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Keywords:

  • entrepreneurial opportunities;
  • information processing;
  • organizational capabilities

Abstract

In this article, we study two capabilities that influence firms' effectiveness in exercising entrepreneurial opportunities: information-gathering and information-processing capability. We argue that their effects are not always positive or symmetrical. When the firm's information-processing capability is low, high levels of its information-gathering capability may result in lower effectiveness because of managerial cognitive overload. The effects of high information-processing capability are more nuanced and depend on whether the firm's information processing has experiential or cognitive character. Our analysis offers a counterintuitive insight: the firm may fail to exercise entrepreneurial opportunities effectively not only when it has low levels of information capabilities, but also when its levels are high but unbalanced. Copyright © 2009 Strategic Management Society.