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Entrepreneurial Opportunity Recognition and Growth of Venture via Strategic

Alliance: A Case Study of RTAP

Article  in  International Journal of Strategic Business Alliances · December 2014

DOI: 10.1504/IJSBA.2015.075381

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Int. J. Strategic Business Alliances, Vol. 4, No. 4, 2015 201

Entrepreneurial opportunity recognition and growth

of venture via strategic alliance: a case study of
RTAP

Manoj Joshi* and Shailja Dixit

Amity Business School,
Amity University, Lucknow Campus,
Uttar Pradesh, India
Email: manoj.joshi.m@gmail.com
Email: shailjadixit1@gmail.com
*Corresponding author

Abstract: Opportunity recognition is the first nascent step towards

entrepreneurship and in the high tech sector it differs due to the tacit knowledge
component. The purpose of this case is to complement existing theories and
demonstrate how entrepreneurs’ internal and external motivators have an
impact on diagnosis and assessment of informational cues present in the
external environment. This case describes how an entrepreneur assesses
opportunity-related information in order to arrive at a decision while
connecting them via innovative practices. It also demonstrates how strategic
business alliances help new ventures to constantly meet continuous innovation
pressure and how dynamic customisation and social network acts as a key
driving force behind venture creation. RTAP is a small time engineering
service provider, seeded by its founder when Indian economy moved towards
liberalisation. The founding members were first generation entrepreneurs
without any prior start-up experience. The case attempts to examine the
antecedents of, and the relationships between, entrepreneurial opportunity
recognition, individual-level motivation and innovation performance, strategic
alliances and social networking.

Keywords: entrepreneurial orientation; opportunity recognition; opportunity

evaluation; experience; innovation; high technology; social network; strategic
alliance; entrepreneurship.

Reference to this paper should be made as follows: Joshi, M. and Dixit, S.

(2015) ‘Entrepreneurial opportunity recognition and growth of venture via
strategic alliance: a case study of RTAP’, Int. J. Strategic Business Alliances,
Vol. 4, No. 4, pp.201–220.

Biographical notes: Manoj Joshi is in the editorial boards of IJEI, JFBM,

APJM, JSBM, JEEE, WREMSD, BSEVEM, and several other leading
international peer reviewed journals. Case writing is his keen interest, besides
mentoring entrepreneurs and consulting on ‘innovation and family business
strategy’.

Shailja Dixit holds a PhD in Marketing and has published papers in peer
reviewed journals. She has keen interest in writing case studies apart from
research on women related issues. Her publication has a special bend towards
women entrepreneurs and development.

Copyright © 2015 Inderscience Enterprises Ltd.

202 M. Joshi and S. Dixit

1 Introduction

Entrepreneurs all over the world undergo tremendous challenges while initiating and
growing their venture successfully. This situation intensifies multiple times specially for
high technology industries where managing resources, upgrading technology, meeting
competition and maintaining business growth has to be achieved simultaneously. In order
to overcome these odds, entrepreneurs of high-tech firms form strategic alliances with
larger ones in order to obtain critical resources and much needed updated technology.
The entrepreneurs are able to identify potential cues in the environment and convert these
cues into venture but strategic alliances become pivotal for the growth and success of the
venture.
Real Time Automation Products Private Limited (RTAP), a small time engineering
service provider, is one such enterprise that was seeded by its founder M.L. Gupta, a
highly qualified professional. His capability to understand the business environment, the
barriers to change, risks and opportunity recognition are worth appreciating. The case
demonstrates the balance of appreciating the favourable circumstances, while connecting
them by a thread of innovative practices and deploying incremental innovation. The case
also brings about the process of becoming a successful technical service provider as an
entrepreneur in a tight compartment through various strategic alliances it had for the
growth of the venture. Gupta capitalised upon an opportunity, recognised it and steered it
into new heights.

2 Making of the entrepreneur: development of entrepreneurial orientation

An individual’s background with entrepreneurial parents could shape how individual

identifies and evaluates business opportunities (Shane, 2000), though personality
characteristics also matter in determining how entrepreneurs evaluate business
opportunities. But Gupta is a first generation entrepreneur who did not have the benefit of
inheriting entrepreneurial orientation (EO). EO refers to “the processes, practices, and
decision making activities that lead to new entry” (Lumpkin and Dess, 1996). EO is
revealed through firm-level characteristics as summarised by Miller (1983): “An
entrepreneurial firm is one that engages in product-market innovation, undertakes
somewhat risky ventures, and is first to come up with ‘proactive’ innovations, beating
competitors to the punch”.
Gupta is an Engineering graduate in Electronics and Communication from the
prestigious Indian Institute of Science, Bangalore. He later served in Uttar Pradesh
Electronics Limited (UPTRON), Lucknow, India, a state government enterprise, as Joint
Manager (Tech. Development) for 11 years, while gaining rich experience in design,
engineering and software development. An active member of Institute of Electrical
and Electronics Engineers (IEEE), USA, he presented several research papers in
international/national conferences, which reflect his credentials in demonstrating new
technology. In March 1990, he led a team of seven engineers, engaged in the
development of different types of industrial systems, including distributed control
systems.
 Entrepreneurial opportunity recognition and growth of venture 203

His tenure and exposure during this period witnessed a consortium of experiences
spread over various geographical areas. He spent more than three years at Leeds &
Northrop and MAX Control Systems, USA. Exposure to execution of software
development contracts and training on various technical product areas was an added
advantage. Subsequently, he was associated with engineering, software development and
start-up of national and international origin, which brought about transformational change
in his abilities to go for an independent venture.

Figure 1 RTAP – the process of becoming an entrepreneur

2. Hands on
1. Professional experience
education

3. Exposure
6. Birth of the
to business
entrepreneur
environment

5. Developing
the orientation 4. Recognising
opportunity

3 Opportunity identification: creation of the business

3.1 India’s economic reforms

The reform process in India was initiated in 1990 with the aim of accelerating the pace of
economic growth and eradication of poverty. Though this reform process began in 1970s
but it was only in 1991 that the Indian Government signalled a systemic shift to a more
open economy. The focus was on greater reliance upon market forces. These economic
reforms initiated far-reaching measures that altered the dynamics of the economy. These
changes were pertinent to the following:
204 M. Joshi and S. Dixit

3.1.1 Reforms in industrial policy

Massive deregulation of the industrial sector was done in order to bring in the element of
competition and increase efficiency. Industrial licensing by the central government was
almost abolished except for a few hazardous and environmentally sensitive industries.
Further, restrictions that existed on the import of foreign technology were withdrawn.

3.1.2 Reforms in trade policy

Import licensing was abolished relatively early for capital goods and intermediates which
became freely importable in 1993, simultaneously with the switch to a flexible exchange
rate regime. Quantitative restrictions on imports of manufactured consumer goods and
agricultural products were finally removed.

3.2 Financial sector reforms

The government emphasised on stronger regulation aimed at strengthening prudential
norms, transparency and supervision to mitigate the prospects of systemic risks.
The reforms fuelled India’s enormous growth potential and inspired latent
entrepreneurial desires to capitalise upon the opportunities. These reforms brought new
motivation and zeal amongst the prospective entrepreneurs to think further to their
mission.
Mr. Gupta too thought about opening his enterprise but this intuition was further
developed in to a concrete idea in incremental steps. In 1990 he left UPTRON and went
to USA for an eight months training that included a consulting assignment on software
development. It was here he started worshipping a capitalist frame of mind. He returned
to India in December 1990, with a clear perspective, and strong desire to set up his own
consultancy. It was clear that a new enterprise would be on the anvil. Stevenson and
Gumpert (1985) pointed out in their research that external pressures, technology,
consumer economics, social values, political action, and regulatory standards may
stimulate individuals to pursue opportunity recognition. Shane (2003) reviewed
Schumpeter’s (1934) study and concluded that there are three sources of entrepreneurial
opportunities:

1 technological changes

2 political and regulatory changes

3 social and demographic changes.

In addition, contextual factors such as external jolts and uncertainty influence an

individual’s motivation to pursue and discover new opportunities. That is, the
entrepreneurial opportunity recognition process helps to identify environmental threats
and opportunities present in business environment and in the industry (Krueger, 1998).
The research studies by Ardichvili et al. (2003), Gaglio and Katz (2001), Ozgen (2003)
and Ozgen and Baron (2007) share common insights that self-alertness, prior knowledge,
self-efficacy, and social networks are major individual factors in identifying opportunity
recognition process.
 Entrepreneurial opportunity recognition and growth of venture 205

3.3 The distinctive edge

It is important to understand how traits influence an entrepreneur’s evaluation of a
business opportunity. This is important because traits shape our thinking (Smith and
Levin, 1996) and determine whether or not we exploit a business opportunity (Shane and
Venkataraman, 2000). According to Venkataraman (1997) and Shane and Venkataraman
(2000), the key issue in entrepreneurship is the opportunity recognition process, which
comprises the discovery, evaluation, and implementation of business opportunities. This
is supported by the theory given by Hostager et al. (1998), who mentioned that
employees who are able to see and act on potential opportunities, which get overlooked
by the competitors, are able to carve out a unique competitive advantage for themselves.
Gupta was an UPTRON employee, a government organisation, which provided job
security along with complacency towards professional growth. But this complacency was
not evident in Gupta. He never got influenced by his colleagues’ behaviour and neither
with bureaucratic way of functioning. His colleagues possessed similar level of technical
expertise but lacked entrepreneurial framework, which formed a distinctive advantage
with Gupta.

4 Entrepreneurial orientation, entrepreneurial decision and work

experience

This concerns the entrepreneur’s reasons for entrepreneurial decision, background

information (for example education, work experience or training) and his/her personality
(for example self-efficacy expressed as attitude or ability and self-confidence). It is a
decision making process measured by an individual’s risk propensity (Shane, 2003).

4.1 Reasons for entrepreneurial decision

Hisrich et al. (2008) and Kuzilwa (2005) regard education, experience and self-efficacy
as pull factors in entrepreneurial activity. The need for achievement and autonomy, risk
taking, control of business and self-efficacy are important characteristics for
entrepreneurial intentions (Shane, 2003). Carter and Shaw (2006) and Gatewood et al.
(2004) state on demography, skills and reputation as important factors. A strong desire
for independence, innovation, risk-taking, resourcefulness, business skills, knowledge,
and networks are also associated with entrepreneurial inhibitions (Salman, 2009).
Innovation and decision-making ability are other characteristics (Cunha, 2007).
Ambition, self-confidence and high level of energy have also been recognised as vital
entrepreneurial characteristics (Idris and Mahmood, 2003). Self-evaluation and intuition
are also crucial characteristics (Shane, 2003).

4.2 Work experience/training

This is the knowledge or skill gained in a particular job over time. It is reported that
entrepreneurs in developing countries lack exposure to business due to limited
opportunities (Antoncic, 2006). Antoncic (2006), Carter and Shaw (2006) and Harrison
and Mason (2007) support that a minimum of three years of business experience is
sufficient for an entrepreneur to leverage upon any opportunity.
206 M. Joshi and S. Dixit

Private organisations were very few in India during Pre-Liberalisation era. The
research literature of entrepreneurial opportunity recognition suggests that, antecedents of
entrepreneurial opportunity recognition have covered a wide range of factors from
individual to external environmental factors.
His prior knowledge and expertise in the technical field was a definite energy that
cornered Gupta towards this field. Thus, Gupta conceived the idea of being an
entrepreneur. Westhead and Wright (1998) have emphasised the importance of prior
work experience in the opportunity evaluation process because it contributes expertise to
help spot and serve profitable market segments. Prior knowledge impacts an individual’s
mental schema.
Ronstadt (1988) coined the term ‘corridor principle’, which means each individual’s
prior knowledge and experience idiosyncrasies are corridors that trigger recognition of
the value of new opportunities. Shane and Venkataraman (2000) have suggested that
information corridors and cognitive properties are two main factors that determine
whether entrepreneurs discover particular opportunities. Both information corridors and
cognitive properties put an emphasis on mental schemas, which frame an individuals’
recognition of new opportunities. Consequently, an entrepreneur’s unique possession of
knowledge enables him or her to identify certain opportunities that others neglect.

4.3 Entrepreneurial orientation and social network

‘If the house is in order managing the world outside becomes much easier’. This became
the mantra for company’s effort in building the small enterprise. Mr. Gupta’s contacts
that were created in USA came as a rescue to this initiation. After months of struggle and
persuasion, the business rattled on rails with the same collaborators, whom he knew,
during his tenure with UPTRON. Business exposure to China, Israel, Pakistan, and USA,
set the trend to a healthy beginning. UPTRON had a trained staff and hence, sourcing
good technicians from alma mater was an obvious choice.
Social network theory (Busenitz et al., 2003) suggests that an individual’s
interpersonal networks, including weak-tie networks and strong-tie networks, facilitate
the access to diverse information that benefits learning and information dissemination
processes to further discover opportunities. Under uncertain environmental conditions,
individual social networks bring more accurate information and resources, thus helping
entrepreneurs identify entrepreneurial opportunities and information of value (Manev
et al., 2005). Rae’s (2006) qualitative study pointed out that social experiences and
interpersonal networks aid entrepreneurial opportunity recognition ability thus further
facilitating an entrepreneur’s entrepreneurial learning process.

4.4 The organisational structure

RTAP, classified as Indian non-government company, was registered in January 1991
with Registrar of Companies, Kanpur, having its registered office at Lucknow in Uttar
Pradesh and branch offices in Aurangabad and site office at UPSEB Anpara and NTPC
Tanda.
Since its initiation, the firm has been promoted and being managed by a group of
professional engineers with wide experience in design, engineering, installation, supply
in power, chemical, petrochemical, polyesters, fertilisers, oil and gas sectors. The
company is presently engaged in providing technical services and automation solutions to
 Entrepreneurial opportunity recognition and growth of venture 207

process industries as turnkey projects, which include detailed engineering, supply,

installation, commissioning and maintenance of process control equipment.

Figure 2 RTAP – the flat organisational structure

MD

Mgr Business Development Mgr. Services Mgr. Marketing

“People power is our strength”. The enterprise has built up a strong and highly motivated
team of personnel. The people are qualified, well experienced and technically sound.
Their contributions in overall commissioning of the projects have been well appreciated
by all the Indian and Overseas organisations with whom RTAP had an opportunity to
work with. “Our marketing executives always aim at providing total and optimum
solutions to the users”, claims the MD, Laxmikanta Gupta.
Mrs. Vijay Laxmi Gupta is one of the Directors and is responsible for finance and
accounting. Her academic excellence has helped her to support the organisation towards
optimised thinking. The commercial matters are looked by Ajai Saluja, who served as
General Manager Finance in UPTRON. The instrumentation support comes from
S.P. Deshmane, who has vast experience in design, installation, commissioning of
process control instruments and control systems. At RTAP, he is looking after process
control instruments’ activities and industrial automation systems, design and
implementation.
Dheeraj Srivastava, manager (marketing) is a specialist in computer engineering and
programming. His experience, multi-dimensionality and energetic approach on projects
in C&I area have made his presence important for RTAP. Praveen Tripathi, manager
(C&I) and head of the Control and Instrumentation Department, is a Bachelor in
Technology (Electronics and Communication) from a reputed university. The experience
of the company thus has been enlarged in most areas of engineering, installation and
commissioning due to their experienced leaders.

4.5 Entrepreneurial orientation and opportunity evaluation

Evaluation is an important step in the opportunity recognition process since ideas are
plentiful, and unless they are favourably evaluated, they will not be exploited (Hills and
Shrader, 1998; Simon et al., 2000). Cognitive processes of the entrepreneur shape
opportunity evaluation. After evaluating the business opportunity and environment RTAP
volunteered to become business partners for a host of companies. This endeavour aimed
to broaden their presence in different sectors. The products were integrated to the core
business segment(s). Further to this, RTAP became an authorised representative of
Emerson’s, Rockwell, Waaree, Switzer and Enercon Systems (P) Ltd. Bangalore for their
products, like electronic type multi-task management of loads systems etc. This
association with key manufacturers aided their presence in multiple segments, where in
other way it would have taken a hard time to link around. This also became a strategic
approach in their action for increasing their business presence.
208 M. Joshi and S. Dixit

Thus, it is evident that one’s unique motivation, prior knowledge, and social networks
and ability to distinguish opportunity and a tangible business idea from a business plan
though proper opportunity assessment of external environmental variables, defines the
future of the venture. Entrepreneurial opportunity recognition puts an emphasis on an
individual’s recognition and exploitation of potential business ideas and opportunities,
which can be viewed as an individual’s entrepreneurial strategy in discovering resources
to generate innovative outputs (Manev et al., 2005).

4.6 Entrepreneurial orientation and business strategy

EO trait refers to the decision-making style for entrepreneurship related activities
(Lumpkin and Dess, 1996). The trait of EO is closely tied with entrepreneurial activities.
Studies found that EO is positively related to firm performance (e.g., Covin and Slevin,
1989; Lumpkin and Dess, 2001) and other outcomes such as networking activities
(Ramachandran and Ramnarayan, 1993). At the early stages, the firm is likely to reflect
the preferences of the entrepreneur (Schein, 1983).

Figure 3 The business orientation

Marketing

Export of Turnkey
services projects

RTAP

Training Customisation

RTAP during its seeding had the following objectives:

 Entrepreneurial opportunity recognition and growth of venture 209

• Marketing of solutions, where the company offers expertise in providing tailor made
solutions to its clients in the area of instrumentation, control and software support.
• Providing support to power plants specifically of thermal origin.
• Marketing of industrial automation products and systems.
• Undertaking turnkey projects for process control which includes engineering,
commissioning, maintenance of equipment.
• Endeavour to develop customised electronic system, hardware, software for process
control.
• To impart specialised training in the areas of process control and computers.
• Export of technical services.

5 RTAPs growth mantra: strategic alliances

Compared to other industries, the high technology industry often faces increased
competition and a rapidly changing industrial environment. Such industrial
environmental characteristics provide possible new entrepreneurial opportunities and
innovative insights that may enable firms to keep up with technological advances and
respond to new market needs (Michalski, 2006).
The prime entrepreneurial activity contains not only new product innovation but also
the recognition of new markets and opportunities and creating new ideas such to attract
and retain customers. Innovativeness reflects a firm’s willingness to support new ideas,
creativity, and experimentation in the development of internal solutions or external
offerings. Risk-taking is associated with a firm’s readiness to make bold and daring
resource commitments towards organisational initiatives with uncertain returns. To avoid
financial loss entrepreneurs precisely and accurately identify so called ‘new
opportunities’ and innovation decision.
Proactiveness represents a forward-looking and opportunity-seeking perspective that
provides the firm an advantage over competitors’ actions by anticipating future market
demands. To achieve organisations’ required rate of growth, access to global markets and
the updated technology to cater to international and national customer; RTAP entered
into various strategic alliance. In the process of mastering business language in their field
of expertise, RTAP successfully executed several technical alliances in India, USA and
China and Europe. It has strategic alliances with MAX Control Systems and Applied
Control Systems of USA for DCS related jobs. For power plant control they have a tie up
with Leeds & Northrop of USA.
Research has shown that strategic alliances are particularly prevalent in
technologically intensive firms. These alliances often occur between small high tech new
ventures and large companies (Olleros and Macdonald, 1988). Considering the important
role that technology-based new ventures play in the development and commercialisation
of new products, processes and technologies, and of new industries (Kazanjian, 1988),
Strategic linkages with wholesalers and suppliers offer new ventures an important
competitive strategy to the small entrepreneurial firm.
210 M. Joshi and S. Dixit

Presently, RTAP undertakes developmental activities to provide total solutions.

Backed by 100 man-years of experience in developing electronic products, systems for
industrial and communication-related application, the engineers stand tall in their claim
for their technical presence. External sources of technology has augmented in-house
R&D skills and enhanced managers’ confidence that they no longer see external
innovation as a threat, but as a risk management vehicle that allows the firm to manage
costs and share development risks. In order to facilitate this, it has developed a complete
infrastructure to carry out detailed engineering, configuration, software development,
installation, commissioning and after sales support for DCS and other instrumentation.
This includes the capability to provide component level repair services of hi-tech
electronic cards of these systems and instruments.
Strategic alliances benefits include better exchange of product/market information,
greater availability of marketing and management expertise, more competitive pricing,
access to new channels and markets, shorter lead times for product development, and
financial resources (Gales and Blackburn, 1990; Larson, 1991). In a subsequent study by
McGee et al. (1995), they found that strategic alliances had a positive impact on firm
performance when the alliance was chosen in a functional area that the firm’s
management team had prior experience.
L.K. Gupta puts forward, ‘we initiated with a humble note, we have been proceeding
with a humble note but the key to our strength has been the technical integration of
products and services for specific user base. But the coming years it will be the
competitive thinking that shall be the forward trigger to perform. For this, we have to
constantly engage in innovative thinking’. He gives the credit to company’s
foresightedness for getting into appropriate strategic alliances timely and appropriately.
The business development department operates like a missionary, in seeking growth
opportunities and strategic partnerships.
RTAPs strategic alliances not only helped them in delivering required technical
support and resources also helped in bagging prestigious supply orders from many
reputed organisations like DCS systems for MITSUI & Co. in India, Wai Gao Qiao and
Qing Huang Dao Power Project in China, Uch Power Plant in Pakistan, Diesel Power
Plant at Chennai in India, Rutenberg Power Plant in Israel, PP&L Montour plant in USA,
SITHE and many other power plants in USA. Hindalco Industries, Kanoria Chemicals,
Raymonds synthetics, Bharat Pump and compressors, SAIL, India Polyfibre, Indian
Rayon, NTPC, RDSO, BHEL, Maruti Udhyog, Triveni, National Thermal Power Plant
(NTPC) of Tanda, Unchahar, Vindhyachal and Badarpur are few of the their clients
where RTAP has been providing all the strict and stringent technical support and
requirements.

5.1 Marketing strategy and customisation

The customer is approached independently. The applications in their plant are carefully
studied. In most occasions the customer expects a solution that suits its configuration.
Majority of the instruments and controls come with standard fittings. Thus, out sourcing
products from reputed firms become an obvious choice. Subsequently, based on finer
requirement by the client, system integration is initiated. This comprises of studying the
layout, developing engineering drawings, reprogramming or making fresh control
algorithms etc. RTAP has a plethora of companies, which have diversified interest and at
 Entrepreneurial opportunity recognition and growth of venture 211

the same time complement each other. Hence, it becomes easier for the enterprise to
source the products in need to meet the customer demand. Strategic alliances act as a
rescue for majority of the projects as RTAP collaborates with them according to customer
specified need and later does integration, which is their main strength.

Figure 4 Marketing strategy and customisation

Buy the Configure as per Installation and

product requirements maintenance

Once the client’s specific needs are assessed, they are passed over to the strategic group,
who initiate in locating the source from where the base instrument would be procured. If
it is possible from the alliance companies the problem is resolved, but in some cases the
search for fresh association starts. This becomes the driving force for knowledge seeking
and upgrading skill sets and technology. Further to this, the engineers develop the local
content called as value integration by re-programming or adding some devices as check
points, either in forward or backward integration. Following this, the system designing is
re-confirmed, before being tested on computer, then the test bed and finally integrated to
the main unit at site. This has been a unique experience and practice by professional at
RTAP. To accomplish this, constant multidimensional training of the executives is
planned and accomplished.

5.2 Challenges/threats

RTAP’s presence has been challenged by many constraints. Entrepreneurial firms

constantly face complex and turbulent external environments (Lumpkin and Dess, 1996).
“Requirements for man power for such mammoth tasks are always on the rise and trained
staff is not easily available. But the unavailability of trained manpower constraint shall
always remain in a technical business”, claims the MD. Also, though external alliances
are an effective method for increasing innovation, they have created dependencies for
RTAP to fulfil their customer commitment. Company has struggled to find a balance
between what they must own versus what they must outsource through strategic alliances.
With external sourcing RTAP is sharing but not controlling activities, and at times have
to negotiate the use of intellectual property to meet both firms’ business needs.
Customers come with problems of mishandling and improper calibration. As an effect
site work is additionally carried out. This at times affects the firms’ overall profits. Cash
starved and limited in resources the enterprise is undergoing a transition phase. The
overall performance of the company has been affected due to confinement in Lucknow as
the scope for business expansion is limited. Shifting of all employees is also not plausible
as most of them are local and unwilling to relocate. But they are assets to the enterprise
and the younger breed is yet to take the leadership.
212 M. Joshi and S. Dixit

5.3 Lessons and learning

The entrepreneur is in possession of knowledge which may be classified as technology
related, management related, and market related. In order to offer any product in the high
tech domain, a deep understanding products and market working require with a
well-grooved technical background. Cohen and Levinthal (1990) also mention that higher
education and relevant industry experience translates into higher stock of knowledge and
also higher absorptive capacity.
The entrepreneurs receive information from varied sources such as working
organisations, mentors, professional acquaintances and friends, regulatory
announcements, investors or potential investors, potential customers etc. which they
process for their use. The sources of information either create or reduce the information
asymmetry among the entrepreneurs. However, the information has to be processed for
by none other than the entrepreneur. Presence of high stock of quality knowledge and
relevant information or cues enables the entrepreneur to build mental models or schemas
based on relevance to meet market and organisational requirements.
Timing plays an important element in the process of conceiving, analysing,
implementation and harvesting the fruits. While some entrepreneurs take less time to
execute, others take longer in contrast and it may be difficult to establish, as to why this
happens. Prior experience in the sector of venture, may aid a smooth sailing
comparatively. Each time opportunity recognition is hunted to its planning, it makes the
entrepreneur undergo a rich full experience. And this may never repeat because of its
uniqueness, but the experience would be valuable as a trendsetter and guiding force.
Secondly, any idea conceived, rarely finds its way up the ladder as it is, without
undergoing ratifications. These changes could be as little to moderate, major and
complete change.
The cognitive learning clearly plays a very prominent role in the ability of the
entrepreneur’s active in the high tech industries in extrapolating their ideas to the future.
Opportunity identification, which emerges from previous work experience, understanding
of the business environment and presence of an active social network helps
entrepreneurial orientation to grow a firm via strategic alliance. The effort by the founder
manager helps in transiting the firm to a centre of distinction, through innovative
practices. The victory of the firm is accredited to accepting challenges, while making use
of its key strengths in resolving the issues.

6 Conclusions

RTAP’s unique entrepreneurial orientation and proactive involvement of the strategic

alliance for innovative and customisation are directly responsible for firm’s performance.
This case of innovative entrepreneurship and strategic alliances in the engineering service
sector is a true example of passion, intrinsic motivation, an imperative component to
navigation success in all odds.
 Entrepreneurial opportunity recognition and growth of venture 213

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Teaching objectives

1 To explain the importance of strategic alliance on the growth of an entrepreneurial

firms.
2 To demonstrate the environmental impact on entrepreneurial opportunity,
identification and analysis.
3 To develop an understanding of the various concepts of EO and their relationship to
organisational performance.
4 To teach the importance of technical innovation and business alliances for the
growth of new ventures.
216 M. Joshi and S. Dixit

5 To demonstrate that strategic alliances are extremely important business tools, which
can help organisations grow at a faster pace in technologically changing
environment.
6 Develop capabilities to assess to what extent a company needs an alliance, with a
particular focus on its value creation drivers. And also to cope with its problems,
both at strategic and at operational/functional level.

Learning objectives

1 Readers will understand that entrepreneurs are made not born; by different strategic
situations, personal orientation and motivation.
2 Understanding to differentiate a business idea from a tangible business opportunity.
3 Innovation theory and techniques to maximise that opportunity, whether technical,
economic, social or political.
4 Students will be empowered to further their understanding of how to position
and grow new enterprise through innovation and strategic alliance in economic
environments that is increasingly highly uncertain and changing at a first pace.
5 Students can learn about business scenario analysis, which is used to develop
strategic thinking and planning skills, explore business models, interpret sales and
marketing opportunities and grow organisations through strategic alliances.
6 Students will develop an understanding towards how personal motivations, strategic
alliances, social network, innovation, and legal environment impact opportunities in
terms of identification, perception, assess, and growth.

Teaching notes

The entrepreneurial innovation, opportunity

analysis and strategic alliance vortex
Innovators worldwide, create the mainstream of wealth, new or an unbiased jump from
the existing, bequeath new value to old assets and produce entirely new fountains of
capital and social value. It becomes imperative to unveil, why some enterprises, sectors
and Nations are able to create more value than others. The fact is few leading enterprises
around the world have been trapped in the vortex of being ‘competitively innovative, and
endorsing to every opportunity present in the environment. Thus, ‘strategic innovation’ is
the answer. But does the new venture innovate continuously or get into strategic alliances
for sustainability? Over the last two decades, the global number of strategic alliances has
risen by approximately 20% per year, and is currently estimated to account for as much
as 25% of the total revenues of participating companies (Anderson et al., 2006).
An entrepreneur who identifies the opportunity for business creation also have to find
ways using ‘creativity’, in offerings, new platform, solutions to customers, customisation
and new customer experiences, value capturing, creating new products and processes,
fresh dimensions of organisation, supply chain, presence, networking and branding. Thus
 Entrepreneurial opportunity recognition and growth of venture 217

the firm is not left with enough resources for technology up gradation and R&D to meet
the competition.

What are entrepreneurial orientation (EO) and opportunity recognition (OR)?

Entrepreneurial orientation (EO) represents the entrepreneurial processes that addresses
how new ventures are undertaken, whereas the term entrepreneurship refers to the content
of entrepreneurial decisions by addressing what is undertaken. Characteristic of an
entrepreneur, which necessarily build him to being an ‘entrepreneur’ include
independence, innovativeness, risk taking, proactiveness, and aggressiveness. These can
exist in isolation or even in permutations and combinations.
An important step in any venture creation process is the recognition of the
opportunity by the entrepreneur which also refers to the power of the foresight, seeking to
establish a possibility or possibilities in the process of making gains.
The ‘newness’ in the opportunity recognition process is either in the product type, the
technology used or the services being offered.
Ozgen and Baron’s (2007) three-item scale measures entrepreneurial opportunity
recognition which measures the self-perceived alertness in recognising opportunities:
1 self-efficacy is defined as an individual’s belief in and desire to effectively achieve
certain targets and tasks
2 prior knowledge means each individual’s prior knowledge and experience
idiosyncrasies that trigger recognition of the value of new opportunities
3 social networks is an individual’s interpersonal networks, including weak-tie
networks and strong-tie networks, facilitate the access to diverse information that
benefits learning and information dissemination processes to further discover
opportunities.

Intrinsic motivation – the inner strength for an entrepreneur

Achievement motivation has been quoted as “behaviour towards competition with a
standard of excellence” (McClelland, 1953). Higher the level of motivation, greater is the
propensity to challenge the goals. The persuasion level is also very high and to disembark
them from their objectives is a difficult task, come what may. Affiliation need is another
factor that refers to the desire for being closer to other people, in order to feel reassured
that the self is acceptable (McClelland, 1953). Higher the level of affiliation, higher will
be the level of socialising. The risk-taking propensity is “the perceived probability of
receiving rewards associated with the success of a situation that is required by the
individual before he will subject himself to the consequences associated with failure, the
alternative situation providing less reward as well as less severe consequences than
the proposed situation” (Brockhaus, 1980). This risk taking clearly distinguishes
entrepreneurs others, typically the managers. Higher the level of risk taking ability,
higher will be the degree of entrepreneurial orientation. Tolerance for ambiguity has been
defined as “a tendency to perceive ambiguous situations as sources of threat” (Budner,
1962). Thus, there is connectivity between the personality characteristics/the
entrepreneurial activity with entrepreneurial orientation and the entrepreneur.
218 M. Joshi and S. Dixit

Figure 5 Framework of entrepreneurial orientation (see online version for colours)

Environmental factors

Dynamism
Munificence
Complexity
Industry characteristic

Entrepreneurial orientation Performance

Self-efficacy Sales growth

Prior knowledge Market share
Social group Profitability
Overall performance
Stakeholder satisfaction
Organisational factors

Size
Structure
Strategy
Strategy making process
Firm resources
Culture
Top management team
characteristics

Need of new technology

The growing trend towards corporate partnering is largely driven by the
knowledge-intensive nature of global competition, and by the cross-fertilisation of
technological domains (Narula, 2004; Powell et al., 1996). Particularly in high-tech
sectors, the increasingly sophisticated and distributed nature of knowledge transcends
corporate boundaries, making it harder to pursue innovation activities in isolation.
Freeman (1991) identified a positive correlation between the technological sophistication
of an industrial sector, and the number of collaborative partnerships undertaken by
domain companies. In the words of Powell et al. (1996, p.116), “when the sources of
expertise are widely dispersed, the locus of innovation will be found in networks of
learning, rather than in individual firms”. This is especially true for high-tech start-ups
tending to concentrate research investment within a specific technological paradigm, and
lacking the internal resources to develop a diversified bundle of technology-related
products.

Strategic alliance the boon for new venture

Strategic alliances can be of various types: joint ventures, outsourcing, affiliate
marketing, technology licensing, product, licensing, franchising, R&D, distribution
relationships.
As suggested by diverse scholars (Colombo et al., 2006; Faems and Van Looy, 2003),
the strategic alliances undertaken by new ventures can be classified in two broad
categories based on the resources sought after in the collaborative engagement. On the
one hand, start-ups may enter into exploitative commercial alliances with the purpose of
accessing the resources necessary to introduce technological innovations to the final
 Entrepreneurial opportunity recognition and growth of venture 219

market. An exploitative propensity generally leads to the constitution of strategic

alliances with downstream partners, such as large companies excelling at product
commercialisation.
On the other hand, explorative technological alliances enable new ventures to
advance innovation, either by pooling together complementary resources or internalising
the partner’s knowledge.

Importance of strategic alliance for technology driven firms

Strategic alliances are explicitly used by technical firms to enhance the innovativeness –
and in turn, the performance and growth of start-ups. The constitution of strategic
alliances may enable start-ups to overcome the liability of newness, as well as to avoid
the pitfalls associated with the earliest stages of venture development (Baum et al., 2000;
Narula, 2004). As argued by Baum et al. (2000, p.270), “By forming strategic alliances,
start-ups can potentially access social, technical, and commercial resources that normally
require years of operating experience to acquire”. Stuart et al. (1999) showed that
technology start-ups with prominent partners performed better than comparable ventures
without endorsements – in terms of higher sales growth and faster initial public offerings.
Thus this results in cost reductions, knowledge creation, reputation enhancement, and
international expansion.

Figure 6 Critical success factors affecting strategic alliances

Critical success factors

Clear and Appropriate scope

common vision

Shared control
Shared objectives

Team problem solving

Mutual needs

Shared decision
making
Strategic fit/ Successful
complementary alliance
strengths
partnership Cultural compatibility

Senior management/
champion involvement
Mutual trust

Shared risk
Measureable goals

Shared reward Partner accountability

Source: Biggs (2006)

 220 M. Joshi and S. Dixit

However, strategic alliances should be carefully done as they are risky endeavours, and
failure may lead to the shutdown of the new start up as their resources are limited and
fully utilised. Thus, according to Draulans et al. (2003), in order to reap the advantages
associated with inter-organisational collaboration, start-ups need to develop alliance
mastery, defined as the capability to establish structure and manage strategic alliances.

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