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What Affects Technion Faculty Members' Decision to Found a Start-Up Firm? Effects of the Business Opportunity and the Entrepreneur's (faculty)

Researchers
Prof. Avi Fiegenbaum , Dr. Shane Scott , Prof. Miriam Erez , Oshrat Kremer-Srabstein , Prof. Moshe Givon
Cite As:
Fiegenbaum Avi , Scott Shane , Erez Miriam , Kremer-Srabstein Oshrat , Givon Moshe . What Affects Technion Faculty Members' Decision to Found a Start-Up Firm? Effects of the Business Opportunity and the Entrepreneur's (faculty) Haifa Israel: Samuel Neaman Institute, 2005. https://www.neaman.org.il/EN/Effects-Business-Opportunity-and-Entrepreneur-faculty
Download files:
STE-30[1].pdf(739KB)

While research has recognized the importance of the entrepreneurial opportunity evaluation (EOE) stage in affecting overall entrepreneurship activity, only venture capitalists’ (VCs) perspectives were explored. No research has attempted to understand the crucial and complementary role of entrepreneurs’ points of view. In an effort to fill this gap, the current study focuses on the entrepreneur point of view and proposes a new framework centered on two perspectives affecting the EOE: the multifaceted characteristics of the opportunity and the characteristics of the entrepreneur who evaluates the opportunity. In regard to the former, we refer to three characteristics of a business opportunity:  industry, including both size and competition; product innovation, covering both market and technological innovation; and the entrepreneur within the opportunity context, comprising both his familiarity with, and commitment to the opportunity. In regard to the characteristics of the entrepreneur we examine his/her experience in entrepreneurial activities and his/her personal dispositions for risk taking and initiative. In regard to the EOE outcome, we assume that entrepreneurs, like VCs, are profit maximizes who consider the economic value of their decision to move in and exploit a new opportunity. The opportunity’s economic value is described in terms of the probability to be exploited and its expected profit.  Our basic research hypothesis, linking EOE characteristics and outcomes, postulates that the EOE outcome will be higher when the attractiveness of the opportunity characteristics increases. We also compare the relative importance of the opportunity characteristics emphasized by the Resource Based View (RBV) perspective, with those opportunity characteristics emphasized by the Market Based View (MBV) perspective. In addition, we suggest that EOE will be higher for entrepreneurs who are more, rather than less experienced, and oriented toward risk taking and initiative.

 

A sample of 204 (33%) faculty members at the Technion–Israel Institute of Technology, who are potential or actual entrepreneurs, were presented with different entrepreneurial opportunity scenarios and were asked to evaluate the opportunities and their respective outcomes. Using conjoint analyses the following major findings were revealed. First, both the opportunity characteristics and the entrepreneur’s individual characteristics had an impact, although different ones, on the decision to exploit an opportunity, and on its expected profit. Second, the opportunity’s RBV perspective found to have more impact on the decision to exploit an opportunity than the MBV perspective, and there were ambiguous findings regarding the expected profit. Third, the entrepreneur’s personal dispositions toward both risk taking and initiative effects the decision to exploit, but only risk taking propensity effects the expected profit.
These findings are especially important for universities that wish deepen their academia–industry technology transfer and commercialization activities. The results of our study should enable university decision makers, professors, and potential entrepreneurs, to better manage and evaluate the entrepreneurship process and its expected outcome. As a result, it can improve the crucial decision of whether and how to encourage faculty members to add entrepreneurial activities to the current important activities of research, teaching and administration.

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