Reconsidering Schumpeterian Opportunities : the Contribution of Interaction Ritual Chain Theory

This paper develops a novel interactionist theory of entrepreneurial conduct to explore the nature of Schumpeterian opportunities. Specifically, it draws attention to the significance of social interaction and emotion for the enactment of effective business innovation. Deploying constructs drawn from Randall Collins’s ‘interaction ritual chain theory’, the paper provides a model of the entrepreneurial process that specifies the social conditions necessary for innovative ideas to be translated into effective business activity. Examples drawn from the development of the personal computer industry are used to illustrate this argument. It is concluded that ‘interaction rituals’ can contribute to an understanding of individuals’ and groups’ ability to overcome the barriers of social inertia, scepticism and hostility that frequently confront attempts to establish genuine commercial innovations. Introduction A central distinction in entrepreneurial theory is that between Schumpeterian and Kirznerian opportunities (Schumpeter, 1934; Kirzner, 1973). According to Shane (2003, p. 21), Schumpeterian opportunities are disequilibrating, depend upon new information, are highly innovative, rare, and involve processes of creation – the entrepreneur has to work, often in the face of opposition from vested interests or social inertia, to establish new ways of doing things and turning these into a viable business. Kirznerian opportunities, in contrast, are depicted as equilibrating, having limited, or no, reliance on new information, being less innovative, more common, and relying on discovery rather than creation (e.g., finding more effective ways of exploiting an existing business idea). In summary, Schumpeterian opportunities ‘break away from existing knowledge’, while Kirznerian opportunities ‘replicate existing organizational forms’ (Shane 2003, p. 21). The ability to spot and exploit Schumpeterian opportunities is held to be of considerable significance because of the latter’s profound impact on economic and