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Chapter 6. Exploiting Established Compan... > Opportunities That Favor New Firms

Opportunities That Favor New Firms

Not only do established firms face weaknesses in exploiting entrepreneurial opportunities that allow entrepreneurs to successfully launch new companies, but also some opportunities are inherently easier than others for new firms to exploit. This section discusses four characteristics of technological opportunities that make them better for new firm formation: discreteness, human-capital intensity, general purposeness, and uncertainty.

Discreteness

New companies perform best when they pursue opportunities to create new products and services that are based on discrete technologies. A discrete technology is one that can be exploited on its own, as opposed to a systemic technology that must be exploited as part of a larger system. For instance, a drug is a discrete technology because it can be administered to patients independently from other technologies. One rarely needs more than a syringe or a capsule to deliver a drug. In contrast, a windshield wiper is an example of a systemic technology because it cannot be used effectively on its own. In the absence of the system that powers a vehicle, a windshield wiper is pretty much useless.


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