Opportunity Enactment

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stakeholders’ uncertainty if the idea is objectively valuable (Magnusson et al. 2016). Moreover, crowdsourcing campaigns can help the entrepreneurs in creating an early sense of urgency for their opportunity idea and creating awareness as well as commitment among potential customers. One example for this can be found in the case of funding. Typically, venture capital investments serve as influential signals to stakeholders by proposing that a start-up is valuable (Hellmann and Puri 2002;

Baum and Silverman 2004). In this context, crowdfunding has proven to be a common mechanism applied in the entrepreneurship context. From the perspective of opportunity creation theory, however, crowdfunding grants benefit beyond access to financial resources. The funding behavior of investors, in this case the crowd, may function as a gatekeeper that provides an early evaluation of the opportunity idea. For instance, Mollick and Nanda (2015) showed that the funding of democratic individuals is equal to the expert evaluation of ideas and therefore provides valuable insights to reduce stakeholders’

uncertainty regarding an opportunity. Crowdsourcing supports the opportunity enactment process by reducing potential stakeholders’ uncertainty about the viability of an opportunity, building a shared understanding within a potential market environment, and thus gaining traction among stakeholders by signaling the value of the opportunity. I therefore propose:

Proposition 4: Crowdsourcing supports the entrepreneur to reduce stakeholder uncertainty and persuade stakeholders to support by signaling the value of the opportunity.

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4.1.9.2. Resource Mobilization

As I noted before, opportunity enactment calls for social resources that are larger in size and more diverse than the peers who helped the entrepreneur objectify the idea (Jawahar and McLaughlin 2001; Wood and McKinley 2010). Thus, for an entrepreneur to successfully realize an idea, access to a wide and varying base of actors is of crucial importance (Tocher et al.

2015).

In a creation context, entrepreneurs are often confronted with a very dynamic environment that makes the exploitation of opportunities difficult to accomplish. For example, due to the high uncertainty inherent to opportunities, entrepreneurs often need to adapt their product and service offers at short notice in line with dynamic market developments. This presents entrepreneurs with the challenge of hiring certain employees flexibly and for rather short periods of time. Because of this, entrepreneurs need new organizations of work that allow them to periodically and flexibly hire people with a special expertise.

This becomes even more important if ventures face monetary constraints, as is typical for start-ups. One way to address entrepreneurs’ needs for more flexible and short-term employment relationships is crowd work (Durward et al. 2016).

Thus, platforms such as Freelancer allow an individual to look for freelancers with a wide variety of skills without incurring the high costs associated with the rigidity of long-term employment relationships.

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Similarly, dynamic environments, as usually encountered during opportunity creation, are usually associated with high risks.

However, in such situations of high risks, traditional external sources of capital - including banks and venture capital firms - are unlikely to provide financing for entrepreneurs (Bhide 1992).

Under these conditions, the problem of finding sources of capital is not information asymmetries, it is simply the lack of information. Thus, entrepreneurs in such situations are not capable of reliably presenting economic facts, such as the risks associated with an opportunity, that are required by external capital providers to assess the viability of a new business and therefore a start-up’s probability to repay its debts.

One possible solution to circumvent this shortage of capital is to make use of more flexible forms of financing. For example, a common method used to finance early entrepreneurial endeavors is bootstrapping. In bootstrapping, entrepreneurs finance activities with their own wealth, or the wealth of those closely associated with them— the triumvirate of “friends, family, and fools” (Bhide 1992). However, while this source of capital is a common method in entrepreneurial financing, it is usually restricted to small amounts of money.

One way to address these capital shortages that entrepreneurs inadvertently face is crowdfunding. Crowdfunding is thereby a very versatile tool that through the distributed collection of small sums among many funders can amount to relatively large investment sums granted to the entrepreneur. Even more,

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crowdfunding is a form of financing that is characterized by a low degree of informational requirements, which makes financing accessible even to entrepreneurs who undergo opportunity creation. In addition to that, crowdfunding provides several other advantages. Thus, it can be used as a method of market research to validate consumer demands as well as a method to gather valuable user feedback to align the product with existing market demands (Gierczak et al. 2015).

Proposition 5: Crowdsourcing facilitates access to a diverse base of prospective stakeholders to mobilize resources.

Crowdsourcing provides a rapid and cost-efficient way to aggregate data about the reactions of the market, feedback of functionality, or the customers’ perception of a solution (Ries 2011; Blank 2013). By challenging initial assumptions and beliefs with potential users, the entrepreneur gathers information about the value of the opportunity and the level of its product-market fit, therefore reducing individual uncertainty by validating such assumptions (Alvarez and Barney 2007). The feedback of the heterogeneous crowd therefore results in a higher level of validity that reduces the threat of an entrepreneur’s overestimation of the value of an idea. As crowdsourcing enables the entrepreneur to use feedback from a huge number of people, the threat that he must generalize and make decisions based on small samples is minimized. Vice versa, the feedback from the crowd can also function as signaling that the opportunity is desirable for the market

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(Tocher et al. 2015). Thereby, crowdsourcing helps the entrepreneur to overcome limitations such as limited access to or homogeneity of social resources. Furthermore, crowdsourcing provides valuable potentials for the iterative development of the opportunity by offering access to flexible resources (see Table 4).

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Phase Entrepreneuri al Action

Benefits of Crowdsourcing

Objectification Sense making  Heterogenous knowledge

 Representativeness of feedback

Iterative

development  Demand-side knowledge

 Rapid user feedback Enactment Persuasion of

stakeholder  Signaling of market viability

 Integration of stakeholders

Resource

mobilization  Access to flexible human resources and skills

 Access to flexible financing

Table 4. Benefits of Crowdsourcing for Entrepreneurial Actions