Why do some entrepreneurs succeed and the others fail? The answer lies within the value of information.
The entrepreneur has an incentive to design efficient strategies to collect information on an opportunity. The information collection process does not simply lead the decision of whether to exploit it. Each implementation action can itself generate information as a by-product, so that the sequence of actions involved in exploitation is itself a key characteristic of the information collection process.
“Information,” is used in a broad sense. The term is generally assumed to cover all instances where people interact with their environment in any such way that leaves some impression on them—that is, adds or changes their knowledge store.
These impressions can include the emotional changes that result from reading, or one’s experience.
These changes can also reflect complex interactions where information combines with pre-existing knowledge to make new understandings, or enables the individual to deduce or induce new thoughts and ideas.
In an uncertain world, differential access to information generates radical differences in the perception of the business environment and, moreover, entrepreneurs attempt to exploit these differences of perception to their own advantage. As Casson (2005, p. 328) explicitly argues:
[. . .] many of the strategic issues encountered by the entrepreneur stem from the fact that he is more optimistic about the prospects of the firm than are the other parties with whom he deals [. . .] This is achieved by sharing information [. . .] The entrepreneur needs to know when, and with whom to share information and when to keep it secret instead.
So, the defining characteristic of the entrepreneur is judgmental decision making, which is closely allied to risk and uncertainty. The entrepreneur perceives the risk as much lower, however, because of the information in his possession.
Networks provide important information regarding entrepreneurial opportunities (Johannisson and Nilsson, 1989); or else, they provide individuals with the information needed in order to exploit market discrepancies (Butler, 1991).
As Brown and Butler (1993, p. 103) suggest social networks “[. . .] serve as a source of information about improving operational efficiency [. . .]”. Analysing in particular, small firm information seeking as a response to environmental threats and opportunities, based on models of organization information interpretation such as perceived environmental uncertainty, Lang et al. (1997) found a positive relationship between perceived opportunities and information seeking.
In their study of acquisition, assessment and use of business information by small- and medium-sized enterprises (SMEs), Fuellhart and Glasmeir (2003) found that information from the other firms is positively related to organizational changes. Such organizational changes referred to scanning for technical and business information as well as changes in the product and customer mixes.
As they argue:
[. . .] it is possible that firms are looking to other business organisations (both competitors and non-competitors) in order to make decisions about how to meet product requirements of customers in the marketplace and how to obtain the technical and business information to meet these needs (Fuellhart and Glasmeir, 2003, p. 244).