Attending to the External Environment to Identify Potential Opportunities

Building on a recent study (Shepherd et al. in Strategic Management Journal 38:626–644, 2017), this chapter highlights the importance of noticingnoticing opportunitiesopportunities as an initial step toward new venture creationnew venture creation. Unsurprisingly, there has been considerable interest in the processes of allocating attentionattention to notice potential opportunities arising from changes in the external environmentexternal environment. We know a great deal about the role of top-downtop-down (i.e., based on knowledge and experience) processes of allocating attention to the environment in forming opportunity beliefsbeliefs worthy of entrepreneurial actionentrepreneurial action. However, in this chapter, we illustrate how bottom-upbottom-up processes, whereby environmental changesenvironmental changes capture entrepreneurs’ attention, shape opportunity identificationopportunity identification. Building on the notion of guided attention, we detail an attention model of forming opportunity beliefs for entrepreneurial action that includes both top-down and bottom-up processes for allocating attention. This chapter explains how entrepreneurs can allocate their transient attentiontransient attention to identify potential opportunities from environmental changes. This chapter also describes how allocating sustained entrepreneurial attention influences belief formation about radicalradical and incrementalincremental opportunities requiring entrepreneurial action.