To read this content please select one of the options below:

Opportunity recognition efficiency of small Chinese firms: findings from data envelopment analysis

Zisheng Guo (School of Business Administration, South China University of Technology, Guangzhou, China)
Jianqi Zhang (Lingnan (University) College, Sun Yat-sen University, Guangzhou, China)
Heng Liu (Lingnan College, Sun Yat-sen University, Guangzhou, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 13 August 2019

Issue publication date: 9 December 2019

359

Abstract

Purpose

Small firms in China anticipate entrepreneurial opportunities for continual growth. However, they may fail to recognize opportunities because of their inefficiency in managing their knowledge.

Design/methodology/approach

In this explorative paper, the authors assess the opportunity recognition efficiency of 168 small Chinese firms using data envelopment analysis (DEA). Supplementary Tobit regressions were conducted for further exploring the factors that influence the firms’ efficiency in opportunity recognition.

Findings

Results from the DEA suggest that most respondents recognize significantly fewer opportunities than those with equivalent knowledge stock. Moreover, many firms have low levels of pure technical efficiency but high levels of scale efficiency, indicating insufficient use of knowledge as a major reason for inefficiency in opportunity recognition. The Tobit regressions show that sales and research and development intensity are relevant to a firm’s opportunity recognition efficiency.

Research limitations/implications

This study calls for the investigation of efficiency issues in opportunity recognition and suggests that managers guard against unwarranted loss of opportunities owing to inefficient use of existing knowledge elements.

Originality/value

First, the authors introduce the concept of opportunity recognition efficiency within the entrepreneurial process. Second, they manifest the role of knowledge management in opportunity recognition. Third, they introduce DEA to investigate the relationship between knowledge stock and opportunity recognition. Fourth, this study reveals that inefficient use of knowledge is a disadvantage of small Chinese firms in terms of opportunity recognition.

Keywords

Acknowledgements

This paper forms part of a special section “Chinese management and cross-cultural management”, guest edited by Zheng Fan, Tingting Lu and Peihua Fan.

The research is supported by National Natural Science Foundation of China (71572204) and Key Research Project of Guangdong Province (2016WZDXM001).

Citation

Guo, Z., Zhang, J. and Liu, H. (2019), "Opportunity recognition efficiency of small Chinese firms: findings from data envelopment analysis", Chinese Management Studies, Vol. 13 No. 4, pp. 760-777. https://doi.org/10.1108/CMS-05-2018-0546

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

Related articles