Opportunity formation among nascent entrepreneurs: A qualitative study from a business university in Rwanda

Helle Dahl Rasmussen

Student thesis: Master thesis


Entrepreneurship is a broad field, and there seems to be no agreement about what it includes. In developing countries entrepreneurship is seen as a way to foster private sector growth and economic development as it may bring jobs and new technology. However, the exact impact of entrepreneurship on an economy is not well known, and not much research is done about entrepreneurship in developing countries. Many researchers have pointed out that the concept of opportunity is a crucial element of entrepreneurship, and so are the individuals who form and exploit these opportunities. Enhancing individuals to foster entrepreneurship may be done through education. Rwanda has improved its macro level environment for doing business, but the Rwandan government recognizes that there is a lack of appropriate entrepreneurship education in the country. The purpose of this dissertation is to contribute to the developing country entrepreneurship literature and the debate about appropriate entrepreneurship education, particularly in Rwanda. It does so by looking into how university students from School of Finance and Banking (SFB) in Kigali, Rwanda, form opportunities when they are starting up businesses. Opportunity formation is studied through a developed theoretical framework consisting of causation and effectuation combined with other concepts from the opportunity formation literature. Causation and effectuation are two processes for opportunity formation that have emerged in the entrepreneurship literature. Causation is characterized by focusing on the end-product whereas an effectuation process focuses on available means. The processes are combined with four factors that influence the opportunity formation process, namely; motivation, knowledge, capital and network. Combining the two processes with the four influencing factors has helped operationalize the processes and proved beneficial for understanding the complexity of the opportunity formation processes of the students. This study shows that determining whether actions and decisions belong to a process of causation or effectuation is not always easy and will depend on how the processes are operationalized. The opportunity formation processes of eight entrepreneurs studying at School of Finance and Banking are studied by applying qualitative methods including semi-structured interviews, diaries and observations. The overall conclusion is that the students mostly applied effectuation when they formed their opportunities. However, signs of causation can also be determined. The participants did not make comprehensive opportunity search, accurate predictions, competitive analysis or followed a specific plan, which are all part of a causation process. They were not driven by one specific opportunity or venture and they were willing to change their goals. Further, as in effectuation they formed their opportunities based on controllable knowledge about markets from former work experience or from being customers in the market. From studying at SFB the students gained knowledge about the market for students, resulting in them starting businesses with students has target customers. Start-up capital came from non-formal channels and investments were more based on available capital and what the participants could afford to loose, as in effectuation than on predictions about returns as in causation. The students made use of their network to decrease uncertainty, as in effectuation and to get access to resources, as in causation. The entrepreneurship course at SFB seems to be built on a causation logic. However, designing entrepreneurship education that facilitates both causation and effectuation seems appropriate. Thus, facilitating effectuation processes might prove beneficial for SFB in order to achieve its goal of enabling more people to become entrepreneurs.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
Publication date2011
Number of pages99