The Importance of Market Opportunity Recognition Mechanisms in Interfunctional Management Teams

In today‟s fast moving business environments, managers must be able to gather and interpret data in such a way as to identify lucrative market opportunities. However, being able to exploit these opportunities is contingent on management‟s ability to sense important changes in the market or see the market in a new way and ultimately craft an appropriate response to these insights. Unfortunately, this ability to identify market opportunities has not been explored in the marketing literature. Very little is known about the cognitive processes managers use as they seek out market opportunities.

The purpose of this dissertation is to shed some light on these cognitive processes by developing a conceptualization of market opportunity recognition mechanisms. Specifically, market opportunity recognition mechanisms are conceptualized as a set of interrelated constructs that include management team situational awareness, management team creative problem solving and management team strategic and tactical agreement. This conceptualization is built from a thorough review of the entrepreneurship, creativity, cognitive science, and market orientation literatures as well as from insights gained from field interviews and observations. The market opportunity recognition mechanisms are tested in a nomological framework that includes a contingency based view of firm responsiveness. The test of the dissertation hypotheses was conducted using participants engaged in a dynamic market simulation. The results of the tests suggest that situational awareness is the foundational construct in market opportunity recognition mechanisms and that the interaction between situational awareness and team agreement on tactical and strategic actions increases the probability that the team will effectively align resources to market conditions. This ultimately results in increased financial performance.