Baylor's David Scheaf Measures the Scale of Attraction
November 30, 2020
There are a lot of key factors in deciding to start that new company or
launch a new product. Is this the right time? Is there a need? Is it
worth the effort? For many entrepreneurs, there is a constant wave of
questions in the development process.
So what makes an opportunity attractive to some and not others? It
ultimately boils down to what matters to you most, Entrepreneurship
Professor David Scheaf said.
"When you look at what the research has to say on what goes into
evaluating an entrepreneurial opportunity, it is kind of all over the
place," Scheaf said. "Riskiness, industry profits, do they actually like
the things they are doing. It is a long, long, LONG list."
The question of what core assessments drive a person's evaluation of a
new product or service idea is the foundation behind Scheaf's research
in "Measuring Opportunity Evaluation: Conceptual Synthesis and Scale
Development," written by Scheaf, fellow Baylor professor Matthew Wood,
Andrew Loignon of Louisiana State University, as well as Justin Webb and
Eric Heggestad, both from the University of North Carolina at Charlotte.
The article was published in the Journal of Business Venturing.
Scheaf and the research team did not stop at identifying the lists of
factors evaluated in their research. They ultimately wanted to introduce
a scientifically- and rigorously-developed measurement tool to measure
the criteria they identified. It is not enough to just ask the question,
he said. They needed to be able to reliably measure how people evaluate
From digging through the prior research, the team synthesized the long
list into four general assessments that people make when they think
about evaluating opportunities, Scheaf said. This allowed them to
develop a construct for opportunity attractiveness comprised of these
assessments: gain estimation, loss estimation, perceived desirability
and perceived feasibility.
With the assessment definitions in place, the researchers developed
scale items to capture peoples' assessments of various entrepreneurial
opportunities. A total of 40 items were constructed and assigned to the
respective assessment categories.
To test the validity and reliability of the measuring instrument, the
team conducted six independent studies with a total of 855 participants.
The first three studies included undergraduate students, the fourth
looked at MBA students and the final two studied sets of international
entrepreneurs. It may initially sound like overkill, Scheaf said, but
this level of rigor is key to this type of research.
"You want to make sure that the instrument is accurately measuring the
thing you think it is and it does so consistently," he said.
Following the six studies, Scheaf and the research team were able to
reduce the 40 items down to 14, but they also discovered the perceived
desirability assessment was often associated with obtaining non-monetary
benefits. The definition of gain estimation was revised to include this,
resulting in just three assessments of opportunity attractiveness.
This scale provides a new method for measuring how a person determines
if an opportunity is attractive or not, Scheaf said. This is
significant, as there had not previously been one available to
entrepreneurs or researchers.
The existence of such a scale is important because it sets a standard,
Scheaf said. He compares the process of hiring an employee. You would
not change the bar for each candidate, you would evaluate them against a
certain set of criteria and determine how they fit in the position. The
same applies to evaluating entrepreneurial opportunities.
While this development is huge for entrepreneurship research and
entrepreneurs as a whole, Scheaf admits there are a few limitations to
the study. One such is there is no real understanding of how people
weigh the criteria.
"We really don't know why or how people weigh the criteria," he said.
"We also found that some people weigh it differently, it changes by the
person. Some people emphasize more gains. Some people don't care about
losses. Some only look at feasibility."
is a difference between first- and third-person evaluations, Scheaf
said. Some people may think an idea is great and go out and do it, while
others may think it is not a good venture at all. Both are examples of
first-person evaluations. But a third-person evaluation is when a person
thinks the idea is solid, but not a good idea for them personally.
Scheaf and his colleagues' new measurement captures first-person
evaluations but it does not capture these third-person evaluations.
While there are a few limitations, this study has significant real-world
importance because it provides a standardized way to measure opportunity
evaluation, Scheaf said.
"Now managers, entrepreneurs or founding teams can give this tool to
everyone on their team and discuss why numbers or ratings differ," he
said. "What it comes down to is it allows for a paradigm on how to think
rather than what to think. It is a facilitation of conversation and a
way to measure what people within your organization actually think about