The Roles of Knowledge and Organizational Form on Opportunity Evaluation


  • Shaun Paul Digan University of Lousiville
  • Sharon A Kerrick Bellarmine University
  • Denise M Cumberland University of Louisville
  • Robert P Garrett University of Louisville


What influences an individual to pursue one type of entrepreneurial opportunity versus another? Knowledge is central to the concept of opportunity identification and evaluation.  Using conjoint analysis to capture underlying decision policies, we explore the roles of both knowledge and organizational form in the evaluation of entrepreneurial opportunities.  Our findings suggest that, among respondents who considered entering a franchise agreement a viable alternative to founding an independent business, franchise versus independent form alone did not play a specific and significant role in the evaluation of the attractiveness of entrepreneurial opportunities.  Rather, organizational form appears to influence the impact of both human capital relatedness and the inimitability of resources attributes on opportunity attractiveness.  


Download data is not yet available.

Author Biographies

Shaun Paul Digan, University of Lousiville

PhD Candidate, Entrepreneurship

Sharon A Kerrick, Bellarmine University

Assistant Dean

College of Business

Denise M Cumberland, University of Louisville

Assistant Professor

Department of Educational Leadership, Evaluation, and Organizational Development

Robert P Garrett, University of Louisville

Associate Professor

Entrepreneurship Department



Aguinis, H., Gottfredson, R. K., & Culpepper, S. A. (2013). Best-practice recommendations for estimating cross-level interaction effects using multilevel modeling. Journal of Management, 39(6), 1490–1528.

Aguinis, H., & Lawal, S. O. (2012). Conducting field experiments using eLancing’s natural environment. Journal of Business Venturing, 27(4), 493–505.

Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32(10), 1231–1241.

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

Barney, J. B. (2014). Gaining and sustaining competitive advantage (4th ed.). Pearson Education.

Baron, R. A. (2006). Opportunity recognition as pattern recognition: How entrepreneurs “connect the dots” to identify new business opportunities. Academy of Management Perspectives, 20(1), 104–119.

Baron, R. A., & Ensley, M. (2006). Opportunity recognition as the detection of meaningful patterns: Evidence from comparisons of novice and experienced entrepreneurs. Management science, 52(9), 1331–1344.

Bates, T. (1995). A comparison of franchise and independent small business survival rates. Small Business Economics, 7(5), 377–388.

Baucus, D. A., Baucus, M. S., & Human, S. E. (1993). Choosing a franchise: How base fees and royalties relate to the value of the franchise. Journal of Small Business Management, 32(2), 91–104.

Baucus, D. A., Baucus, M. S., & Human, S. E. (1996). Consensus in franchise organizations: A cooperative arrangement among entrepreneurs. Journal of Business Venturing, 11(5), 359–378.

Becker, G. (2009). Human capital: A Theoretical and Empirical Analysis with Special Reference to Education. University of Chicago Press.

Bennett, S., Frazer, L., & Weaven, S. (2010). What prospective franchisees are seeking. Journal of Marketing Channels, 17(1), 69–87.

Brickley, J., & Dark, F. (1987). The choice of organizational form the case of franchising. Journal of Financial Economics, 18(2), 401–420.

Brown, T. R. (1972). A comparison of judgmental policy equations obtained from human judges under natural and contrived conditions. Mathematical Biosciences, 15(3), 205–230.

Buhrmester, M., Kwang, T., & Gosling, S. D. (2011). Amazon’s Mechanical Turk: A new source of inexpensive, yet high-quality, data? Perspectives on Psychological Science, 6(1), 3–5.

Calderon-Monge, E., & Huerta-Zavala, P. (2015). Performance and risk as signals for setting up a franchised business. Journal of Small Business Strategy, 23(2), 41–58.

Choi, Y. R., & Shepherd, D. A. (2004). Entrepreneurs’ decisions to exploit opportunities. Journal of Management, 30(3), 377–395.

Combs, J. G., & Ketchen Jr., D. J. (2003). Why do firms use franchising as an entrepreneurial strategy?: A meta-analysis. Journal of Management, 29(3), 443–465.

Combs, J. G., Ketchen Jr., D. J., Shook, C. L., & Short, J. C. (2010). Antecedents and consequences of franchising: Past accomplishments and future challenges. Journal of Management, 37(1), 99–126.

Combs, J. G., Ketchen Jr., D. J., & Short, J. C. (2011). Franchising research: Major milestones, new directions, and its future within entrepreneurship. Entrepreneurship Theory and Practice, 35(3), 413–425.

Dada, O., & Watson, A. (2013). Entrepreneurial orientation and the franchise system: Organisational antecedents and performance outcomes. European Journal of Marketing, 47(5/6), 790–812.

Dada, O., Watson, A., & Kirby, D. A. (2015). Entrepreneurial tendencies in franchising: evidence from the UK. Journal of Small Business and Enterprise Development, 22(1), 82–98.

Dant, R. P., & Gundlach, G. T. (1999). The challenge of autonomy and dependence in franchised channels of distribution. Journal of Business Venturing, 14(1), 35–67.

Desarbo, W. S., Macmillan, I. C., & Day, D. L. (1987). Criteria for corporate venturing: Importance assigned by managers. Journal of Business Venturing, 2(4), 329–350.

Desouza, K., & Evaristo, R. (2003). Global knowledge management strategies. European Management Journal, 21(1), 62–67.

Douglas, E. E. J., & Shepherd, D. A. (2002). Self-employment as a career choice: attitudes, entrepreneurial intentions, and utility maximization. Entrepreneurship Theory and Practice, 26(3), 81–90.

Fiet, J. O. (1996). The informational basis of entrepreneurial discovery. Small Business Economics, 8(6), 419–430.

Fiet, J. O. (2007). A prescriptive analysis of search and discovery. Journal of Management Studies, 44(4), 592–611.

Fiet, J. O., & Patel, P. C. (2008). Entrepreneurial discovery as constrained, sytematic search. Small Business Economics, 30(3), 215–229.

Fiet, J. O., & Samuelsson, M. (2000). Knowledge-based competencies as a platform for firm formation. Frontiers of Entrepreneurship Research, 166–178.

Fischhoff, B. (1982). Debiasing. In D. Kahneman, P. Slovic, & A. Tversky (Eds.), Judgment under uncertainty: Heuristics and biases (pp. 422–444). Cambridge University Press, New York.

Foss, N. J., & Knudsen, T. (2003). The resource-based tangle: Towards a sustainable explanation of competitive advantage. Managerial and Decision Economics, 24(4), 291–307.

Franke, N., Gruber, M., Harhoff, D., & Henkel, J. (2008). Venture capitalists’ evaluations of start up teams: Trade offs, knock out criteria, and the impact of VC experience. Entrepreneurship Theory and Practice, 32(3), 459–483.

Gibbons, R., & Waldman, M. (2004). Task-specific human capital. American Economic Review, 94(2), 203–207.

Gillis, W. E., Combs, J. G., & Ketchen Jr., D. J. (2014). Using resource-based theory to help explain plural form franchising. Entrepreneurship Theory and Practice, 38(3), 449–472.

Gonzalez-Diaz, M., & Solis-Rodriguez, V. (2012). Why do entrepreneurs use franchising as a financial tool? An agency explanation. Journal of Business Venturing, 27(3), 325–341.

Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122.

Green, P. E., Krieger, A. M., & Wind, Y. (2001). Thirty years of conjoint analysis: Reflections and prospects. Interfaces, 31(3_Suppliment), 56–73.

Green, P. E., & Srinivasan, V. (1990). Conjoint analysis in marketing: New developments with implications for research and practice. The Journal of Marketing, 54(4), 3–19.

Grünhagen, M., & Dorsch, M. J. (2003). Does the franchisor provide value to franchisees? Past, current, and future value assessments of two franchisee types. Journal of Small Business Management, 41(4), 366–384.

Hahn, & Shapiro. (1966). A catalogue and computer programme for design and analysis of orthogonal symmetric and asymmetric fractional experiments. General Electric Research and Development Centre Report No 66-C-165, Schenectady, New York.

Hammond, K. R., & Adelman, L. (1977). Science, values, and human judgment: Integration of facts and values requires the scientific study of human judgment. Jurimetrics Journal, 17(4), 253–269.

Harmon, T. R., & Griffiths, M. (2008). Franchisee perceived relationship value. Journal of Business & Industrial Marketing, 23(4), 256–263.

Hayek, F. (1945). The use of knowledge in society. The American Economic Review, 35(4), 519–530.

Haynie, J. M., Shepherd, D. A., & McMullen, J. S. (2009). An opportunity for me? The role of resources in opportunity evaluation decisions. Journal of Management Studies, 46(3), 337–361.

Holland, D. V, & Shepherd, D. A. (2013). Deciding to persist: Adversity, values, and entrepreneurs’ decision policies. Entrepreneurship Theory and Practice, 37(2), 331–358.

Horton, J. J., Rand, D. G., & Zeckhauser, R. J. (2011). The online laboratory: Conducting experiments in a real labor market. Experimental Economics, 14(3), 399–425.

Jensen, M. C., & Meckling, W. H. (1992). Specific and general knowledge, and organizational structure. Journal of Applied Corporate Finance, 8(2), 4–18.

Justis, R., Chan, P., & Kedia, B. (2015). Pricing strategies and fee structures in franchising organizations. Journal of Small Business Strategy, 2(2), 16–23.

Justis, R., & Judd, R. (1998). Franchising. Houtson, TX: Dame.

Kaufmann, P. J., & Dant, R. P. (1999). Franchising and the domain of entrepreneurship research. Journal of Business Venturing, 14(1), 5–16.

Kaufmann, P. J., & Stanworth, J. (1995). The decision to purchase a franchise: A study of prospective franchisees. Journal of Small Business Management, 33(4), 22–33.

Kolvereid, L., & Isaksen, E. (2006). New business start-up and subsequent entry into self-employment. Journal of Business Venturing, 21(6), 866–885.

Kushev, T. (2014). A Social Cognitive Perspective on Opporutnity Evaluation. University of Lousiville.

Lohrke, F. T., Holloway, B. B., & Woolley, T. W. (2010). Conjoint analysis in entrepreneurship research: A review and research agenda. Organizational Research Methods, 13(1), 16–30.

Mason, W., & Suri, S. (2012). Conducting behavioral research on Amazon’s Mechanical Turk. Behavior Research Methods, 44(1), 1–23.

Mathewson, G., & Winter, R. (1985). The economics of franchise contracts. Journal of Law and Economics, 28(3), 503–526.

Mitchell, J. R., & Shepherd, D. A. (2010). To thine own self be true: Images of self, images of opportunity, and entrepreneurial action. Journal of Business Venturing, 25(1), 138–154.

Paolacci, G., Chandler, J., & Ipeirotis, P. G. (2010). Running experiments on amazon mechanical turk. Judgment and Decision Making, 5(5), 411–419.

Paswan, A. K., & Wittmann, C. M. (2009). Knowledge management and franchise systems. Industrial Marketing Management, 38(2), 173–180.

Penrose, E. (1959). The theory of the growth of the firm. In The Theory of the Growth of the Firm.

Perdreau, F., Nadant, A.-L. Le, & Cliquet, G. (2015). Human capital intangibles and perfromance of franchise networks: A complementary view between agency and critical resource perspectives. Managerial and Decision Economics, 36(2), 121–138.

Peterson, A., & Dant, R. P. (1990). Perceived advantages of the franchise option from the franchisee perspective: Empirical insights from a service franchise. Journal of Small Business Management, 28(3), 46.

Priem, R. L., & Harrison, D. A. (1994). Exploring strategic judgment: Methods for testing the assumptions of prescripitve contingency theorie. Strategic Management Journal, 15(4), 311–324.

Raudenbush, S., & Bryk, A. (2002). Hierarchical linear models: Applications and data analysis methods.

Reynolds, P. D. (2007). New firm creation in the United States: A PSED I overview. Foundations and Trends in Entrepreneurship, 3(1), 1–150.

Reynolds, P. D. (2011). Informal and early formal financial support in the business creation process: exploration with PSED II data set. Journal of Small Business Management, 49(1), 27–54.

Rubin, P. H. (1978). The theory of the firm and the structure of the franchise contract. The Journal of Law & Economics, 21(1), 223–233.

Shane, S. A. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.

Shane, S. A. (2003). A General Theory of Entrepreneurship. Edward Elgar Publishing.

Shepherd, D. A. (1999). Venture capitalists’ assessment of new venture survival. Management science, 45(5), 621–632.

Shepherd, D. A., & Zacharakis, A. L. (1997). Conjoint analysis: A window of opportunity for entrepreneurship research. In J. Katz (Ed.), Advances in Entrepreneurship, Firm Emergence and Growth (Vol. 3, pp. 203–248). JAI Press Greenwich, CT.

Shepherd, D. A., & Zacharakis, A. L. (1999). Conjoint analysis: A new methodological approach for researching the decision policies of venture capitalists. Venture Capital, 1(3), 197–217.

Shepherd, D. A., & Zacharakis, A. L. (2003). A new venture’s cognitive legitimacy: An assessment by customers. Journal of Small Business Management, 41(2), 148–167.

Shepherd, D. A., Zacharakis, A. L., & Baron, R. A. (2003). VCs’ decision processes. Journal of Business Venturing, 18(3), 381–401.

Stanworth, J., Stanworth, C., Watson, A., Purdy, D., & Healeas, S. (2004). Franchising as a small business growth strategy a resource-based view of organizational development. International Small Business Journal, 22(6), 539–559.

Stiglitz, J. E. (1985). Information and economic analysis: A perspective. The Economic Journal, 95(Supplement: Conference Papers), 21–41.

Strutton, D., Pelton, L., & Lumpkin, J. (1995). Psychological climate in franchising system channels and franchisor-franchisee solidarity. Journal of Business Research, 34(2), 81–91.

Tuunanen, M., & Hoy, F. (2006). Franchising–multifaceted form of entrepreneurship. International Journal of Entrepreneurship and Small Business, 4(1), 52–67.

Ucbasaran, D., Westhead, P., & Wright, M. (2008). Opportunity identification and pursuit: Does an entrepreneur’s human capital matter? Small Business Economics, 30(2), 153–173.

Venkataraman, S. (1997). The distinctive domain of entrepreneurship research: An editor’s perspective. Advances in entrepreneurship, firm emergence and growth, 3(1), 119–138.

Watson, A., & Stanworth, J. (2006). Franchising and intellectual capital: A franchisee’s perspective. International Entrepreneurship and Management Journal, 2(3), 337–349.

Welsh, D. H. B., Davis, A. E., Desplaces, D. E., & Falbe, C. M. (2011). A resource-based view of three forms of business in the startup phase: Implications For franchising. Journal of Small Business Strategy, 22(1), 47–66.

Williams, D. L. (1999). Why do entrepreneurs become franchisees? An empirical analysis of organizational choice. Journal of Business Venturing, 14(1), 103–124.

Yong, S. P., & Young-Ryeol, P. (2004). A framework of knowledge transfer in cross-border joint ventures: An empirical test of the Korean context. Management International Review, 44(4), 417–436.



How to Cite

Digan, S. P., Kerrick, S. A., Cumberland, D. M., & Garrett, R. P. (2017). The Roles of Knowledge and Organizational Form on Opportunity Evaluation. Journal of Small Business Strategy, 27(2), 65-89. Retrieved from




Most read articles by the same author(s)