Black Opportunity Entrepreneurship Post-Pandemic Outcomes

Opportunity Entrepreneurship

Scholars have long asserted that opportunity recognition is an essential and critical first step of the entrepreneurship process (Bygrave, 1989a, 1989b; Christensen et al., 1994; Hills, G., 1995; Shane and Venkataraman, 2000; Stevenson et al.,1989; Stevenson & Jarillo-Mossi, 1986). Two different types of opportunity recognition exist: externally-stimulated opportunity recognition, and internally-stimulated opportunity recognition (Bhave, 1994; Cyert & March, 1963). In externally-stimulated opportunity recognition, entrepreneurs first decide to become an entrepreneur, and only after making that decision do they search for and discover an entrepreneurial opportunity. In contrast, internally-stimulated opportunity recognition begins with a person discovering an unsolved market problem or unmet need, and only after discovery does the person decide to create a new business venture to address that unresolved market need (Bhave, 1994; Cyert & March, 1963). Entrepreneurial ventures formed through internally stimulated opportunity recognition produce higher revenue projections than externally stimulated opportunity recognition ventures (Singh & Hills, 2003). Entrepreneurs who pursue internally-stimulated opportunities are also more highly educated and contain higher net worth than those who pursue externally-stimulated opportunities (Singh & Hills, 2003).

Necessity-Based vs. Opportunity-Based Entrepreneurship

What motivates people to become entrepreneurs and business owners differ. With necessity-based entrepreneurship, people become entrepreneurs to generate income for subsistence purposes (Gibbs, Mahone, & Crump, 2014; Raijman, 2001; Reynolds et al., 2004; Sassen, 1997). Thus, necessity-based entrepreneurs engage in externally stimulated opportunity recognition. In opportunity-based entrepreneurship, people become entrepreneurs primarily because they have discovered some business opportunity they now wish to pursue (Snyder, 2004; Edgcomb & Thetford, 2004; Williams, 2011).

When people struggle economically, out of necessity, often they decide to start a business. When people who are secure in their abilities to generate suitable income decide to start a business, they most often start opportunity-based businesses. Necessity-based businesses are often micro-businesses that are extremely small in scale, run by one person along with the assistance of family and household members, and run informally (DeJaeghere & Baxter, 2014; Libombo & Dinis, 2015). As the percentage of income insecure people in a particular region outpaces those who are income secure, the percentage of people who start opportunity-based businesses in that region will decrease. In response to macro-economic trends in wealth transference in the United States which leads to an increasing mass of an economically struggling population, one should expect that the percentage of opportunity-based entrepreneurs in the US has decreased over the past 25 years.