Many researchers have searched for firm-level factors explaining why some firms and not others end up recognising and exploiting international opportunities. For instance, Zahra, Korri, and Yu (2005) suggest that international entrepreneurship is a fundamentally individual process yet rooted in the firm’s organisational culture and external environment. Organisations are believed to constitute cognitive systems that exhibit the key members’ shared beliefs and information (Daft & Weick 1984). Such systems further drive entrepreneurs to seek certain types of data, to weigh and interpret the data, and to emphasise particular international opportunities while also influencing the entrepreneur’s decision rules, decision horizons, and risk preferences.
Chandra, Styles, and Wilkinson (2009) argue that firms with a stronger entrepreneurial orientation will be more likely to discover first-time international opportunities in international markets. Based on Lumpkin and Dess (1996; 2001) and Knight (1997), they define entrepreneurial orientation as comprising autonomy, innovativeness, risk-taking, proactiveness, and competitive aggressiveness. They propose that the innovativeness, autonomy, and proactiveness of the firm drive opportunity recognition in international markets, while risk-taking and aggressiveness in regard to leverage opportunities affect the willingness and ability of people and the firm to eventually exploit opportunities. Dimitratos, Voudouris, Plakoyiannaki, and Nakos (2012) advance the understanding on the international entrepreneurial culture that facilitates and accommodates the entrepreneurial activities of the firm internationally and the engagement in international entrepreneurial ventures seeking opportunities. Thus, taking also a firm-level perspective, they propose a six-dimensional operationalisation of international entrepreneurial culture, including (1) international entrepreneurial orientation (risk-seeking, proactive, and innovative propensity); (2) international market orientation (prioritises the customer and collects competitor information abroad); (3) international motivation (induces employees to propose ideas for foreign activities); (4) international learning orientation (effective dissemination and utilisation of intelligence between the firm departments); and (5) international networking orientation with competitors as well as with (6) non-competitors (pursuing joint manufacturing, research, advertising, and marketing activities). Through measuring these international entrepreneurial culture characteristics, mangers may develop the firm’s organisational culture in order to better pursue entrepreneurial ventures abroad. The SME type may also have an impact on opportunity recognition as, for instance, Kontinen and Ojala (2011) argue that family-owned SMEs are likely to recognise international opportunities on the basis of alertness to opportunities rather than
based on an active search for them. However, the high alertness seems to result from the small size and flexibility of the management teams concerned, which may also characterise other types of SMEs.
Besides firm characteristics, the concrete actions taken by the firm also matter. Hohenthal, Johanson, and Johanson (2003) study the impact of ongoing activities (expansive or explorative in international markets) on the discovery of new market opportunities and present propositions on how the discoveries influence further the activities, learning, and international expansion of the firm. Chandra, Styles, and Wilkinson (2012) also emphasise the dynamic feedback processes involved in opportunity identification and development. They state that existing knowledge and resources stem from past actions, learning, and networks and that this history can play an important role in shaping a firm’s ability and willingness to engage in international operations. The pace of learning and feedback processes, in turn, depends on the firm’s resources and abilities as well as on the context in which it operates. In line with this, Hilmersson and Papaioannou (2015) suggest that the greater the international experience of the SME, the more systematically the SME will scout for international opportunities. Chandra (2017) highlights the overall firm evolution by suggesting that the time and resources available, the type of stakeholders, and the extent of professional managers’ influence in firm decision making improve along the internationalisation path. Hence, the evaluation of early-stage international opportunities is based on simple rules, whereas at the late stage the rules have developed from simple to revised and, eventually, to complex rules that allow the firm to better identify successful opportunities and achieve higher performance.
Firms are also embedded in their environment in many ways, whereby the characteristics and dynamics of the surrounding business environment in which opportunities may be recognised have a considerable impact on opportunity recognition, too. Cuero Acosta, Adu-Gyamfi, Un Nabi, Noor, and Dornberger (2017) determine regulatory environment, culture and norms, and incentives in the market together with the entrepreneur’s prior knowledge, contextual knowledge, and network as the framework conditions that influence entrepreneurial opportunity identification in the international market context although state that there is no agreement in the literature on how the various factors operate in contributing to opportunity identification. Mainela, Puhakka, and Sipola (2018) note that it is important to notice the cultural-historical context and the community in which opportunities are generated. The surrounding community is not only a facilitator or hinderer in an entrepreneur’s journey, but through collective opportunity beliefs it creates the systemic favourability and the circumstances under which an opportunity is considered attractive or not, for instance in terms of risk perception or attitude towards failure.
Furthermore, also of considerable importance is the information the firm and the entrepreneur receives about the environment, including hints about potential business opportunities. Santos-Álvarez and Carcía-Merino (2010) discuss the following different stimuli leading to business internationalisation: the appeal of internationalisation, hurdles to internationalism, and support programmes available to facilitate internationalisation. They argue that besides the entrepreneur’s cognitive skills, the processing of informative stimuli is affected by the content of the stimuli and the source of information. Referring to the debate on the nature of opportunities, scholars have differing views on whether such stimuli are discovered or sought on purpose.
Oyson and Whittaker (2015) state that in their study, serendipity played a role in the discovery of international opportunities and that this explains why some entrepreneurs discover opportunities and some do not, although entrepreneurs can also create their own luck in opportunity discovery through alertness and preceding entrepreneurial action. In contrast, Chandra, Styles, and Wilkinson (2009) argue that opportunity recognition which may first seem like luck turns out not to be eventually: even pure discovery of an international opportunity requires the firm to possess prior international and technical knowledge, intellectual property, openness and access to information, and firm characteristics such as entrepreneurial orientation, whereby the entrepreneur is capable of interpreting possible matches between pre-existing means (resources, skills, or technologies) and new ends (international markets). Ellis (2011) states that the majority of exchange opportunities are discovered rather than sought but also argues that the discoveries are intentional rather than accidental. In his study, none of the meetings of exchange partners was based on pure luck. He aligns with Chandra, Styles, and Wilkinson (2009) by stating that the role of luck has been exaggerated in the past research as researchers have not fully understood particularly the social exchanges that precede opportunity identification.
Thus, to summarise, the views on firm-level factors influencing opportunity recognition remain multitudinous and somewhat controversial. However, it is fair to say that both the firm and the surrounding environment in which an entrepreneur acts play an important role in his/her opportunity recognition, whereby the phenomenon is not only about the characteristics of an individual. Firms characterised by unique cognitive systems, entrepreneurial orientation, international entrepreneurial culture, international experience, stage of evolution, and ownership structure, let alone the learnings from prior actions and the feedback from ongoing activities, have an effect on how managers and other employees view their surroundings and how open they are to new opportunities. Moreover, beyond the firm, the historical, cultural, and regulatory environment as well as the information and stimuli concerning changes in it – together with
some serendipity – provide the circumstances in which opportunity recognition may take place. Hence, a synthesis of the prior literature shows that no single factor about the individual, the firm, or the environment can explain international opportunity recognition, but based on a mixture of various enablers, an individual may subjectively recognise an opportunity.