The process of entrepreneurship consists of discovering,
evaluating and exploiting opportunities to create future goods and services.
(Shane and Venkataraman, 2000). Considerable scholarly attention has been given
to the discovery and evaluation stages (Shane, 2000; Alvarez and Barney, 2007),
but only little research devoted to the opportunity exploitation process, and
this research mainly focused on the decision to exploit (Hmieleski and Baron,
2008, Choi, Moren and Sheperd, 2008), little or no
research has been devoted to the exploitation stage itself and there is
no clear process and no clear antecedents.
Our study focuses on the opportunity exploitation stage in
new ventures operating in incubators; we propose and demonstrate that
Absorptive Capacity (ACAP), the capabilities of the firm to recognize the value
of new knowledge coming from external sources, to assimilate it, and to apply
it to commercial ends, has a fundamental
role in the process. We show that different team characteristics affect the
different ACAP stages: new ventures team diversity has a positive effect on
ACAP acquisition while goal setting has a positive effect on ACAP exploitation.
We demonstrate that ACAP acquisition is positively related to new ventures
performance, while the effect of ACAP exploitation on Performance is moderated
by environmental uncertainty such that in a low uncertainty environment (high
certainty) it has a negative effect on performance, whereas in high uncertainty
environment ACAP exploitation has a positive effect. Moreover we were able to
demonstrate that implementing flexibility strategy has a positive effect on new
ventures performance. We also tested for the incubator effect on new ventures
performance using multilevel analysis- and demonstrate that there is a positive
effect on performance, simply belonging to a certain incubator could increase
or decrease the chances and the amount for first round financing.
The model was tested in Israel on a sample of 56 new ventures in 13 incubators.
The research makes significant theoretical contributions
both to the entrepreneurship and ACAP literature: We propose and demonstrate
that the exploitation stage is an ACAP centered process, whereby the ACAP
antecedents: new venture’s team functional diversity and goal setting, affect
ACAP that in turn affect new venture performance. The study is pioneer in
examining the moderating role of the environment on the effect of ACAP exploitation
on performance. We use a multilevel approach and demonstrate that factors at
the incubator level and at the new venture level affect the new venture's