates a profitable
product/service in a less-than-saturated market. Casson’s (1982) definition extends
beyond products and services as it also includes the introduction of new raw materials
and organising methods, as long as they can be introduced at a price greater than their
cost of production. Other scholars argue that it is not necessary to stipulate that
opportunities are profitable, it is enough that its realisation adds value for the buyers
(Timmons, 1994). Stevenson and Gumpert (1983), on the other hand, simply define an
opportunity as a desirable future state that is attainable.
For the purpose of this article we believe that it is important to use a definition that is
very specific in terms of what an opportunity is without constraining assumptions of how
they are noticed or exploited. In addition, it appears that an awareness of unmet market
needs hardly constitutes an opportunity unless a solution with functions that match those
needs can be compiled and delivered. Without a possible solution, the prospective
entrepreneur lacks means to capitalise on the needs however great those needs might be.
Moreover, when customers’ needs can be assumed to be more or less limitless – most
people would like to be able to get anything they want, for free, right away – it is only
when the entrepreneur is able to capture an appropriate part of the value created by the
solution for himself that the need represents an opportunity. The unmet need must hence
be accompanied with a willingness to pay, or in other words, there must be a demand
(Sullivan and Sheffrin, 2003)1. We therefore define opportunity as a conjugation of a
demand and a possibility to supply a corresponding solution (Thorén and Brown, 2010).
2.1 Opportunity categories in previous research
Several authors have found systematic differences between groups of opportunities which
they have used as a base to propose typologies. These typologies address the three main
areas of interest for entrepreneurship research, i.e., the existence, the detection and the
exploitation of opportunities (Shane and Venkataraman, 2000a), to a varying degree and
in different ways.
Ardichvili et al. (2003) reviews literature on a number of factors proposed to
influence opportunity recognition, and argue for four conceptual types of opportunities.
These four types are generated through combinations of the entrepreneurs’ level of
knowledge regarding market needs for a new product or service and the firm’s present
capability for providing that product or service. Their typology hence concerns the
detection of opportunity and the issues related to its exploitation.
Drucker (1985) suggests three broad opportunity categories characterised primarily
by how opportunities come into existence. He suggests that opportunities can occur
through
1 the creation of new information, as occurs with the invention of new technologies
2 the exploitation of market inefficiencies that result from information asymmetry
The Särimner effect and three types of ever-abundant business opportunities 117
3 the reaction to shifts in the relative costs and benefits of alternative uses, as for
instance occurs with regulatory changes.
Another distinction refers to whether impulses to initiate entrepreneurial activities
originate from conditions inside the firm or from the external environment.
There have also been attempts to identify opportunity types through empirical
investigation. Teach et al. (1989) found four typical patterns of how software industry
entrepreneurs bring new products to the market. Their study also involved outcome
dimensions, like the time they require to achieve different result milestones (i.e.,
break-even etc.). The four patterns they uncovered refer to the discovery of opportunities
and the styles of exploiting them, rather than being a typology of opportunities per se.
Another empirical study distinguishes between opportunity detection processes
(Alsos and Kaikkonen, 2004). Their study investigates whether opportunities were
created or discovered and varying degrees of deliberateness in the entrepreneur’s search
activities, leading to four types of opportunity detection processes; opportunity discovery,
opportunity search, opportunity creation and opportunity occurrence.
While the research efforts presented above have begun to provide important insights
into the nature of opportunities and some of the relevant dimensions for studying them,
they fail to take into account potential relationships between opportunities themselves.
This article attempts to remedy this gap in previous research. The background for our
approach of doing so is to be found in attempts to conceptualise the firm’s environment
in a way that marries realism and theoretical coherence.
2.2 The experimentally organised economy
Classic economic theory has long been criticised for its unrealistic assumptions like
market equilibrium, perfect competition and perfect information, as those conditions
would leave little room for the strategic choices and entrepreneurial activities that we see
everyday. Models based on these assumptions therefore tends to be inadequate for
producing useful advice to managers who are facing more unpredictable and dynamic
business conditions.
Schumpeter (1934) and Kirzner (1973, 1997), who both highlight the role of the
entrepreneur as a key actor in the economy, have proposed less static models. In
Schumpeter’s view, equilibrium is distorted by entrepreneurs through the creation of new
innovative resource combinations – potentially so competitive that they lead to the
destruction of the established firms or entire industries – thereby providing the dominant
force of renewal and development in the economy. Kirzner has another view that places
the entrepreneur in the role of an optimiser in an economy, as his activities drive markets
towards equilibrium rather than from it. This effect occurs because the entrepreneur’s
exploitation efforts expose the opportunity for other actors, thereby reducing the
information asymmetries that Kirzner considers to be the source of the opportunity in the
first place. Over time, this process gradually satisfies the equilibrium condition of perfect
knowledge among market participants, as more and more actors enter the market to
compete for a share of the opportunity until the reduction of prices makes further entries
unprofitable.
Interestingly, while Kirzner proposes that real-life markets cannot be expected to ever
attain absolute equilibrium, some of his critics go a step further and suggest that even a
tendency towards equilibrium is an unrealistic assumption. In an ever-changing market
118 K. Thorén and T.E. Brown
there is no assurance that the forces towards equilibrium are stronger than the
destabilising forces (e.g., Lachmann, 1986).
However, the concept of equilibrium may not only be unrealistic but also redundant
when studying certain aspects of firms and markets. One way to establish a more
practically useful conceptual framing, without losing the applicability of theoretical
reasoning, is to work from an assumption of disequilibrium rather than equilibrium (e.g.,
Eliasson, 1996; Nelson and Winter, 1982; Shane and Venkataraman, 2000a). By relaxing
some of the assumptions of the classic and traditional models it becomes possible to
develop more useful theories that capture the relevant aspects of firm management in a
more realistic way. An example of such attempts is the experimentally organized
economy (EOE), a framework which aims at capturing the economic environment of
firms as managers recognise it (Eliasson, 1987, 1996). Contrary to the classic models, the
EOE rests on the assumptions of the bounded rationality of market participants and a very
large and heterogeneous opportunity set. In addition, it is assumed that knowledge can be
tacit in nature, which signifies that it is not easily transferable between actors.
Jonason (2001) describes the EOE as evolutionary, since it deals explicitly and
endogenously with knowledge-based information processes, learning and
communication, while having no stable exogenous equilibrium. But he propose that the
EOE is different from other schools of evolutionary theory (e.g., Nelson and Winter,
1982) because it suggest an, for all practical purposes, open set of opportunities. The
opportunity set is viewed as a state space containing an enormous amount of elements in
complicated and unstable configurations that is so large and complex that it is impossible
for actors to know more than a local fraction of the whole (Eliasson, 1987).
The complexity of the situation introduces a dominant element of uncertainty where
actors, despite attempting to be rational, cannot simply deduce strategies from preference
rankings (Jonason, 2001). The informational constraints furthermore prevent them from
reliably assigning probabilities to possible consequences of their choices (c.f. Knight,
1921). Facing considerable uncertainty in a setting where knowledge is largely
impossible to transfer, executives and entrepreneurs alike must base their business
decisions on the available bits and pieces of asymmetrically distributed information.
Eliasson (1996) argues that these circumstances make the local environment of each firm
fundamentally unpredictable, and that the competence of the firm relates to its capacity to
cope with this unpredictable environment. In fact, in the EOE, actors are expected to
frequently make poor choices and bad decisions, based on more or less erroneous,
incomplete and unreliable information. This view is in sharp contrast to the classic theory
assumptions of perfect information and static equilibrium.
2.3 The existence of opportunities in the EOE
In cases where opportunities involve market inefficiencies they can be the result of
shortages, surpluses, or misallocation of resources leading to prices that are ‘too high’ or
‘too low’ (Drucker, 1985). An entrepreneur who discovers such a discrepancy can make
an entrepreneurial profit by exploiting it, but will at the same time reveal the discovery to
others who might decide to compete for a piece of the market (Kirzner, 1997). One
actor’s exploitation effort can therefore lead to another actor’s learning, as the latter
acquire more information of greater certainty about exposed opportunity during the
progress of the first actor’s entrepreneurial activities. However, this learning is not
necessarily limited to the opportunity that the initial entrepreneur tries to seize.
The Särimner effect and three types of ever-abundant business opportunities 119
Entrepreneurial activities influence many aspects of an economy by adding new products
or services to a market, adding new business activities to an industry, introducing new
technical solutions, influencing the balance of customer-supplier relationships and so
forth. Action, and interaction, in the market is therefore associated with an expansion of
the state space that leads to an increase of the total number of possible combinations
(Eliasson, 1987). As a result, new solutions become available allowing for some of the
demands that were unmet (or met at a higher price) by previous solutions to be exploited
by market participants, as a direct result of someone else’s launch of another new
business. An important consequence of entrepreneurship in the EOE is hence that the
opportunity set expands through its exploitation.
Eliasson refers to this phenomenon as the ‘Särimner effect’ after Nordic mythology
(e.g. Eliasson, 1996). Särimner was a pig in the Gods’ home Valhalla that, in addition to
producing very tasty pork, had a special ability that made him crucial in the gods’
household. According to the myth, Särimner was eaten in the evening but then always
reappears again alive the next morning. The magic was then repeated over and over
again, so there could be a feast every night. Consequently, Särimner provided the gods
with an ever-abundant source of fresh food. Similarly, the Särimner effect demonstrates
how the collective activities of market actors constitute the fundamental driving force of
the opportunity set’s development and provide an inexhaustible supply of opportunities2.
This does not mean that the expansion of the opportunity set is random. Instead, we
should expect it to be path-dependent, because the occurring opportunities are effects of
the specific previous actions of market participants.
Individuals’ and firms’ exploitation processes are path-dependent in a similar manner.
The exploitation of opportunities induced by the exploitation of other opportunities can
represent the second, or subsequent, step in a sequence of opportunity detection and
exploration processes. These opportunities are linked to each other, as experiences from
previous exploitation attempts influence which new opportunities entrepreneurs see. In
other words, entrepreneurs acquire local knowledge about the state space along the
path they take though the opportunity set over time. For individuals, this is sometimes
referred to as a knowledge corridor (Ronstadt, 1988). But the corridor principle is valid
for firms’ opportunity recognition and exploitation patterns as well, which leads to a
path-dependent development process of the firm (Normann, 1977).
2.4 Opportunity detection
Actors’ ability to detect opportunities depends on their alertness to relevant market
information (Kirzner, 1973, 1997), their tendency to combine such information with
previously acquired knowledge into new ideas (Ward et al., 1997) and their tendency to
think about applications in terms of potential market needs or new products (Ardichvili et
al., 2003). Social networks, personal background and individual characteristics, such as
prior knowledge, creativity, optimism and self-efficacy are considered to influence
opportunity detection (Ardichivili et al., 2003; Hills et al., 1997; Shane, 2000). The
detection of opportunities hence involves aspects of the environment in which the
opportunities exist as well as aspects of the individuals that see them (Shane and
Venkataraman, 2000a, 2000b). For the coming discussions it is useful to pay attention to
two aspects of opportunity detection.
First, one central issue for successful detection (and exploitation for that matter)
appears to be how familiar the entrepreneur is with the market for the new product or
120 K. Thorén and T.E. Brown
service (Ardichvili et al., 2003; Shane, 2000). In an EOE, such knowledge is acquired
from experimentation and active participation in the market through ongoing business
activities (Eliasson, 1996). However, while perceived opportunities often relate to
actors previous experience (e.g., Shane, 2000), the inspiration for vision of a new
demand-possibility conjugate can come from outside as well as inside the firm’s own
activities. In fact, the Särimner effect suggests that market knowledge and inspiration for
new ventures can be obtained from the current ongoing exploitation undertakings in
general. It is important to recognise that the opportunities which mainly originates from
the firm’s internal ongoing activities are somewhat different from those originating from
the outside (cf. Drucker, 1985; Teach et al., 1989), since empirical studies show that
different opportunity detection processes leads to different amounts of market
and technical uncertainty3. In strategy literature, this is sometimes referred to as the
‘outside-in’ and ‘inside-out’ approaches to strategy formation that result in market-driven
or resource-driven firms (Baden-Fuller, 1995; de Witt and Meyer, 2004).
The second aspect of importance is the amount of similarity between the detected
opportunity and the ones that provide inspiration. In some cases, the entrepreneur might
offer an identical or very similar solution to a market. In other cases there might be no
similarity at all, for instance if the observed exploitation merely served as a trigger that
caused the entrepreneur to come up with some new ideas. The resulting solution offered
to customers can then be realised through a new and creative recombination of resources,
an innovation. The similarity aspect influences, at a minimum, the uncertainty levels and
competition the venture will face4. Next, we will go into three particularly interesting
combinations of these two aspects.
3 Three categories of exploitation-induced opportunities
Based on the opportunity detection discussion above, we will divide exploitation-induced
opportunities into several different categories.
First, when the firm’s own exploitation efforts involve learning that enables a firm to
detect opportunities that previously were unavailable, it appears to the entrepreneur as
one opportunity following from another in a sequential manner. These subsequent
opportunities become visible and attainable for an entrepreneur only after the launch of
the initial venture (Ronstadt, 1988). Sequential opportunities are hence related to the
firm’s ongoing business, i.e., to either the initial opportunity itself or to aspects of its
exploitation, through a process where actors notice information in light of what they
already know (von Hippel, 1994). Examples of such opportunities include possibilities to
sell complementary products or new innovative ways to use acquired skills and resources
(cf. Alsos and Kaikkonen, 2004).
Second, exploitation can give rise to learning on the part of actors other than the
initial entrepreneur, i.e., in where someone is inspired by events in the external
environment caused by other entrepreneurs. In this manner, actors can recognise new
opportunities that have spilled over and may try to exploit them. For instance, a firm’s
sales of a product or service can give rise to unmet market needs for other products or
services that can be sold by other firms. Spillover can be seen as a diffusion of
knowledge resulting from activity in the market. A spillover can sometimes concern an
opportunity to become a supplier to the initial firm or to sell complementary products, but
spillovers can also be unrelated to the first firm’s operations but nevertheless inspired by
The Särimner effect and three types of ever-abundant business opportunities 121
it. The last situation occurs when business activities provide a creative entrepreneur with
ideas for a new solution that fulfils another need in the same or another market. The
connection to the initial opportunity range from very related to very unrelated, and from a
strong dependency to the initial firm to complete independence.
The third category occurs when opportunity detection is triggered by other firms’
activities and the entrepreneur tries to exploit the same market need by imitating the
initial firm’s solution. In this case, the entrepreneurial profits might have attracted new
entrants to the market and competitive rivalry can be expected (Kirzner, 1973, 1997).
However, it is also possible that the entrepreneur imitates the solution but pursues the
need in question in another geographical area, in which case direct rivalry might not
occur in the short term.
In summary, our categorisation of exploitation-induced opportunities is based on
whether it is one and the same firm pursuing both opportunities and whether it concerns
pursuing the initial opportunity or another one that is induced by it. The alternatives are
illustrated in Figure 1 below. Mere upgrades of current products might be seen as
sequential as well, but they are moves occurring mostly within the firm’s current
possibilities and served demands, and are hence not as new opportunities in the same
sense as the other three categories. They are therefore disregarded in this particular
article.
Figure 1 Three categories of exploitation-induced opportunities driven by the Särimner effect
(see online version for colours)
Imitation
Spillover
Sequential
Opportunity
Source o
f
inspiration
Similarity in
need & solution
There is also a possibility that opportunity occurs truly independent to, and isolated from,
other exploitation activities. This means that they come into existence as a result of
genuinely new ideas that lead to entirely new groups of products or services if they are
realised. Nevertheless, recall that previous research confirm that professional and
entrepreneurial experience gained from prior involvement in exploitation activities play
important roles for opportunity detection. We therefore expect such emergence of
isolated opportunities to be uncommon.
122 K. Thorén and T.E. Brown
3.1 Examples of exploitation-induced opportunities
It is easy to find empirical examples that illustrate how entrepreneurship can influence
circumstances so that more opportunities occur. We will give some examples from
computer gaming. Games are one of the earliest applications of computer technology.
With the increasing interconnectivity between computers facilitated by the internet,
computer gaming has become increasingly interactive and widespread. Today, millions of
people are active in massive multiplayer online role-playing games (MMORPGs) in
which they solve quests, kill monsters and interact with other players in enormous virtual
worlds. As these games have grown very popular, they generate substantial subscription
revenues (game time fees) for companies like Electronic Arts (Ultima Online), Blizzard
Entertainment (World of Warcraft) and Sony Online (EverQuest).
One important feature that makes these games popular is that players can develop
their in-game characters, providing them with more advanced powers and elaborate
personalities over time. A substantial part of character development comes from the
accumulation of virtual objects with special powers, skills and value. But acquiring
powerful objects is not easy, to get them, players have to invest a lot of time in playing.
As a consequence, some players who take their virtual life very seriously actually spend
more time in the game than they do working for a living in their real life (Castranova,
2001). Their strong commitment is linked to the effort and time spent, often over many
months or even years, which tend to make them strongly attached to their in-game
character.
However, as some players had relatively more money than time to spend on
developing their characters an unexpected trade of virtual objects emerged where digital
objects and virtual gold in the games are sold for real-world money on markets outside
the games. For example, it is possible to bid for magical weapons and armour at internet
auction sites like eBay. It appears that the exploitation of online gaming induced a
spillover opportunity for entrepreneurial players to make money as well. Castranova
(2001) assesses that this trade generates a substantial income for some players and that
the exchange rate for the EverQuest world Norrath’s currency is higher than that for the
Japanese yen.
The trade of virtual object has grown substantially over the years and was estimated
to exceed $3 billion in 2009 (Mitham, 2009). Inspired by this spillover business a
company called Black Snow Interactive started to imitate the entrepreneurial MMORPG
players, only on a larger scale (Dibbel, 2003). Black Snow was the world’s first virtual
sweatshop, employing three shifts of unskilled Mexican workers to acquire game world
gold and items at an assembly line pace and then selling them online. This phenomena
has since then been imitated in China where low wage worker act as ‘gold farmers’ who
generates game world gold and sells it for real world money. Black Snow’s business was
quite successful for a while. However, the further developments of this particular
company were somewhat questionable. After a number of very interesting property right
disputes concerning who exactly own the digital objects (i.e., the companies that produce
the game or the players who acquire them) and engagement in fraudulent online
activities, the entire Black Snow operations skipped town without a trace.
Other opportunities have occurred as well. Many, but not all, game companies first
objected to the trade of game resources. However, some of then has now incorporated the
trade into their games, seizing it as a sequential opportunity that provides an additional
revenue source. For instance, San Francisco-based Linden Labs adjusted their game
The Särimner effect and three types of ever-abundant business opportunities 123
‘Second Life’ so it allowed for the buying and selling of player-owned virtual property,
thereby preventing a ‘land rush’ among players dashing ahead to claim land and then sell
it to other players through transactions outside the game (Learmonth, 2004). However,
Linden Labs simultaneously introduced a real-money property tax on the virtual
properties, which soon generated larger revenues than the subscription fees. Nevertheless,
the capability to trade ‘unreal estate’ seems to have made Second Life even more
popular, increasing growth with almost 70%. Sweden-based MindArk’s game ‘Project
Entropia’ went a step further and made trade between players the core of their business
model, replacing subscription fees altogether (Dibbel, 2003). Recent developments in
Entropia includes further spillovers like ‘Club NeverDie’, the world’s first virtual night
club owned by one of the players, and the launch of a credit cards during the spring of
2006 with which players can withdraw money directly from their Entropia dollar account.
4 Conclusions and implications
On a general level, the environmental conditions associated with EOEs shape the
situation in which managers have to act, resulting in confusion, uncertainty and turmoil
as normal circumstances for decision making. Further, the combination of limited local
knowledge, the incommunicability of tacit knowledge and the just about unlimited
opportunity set make it very difficult to predict the outcomes of entrepreneurial activities.
However, the recognition of alternative ways for opportunity induction allows for
additional analysis of the firm’s situation in the EOE that leads to implications for
strategy and how to engage in corporate entrepreneurship.
4.1 Sequential opportunities
With sequential opportunities, exploitation of the initial opportunity creates additional
opportunities that would otherwise not have been visible for the entrepreneur (Ronstadt,
1988). Such opportunities can for instance occur because the firm learns more about
customer needs through market participation, which then leads to the creation of new
products and services. Sometimes explicit customer requests constitute a source for new
business ideas (von Hippel, 1978). In our examples, on the other hand, it was observation
of consumer behaviour that made Linden Labs’ recognise the sequential opportunity that
was even more fruitful than the original business. Other examples can concern openings
to sell complementary products or new versions of the current products etcetera.
One implication for the exploiting firm could be the advantage of paying attention to
how the current business influence the range of available strategic choices when it comes
to areas for future business. Benefits, like possibilities to utilise acquired market
information, distribution channels or technical know-how, can potentially be secured by
careful selection of venture alternatives that provides the best prospects for strategic
knowledge (Thorén, 2007). For example, if a company foresees the emergence of a future
market in which it wants to compete, it might want to proactively optimise the choice of
opportunities to exploit until then so relevant capabilities can be built up in time.
Interestingly, it appears that obtaining useful learning effects do not depend on venture
success – learning can occur through the engagement in entrepreneurial activities,
regardless of their outcome (Sathe, 2003).
124 K. Thorén and T.E. Brown
It might hence be a good idea for managers to try to deliberately influence their firm’s
development process (Normann, 1977). Of course, strategic learning and capability
building can come from exploiting spillover or imitation opportunities as well. But the
firm can exercise more influence over the emergence of sequential opportunities as they
stem from the firm’s own activities, so these are a more relevant target for this type of
proactive considerations.
Regarding sequential opportunities that are unrelated to the initial opportunity, it may
be wise to keep in mind that pursuit of unrelated diversification rarely succeeds as
planned, and could result in some negative consequences (Roberts and Berry, 1985).
4.2 Spillover opportunities
Like the MMORPG players, firms might also spot opportunities that spin of someone
else’s activities. However, managers should consider both which spillovers they pursue
and which they create. For example, when it comes to the spillovers that are created firms
commonly try to minimise them. This defensive posture was taken by most of the
MMORPG companies initially. But it can be fruitful to stimulate the emergence of
certain kinds of spillovers. For instance, one possibility is that new opportunities could
lead would-be competitors to become new customers instead. Another possibility is that
the new opportunities lead to complementary or add-on products whose realisation
actually strengthens the firm’s own market position. In an extreme case, the original
company may be at the hub of a network of companies that cluster around it in a type of
mutual symbiosis. In those situations, entire new industries can emerge, as was the case
with Cisco, SAP and the iPhone. Awareness of the Särimner mechanisms might therefore
cause firms to deliberately exploit an opportunity in a way that give rise to desired
spillovers, thereby ‘staging’ opportunities for others to pursue. Similarly, some firms
might try to use spillover effects to proactively influence conditions for future vertical or
horizontal integration strategies in a favourable manner.
If a spillover opportunity is pursued, certain problems and benefits occur if the
spillover is strongly dependent on the business activity of the initial firm. Benefits could
for example concern the relative certainty regarding product requirements and demand
that is attained when entering a supplier agreement. Sometimes, market risk can be
minimal because of binding contracts and pre-agreed volumes. But dependency also
involves risk. Firms pursuing dependent spillovers are subject to an additional source of
problems on top of general threats like competitive rivalry and technology shifts. These
problems occur when serious difficulties for the initial firm cascade over to the exploiters
of dependent spillovers. In extreme situations, entire clusters of companies perish when a
larger firm goes bankrupt or relocates its activities.
It is also possible to pursue spillover opportunities that are less dependent on the
initial activity. This scenario may actually be more likely than the scenario for unrelated
diversification through sequential opportunities, because an external entrepreneur might
more easily conceive new creative unrelated solutions by combining the learning from
the initial firm's activities with his or her different background and experience (Ardichvili
et al., 2003; Shane, 2000).
The Särimner effect and three types of ever-abundant business opportunities 125
4.3 Imitation opportunities
The primary managerial implication here is quite obviously the increased competition
from firms imitating the original firm and pursuing the same opportunity. The topic of
competitive strategy has received considerable attention from researchers already.
However, the concept of imitator opportunities may open new ways of thinking for some
practitioners. Realising that their own activities can actually stimulate competition,
managers might try to adapt the exploitation efforts so it opens fewer or smaller imitation
opportunities in the first place. This approach might be more effective than going on
straight into a market and then struggle to set up entry barriers.
Although rivalry may very well benefit the customers by providing variety and lower
prices, it certainly can make the profitability of that product segment problematic. One of
the reasons why competition from imitation is such a serious threat is second mover
advantage (Brown, 2001). While true first mover advantage is a real rarity, it is much
more common for the second and third entrants in a market to benefit from experience
and learning effects that are spun off from the first mover’s market activities.
5 Discussion
This article primarily explores a particular process through which opportunities can come
into existence and how corporate entrepreneurship is based on, and leads, such new
opportunities. Specifically, it looks at how the opportunity exploitation itself can lead to
additional opportunities. As a result of our analysis we find that exploitation-induced
opportunities can be divided into three categories that were illustrated with examples
from the online computer game industry. In summary, we argue that it is important for
managers to be aware of how business activities give rise to new opportunities and the
potential consequences this could have, as it may be possible to influence this
development in ways that are beneficial for the own firm rather than for competitors.
Some theorists might argue that the distinction between sequential opportunity and
spillovers is superfluous as they both concern the creation of innovative solutions based
on current business activities. However, from practitioners’ point of view there are at
least two important differences. One is the relatively higher levels of knowledge
concerning the initial opportunity in the sequential case. The other is the fact that firms
can try to manipulate the emergence of sequential opportunities, while they normally
have no control over what other firms do that might lead to spillovers.
While we describe some managerial implications of the Särimner effect and its
impact on organisation, strategy, and risk/uncertainty, the research is new and final
conclusions cannot yet be drawn. While rigorous empirical confirmation of the
opportunity types is yet to be conducted, research on serial entrepreneurs’ opportunity
recognition processes hints that they do purse sequential opportunities and opportunities
based on imitation and spillovers (cf. Alsos and Kaikkonen, 2004).
Finally, we would like to point out that our suggestions represent a number of
possible managerial implications that result from exploitation-induced opportunities, but
there could be countless more.
126 K. Thorén and T.E. Brown
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Notes
1 Note that there are many situations, lot least in internet-based businesses, where it is not the
end user that is willing to pay, but another part in a multi-actor value network (Peppard and
Rylander, 2006). This complicates the picture, but the principle of our opportunity definition
still applies.
2 Although, while the opportunity set is constantly changing and growing, Särimner (the pig)
was always the same shape when he returned (Eliasson, 1987).
3 For example, the discovery of externally prompted opportunities can be the result of an
informal and intuitive feel for the market or of deliberate and explicit search activities (Alsos
and Kaikkonen, 2004; Koller, 1988). Opportunities prompted by internal circumstances can
for example be related to underutilised resources or technologies that can be applied in
products for which the market need is initially undefined. An entrepreneur who engages in
such inside-out type of ventures has something to sell and hopes that there is a market for it.
We expect that such hope-driven ventures are associated higher levels of market uncertainty in
terms of lack of information about customer segments, pricing and so forth. However, some
research indicates that such opportunities tend to be innovative and often have a large potential
for growth if successfully exploited (Alsos and Kaikkonen, 2004).
4 The discussion of similarity can be refined further by distinguishing between similarity in
solution and similarity of need. Another dimension that can have a great strategic importance
is whether the new venture enters the same market as the original opportunity or a new
market, e.g., a new solution serving the same need in the same market could result in creative
destruction. If it serves the need of non-consumers that are over-shoot by current solutions, it
may be an attempt to pursue a blue ocean strategy (Kim and Mauborgne, 2005).
