An Analogy Explanation for the Evaluation of Entrepreneurial Opportunities^*

* The author gratefully acknowledges Steven C. Michael's invaluable contributions to the development of this study. Sung Min Kim and Alexei Marcoux have also improved the work with their comments.

Abstract

Entrepreneurs evaluate opportunities under conditions of uncertainty; they make judgments. To understand these evaluations, I develop an analogical model that represents an entrepreneurial opportunity in the mind of an individual. The model proposes that an opportunity is an analogical knowledge transfer from a source business domain to a target business domain. According to the model, the cognitive distance between the domains influences the opportunity evaluation. Additionally, the inspiration behind the analogy construction influences the opportunity evaluation. The empirical design employs a hypothetical scenario experiment and the results show that the two analogical properties matter for evaluation.

Acknowledgements

I gratefully acknowledge Steven C. Michael's invaluable contributions to the development of this study. Sung Min Kim and Alexei Marcoux have also improved the work with their comments.

Notes

* The author gratefully acknowledges Steven C. Michael's invaluable contributions to the development of this study. Sung Min Kim and Alexei Marcoux have also improved the work with their comments.

1. The dilution of statistical significance as more of the sample is included in the analysis is revealing. Even though increasing the sample size increases the power of a statistical test, the p‐values decrease in this case. When I test the hypotheses on those who answered the manipulation checks inaccurately, neither hypotheses receive support (p‐values > 0.79). Thus, the dilution of the significance can be attributed to whom the manipulation did not induce the desired effect. This fosters my confidence in the causality uncovered by the experiment.

Additional information

Notes on contributors

Ugur Uygur

Ugur Uygur is Associate Professor of Entrepreneurship at Loyola University Chicago.