Research on entrepreneurial opportunities and business models opens up new directions for understanding and explaining entrepreneurship in practice. Although business opportunity has traditionally been seen as a key element of entrepreneurship, previous research has not addressed the question of how to create business models to capture opportunities from the operational point of view.
Business model is indeed fundamental to any company. It helps not only to answer the basic questions about a firm but also to formulate the right questions. What does a company offer to their customers? How and where does the company plan to do it in practice? Why the company would be profitable? And any “How-do-I-start-my-company” guide by default includes a section on business model creation. But these guides never explain or open up the mechanism behind the process of business model creation. What an entrepreneur actually does or has to do remains a black box.
In my research, I explore the ways in which entrepreneurs create business models to capitalize on business opportunities. The study shows that business model creation is a continuous iteration of three action clusters: making choices and decisions under uncertainty; acting upon these choices and decisions; and testing feasibility and acceptability of these choices and decisions against reality. These elements mutually support and reinforce each other by means of feedback loops: modified choices and decisions trigger adjustments in the entrepreneurial actions and reality testing and vice versa.
In the study, I used an action research approach and collected data through entrepreneurial diaries. In total, I collected and analyzed 155 entrepreneurial diaries for the purposes of this research. The respondent groups included the participants of a start-up accelerator programme in Oulu, Finland; the participants of the Entrepreneurship Project organized by the University of Oulu; the participants of a Business Startup Training organized by the Aalborg University, Denmark; and two startup teams based in Helsinki.
Entrepreneurs play a key role in generating economic value. Creating and leveraging a business model can be seen as an essential part of the entrepreneurial process. Though Finland is characterized by a dynamic and innovative entrepreneurial culture, many start-ups struggle to cope with business opportunities, new business ideas, insufficient resources and lack of necessary skills.
My study shows that, despite uncertainty, entrepreneurs should not consider creating a business model as an uncontrolled process, but rather as a planned and manageable, open to different opportunities and business model alternatives. Identifying and mirroring one’s own internal assumptions against external reality and analyzing feedback received from internal and external contexts becomes an entrepreneur’s core capability. In practice, the results of this work can be used to support entrepreneurs in establishing and innovating companies.
A dissertation based on this study was defended with distinction on 30 May 2018 at the University of Oulu, Oulu Business School (Finland). It won 2018 Emerald/EFMD Outstanding Doctoral Research Award in the category Management and Governance.
Irina Atkova, D.Sc. Oulu Business School