Measuring the market newness of new ventures Jonas Dahlqvist a, ⁎, Johan Wiklund a,b,1 a Centre for Innovation Systems, Entrepreneurship and Growth (CISEG), Jönköping International Business School, Box 1026, SE-55111 Jönköping, Sweden b Department of Entrepreneurship and Emerging Enterprises, Whitman School of Management, Syracuse University, Syracuse, NY 13244-2450, USA article info abstract Article history: Received 26 May 2008 Received in revised form 7 December 2010 Accepted 8 December 2010 Available online xxxx Field Editor: P. Phan The present lack of instruments for measuring entrepreneurial opportunity is hampering progress in entrepreneurship research and fundamental hypotheses about opportunity variance are not being tested. This paper sets out to validate a measure of market newness in new ventures based in Austrian Economics, assuming a view of opportunity as objective and discoverable. Empirically, a sample of 250 new internal ventures in gestation was examined regarding to whom these ventures presented something new in terms of geographical extension or new customer groups. The measure improves on existing instruments by providing more intrinsic range while being firmly anchored in an Austrian Economics framework. © 2010 Elsevier Inc. All rights reserved. Keywords: entrepreneurial opportunity individual-opportunity nexus Austrian economics Kirzner measurement theory 1. Executive summary In entrepreneurship, new ventures are created to pursue hitherto unexploited opportunities. The nature of these opportunities as well as the individuals pursuing them is likely to extensively influence the entrepreneurial process as well as the outcomes of this process. To date, extensive research has examined individual differences among entrepreneurs whereas very limited research has occupied itself with differences in terms of entrepreneurial opportunities. This is a shortcoming hampering our understanding of entrepreneurship. We argue that to a large extent, this paucity of research on opportunity variance is due to the lack of validated measures that capture opportunity variance in a conceptually sound way. Building on Austrian Economics and Kirzner's interpretation of the market process, we suggest that market newness is the primary dimension along which to measure opportunity variance because, fundamentally, as entrepreneurs pursue opportunities, they generate newness in the market. Further, the degree of market newness generated by entrepreneurs has a fundamental dimension in terms of geographical scope. This approach is closely associated with Austrian Economics' understanding of information as heterogeneously scattered across the economy. The reason why entrepreneurial opportunity arises in the first place is that material resources, information and knowledge are unevenly spread throughout the economic system, separated by time and distance. Therefore, this paper develops a measurement scale of market newness consisting of 8 yes/no questions. Combining these items allowed us to produce a semi-continuous scale. Screening a cohort of over 4000 firms, we identified those 250 that were actively engaged in pursuing new opportunities and collected extensive data from them in three waves of data collection over a one year period. Our results show that the scale exhibits sound measurement properties including high internal consistency and convergent as well as predictive validity. Journal of Business Venturing xxx (2011) xxx–xxx ⁎ Corresponding author. Tel.: +46 70 4718993. E-mail addresses: jonas.dahlqvist@ihh.hj.se (J. Dahlqvist), jwiklund@syr.edu (J. Wiklund). 1 Tel.: +1 315 443 3356; fax: +1 315 442 1449. JBV-05574; No of Pages 12 0883-9026/$ – see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusvent.2010.12.001 Contents lists available at ScienceDirect Journal of Business Venturing Please cite this article as: Dahlqvist, J., Wiklund, J., Measuring the market newness of new ventures, J. Bus. Venturing (2011), doi:10.1016/j.jbusvent.2010.12.001