Structural model and characteristics of entrepreneurial opportunity recognition abilities among university students in China: a grounded theory approach

China has recently committed to improving its business environment, leading to a significant increase in independent entrepreneurship known as mass entrepreneurship and innovation. This trend has ignited multiple new market dynamics, driving the country's steady economic growth. University students, recognized for their youthful vigor and rigorous education, play an increasingly important role as a key group of entrepreneurs, making substantial contributions to China's entrepreneurial sector. However, the contemporary entrepreneurial landscape among university students is characterized by a phenomenon known as one high and two lows, in which there is a strong aspiration to initiate a firm, but the actual execution and achievement rates are notably low. According to the 2022 China College Graduate Employment Report by Mycos, only 1.2% of self-employed graduates belonged to the Chinese 2021 undergraduate cohort. Moreover, the difficulties faced by student entrepreneurs in staying afloat have become more severe, resulting in a dropout rate of 58.5% within three years. Opportunity identification is a crucial element in the entrepreneurial process for university students. Accurate comprehension and identification of entrepreneurial opportunities are crucial for the success of student initiatives. This underscores the urgent need to conduct research into opportunity identification within the context of university student entrepreneurship. The questions of how to effectively identify entrepreneurial opportunities and who can identify entrepreneurial opportunities have garnered significant attention in both academic research and practical applications. Historically, the majority of empirical studies have considered opportunity identification as a singular dimension. As researchers continue to investigate, the study of opportunity identification has evolved from a one-dimensional perspective to a multi-dimensional approach. Hansen empirically demonstrated that opportunity identification can be conceptualized as a multi-dimensional process comprising stages such as preparation, incubation, insight, evaluation, and elaboration. While previous studies have divided the concept of opportunity identification into various aspects, they have not completely clarified the connections between these aspects. Moreover, while various capabilities may impact entrepreneurial opportunity identification, there is no consensus on the specific capabilities essential for university students in identifying entrepreneurial opportunities. Therefore, this study seeks to address the following research questions: First, aside from the ability to recognize and comprehend new opportunities, what other elements should be incorporated into the entrepreneurial opportunity identification competence of university students? Second, what is the correlation between these factors? Third, what is the conceptual description of the entrepreneurial opportunity identification ability of university students? This study specifically examines the entrepreneurial process of university students in China in order to address these problems adequately. Utilizing the grounded theory research method, the study aims to summarize the structural characteristics of entrepreneurial opportunity identification capability among Chinese university students. The goal is to establish a precise definition of this capability and develop a core element model for understanding entrepreneurial opportunity identification capability among university students. This research will serve as a foundation for future studies that assess the ability of university students to identify entrepreneurial opportunities.

The study of entrepreneurial opportunity identification capability among university students builds on broader research on opportunity identification, a central variable in entrepreneurship. Scholars have approached opportunity identification from three main perspectives: the Austrian School of Economics (e.g., Kirzner), emphasizing information heterogeneity and market disequilibria; the cognitive perspective (e.g., Baron), focusing on entrepreneurial alertness, cognitive processes, and perceptual awareness; and the process perspective (e.g., Long and McMullan), viewing opportunity identification as a multi-stage process. Definitions vary: economically, opportunities arise from mismatches between product and market demand; cognitively, they depend on entrepreneurs’ information processing, alertness, and schemas; and process-wise, models outline stages such as preconceived notion, discovery, elaboration, decision-making, preparation, incubation, evaluation, and elaboration. Scholars have also examined identifiable patterns or characteristics of opportunities using feature analysis and prototype models. Despite extensive research, inconsistencies remain in how entrepreneurial opportunity identification is categorized across studies. The economic, cognitive, and process perspectives provide complementary, not contradictory, explanations. When focusing on entrepreneurial cognition and processes, opportunity identification capability is often treated as a set of skills, yet the nature of each element and their interrelationships is underexplored. There is limited research on the specific internal mechanisms of this capability among university students, a group with unique characteristics such as developmental potential, access to university resources, and distinctive social networks. Cultural differences further complicate applying Western theories directly to Chinese contexts; in China’s collectivist environment, social networks play a decisive role in opportunity identification. While some Chinese scholars have explored university student opportunity identification theoretically, there remains a lack of qualitative or empirical work on its constituent elements. Given advances in innovation and entrepreneurship education in China, it is important to enhance theoretical research on university students’ opportunity identification capability. This study uses grounded theory within the Chinese context to construct a framework for university students’ opportunity identification ability, aiming to support evaluation and improvement efforts and enrich entrepreneurship education research.

Research design and methodology: Given the scarcity of theoretical support and the complex, evolving cognitive and behavioral processes involved in opportunity identification among university student entrepreneurs, this study employed classic grounded theory to derive theory from data. Following established grounded theory procedures, the researchers iteratively coded and analyzed interview data, continuously comparing codes to achieve theoretical saturation and to develop a conceptual definition, dimensions, and a conceptual model of university students’ entrepreneurial opportunity identification capability. Data collection: Using purposive sampling, the study conducted in-depth, individual interviews with 21 outstanding university student entrepreneurs (current students and recent graduates) from universities in the Yangtze River Delta, Pearl River Delta, Northeast China, and Central/Western regions. These universities appeared in the Ministry of Education’s National Innovation and Entrepreneurship Typical Experience database (2016–2019). Inclusion criteria: (1) entrepreneurial deeds recognized as typical cases of university student innovation/entrepreneurship; (2) founded enterprises were profitable; (3) entrepreneurial duration no more than three years to reduce recall bias. Three interviewees were from Double First-Class universities, 15 from local high-level universities, and three from general undergraduate institutions. Interviews were scheduled in advance, held in comfortable environments (17–24 °C, 30%–50% RH), and limited to 30–60 minutes to prevent fatigue. With consent, interviews were recorded and complemented with notes; total interview time was 26 hours, producing over 200,000 words of transcripts. Data were organized within 24 hours, and memos were written to capture insights. Research process and analysis: The study ran from January to May 2023. Pre-interviews ensured alignment with research objectives, and an entrepreneurship mentor reviewed and refined the interview outline. Grounded theory coding proceeded in three stages: - Open coding: Systematic labeling of interview data produced 603 initial codes and 92 nodes, from which 26 initial concepts were extracted (e.g., problem discovery ability, willingness to build relationships). - Axial coding: Logical relationships among categories were identified (causality, context, similarity), yielding five main categories and eleven subcategories by clustering related concepts (e.g., learning from failure synthesized from emotional recovery, reflection, and understanding of failure). - Selective coding: A core category—university student entrepreneurs’ abilities in recognizing entrepreneurial opportunities—was identified, integrating main categories into an overarching theoretical model. Saturation testing: Using the Pandit NR method, 15 cases were analyzed initially, followed by three-level coding of the remaining six cases. No new categories emerged; results consistently supported the proposed model, indicating theoretical saturation.

- The study constructed a structural model of university students’ entrepreneurial opportunity recognition ability based on grounded theory. The capability comprises implicit and explicit components, aligning with the iceberg model of competence. - Implicit capabilities (latent, soft skills): • Entrepreneurial drive: endogenous (entrepreneurial beliefs, pursuit of self-value) and exogenous (pursuit of economic value, alleviating employment pressure, influence of role models). Over 80% of respondents emphasized the impact of exogenous drive (e.g., financial independence, employment pressure, inspiration from role models). • Environmental insight: alertness (sensitivity to market/societal changes and information interconnections), insight (deep understanding of markets, competitors, consumers to discern trends and gaps), and policy awareness (comprehension of national/industry policies and regulations to identify opportunities). - Explicit capabilities (observable, trainable skills): • Learning abilities: entrepreneurial learning (acquiring industry/technical/financial knowledge to assess opportunity feasibility and profitability) and learning from failure (emotional resilience, reflective analysis, and knowledge application after setbacks to identify new opportunities). • Networking abilities: relationship building (valuing and expanding social networks with partners, experts, investors) and network management (communication, cooperation, knowledge sharing to access diverse knowledge and resources, improving opportunity perception). • Integration abilities: knowledge integration (vertical linking of new and existing knowledge; horizontal cross-disciplinary integration) and resource integration (creative combination of fragmented resources to achieve synergistic effects and align with market needs). - Coding outcomes and structure: 603 initial codes → 92 nodes → 26 concepts; axial coding produced five main categories (B1–B5) and eleven subcategories (b1–b11): • B1 Entrepreneurial Drive (b1 Endogenous; b2 Exogenous) • B2 Environmental Insight (b3 Alertness; b4 Insight) • B3 Learning Abilities (b5 Policy Awareness; b6 Learning from Failure; b7 Entrepreneurial Learning) • B4 Networking Abilities (b8 Relationship Building; b9 Network Management) • B5 Integration Abilities (b10 Knowledge Integration; b11 Resource Integration) - Theoretical saturation was achieved; subsequent cases yielded no new categories. The model explains how Chinese university students identify and capitalize on opportunities by combining internal motivation and perception with trainable skills in learning, networking, and integration.

The findings address the study’s research questions by clarifying the constituent elements of university students’ entrepreneurial opportunity identification capability beyond mere opportunity recognition. The model integrates implicit factors—entrepreneurial drive (endogenous and exogenous) and environmental insight (alertness, insight, policy awareness)—with explicit, trainable skills—learning, networking, and integration. Using the iceberg competence paradigm, the study illustrates how latent drives and perceptions shape and enable observable behaviors and skills that directly support opportunity discovery, evaluation, and exploitation. This integrated structure connects previously fragmented dimensions in the literature (cognitive and process perspectives), elucidates interrelationships among elements (e.g., how policy awareness and alertness enhance learning and integration), and provides a coherent explanation of how university students adapt knowledge and resources to changing environments to surface entrepreneurial opportunities. The results underscore the significance of policy literacy, resilience and reflection after failure, and social network building and management in improving opportunity perception, thereby offering actionable directions for entrepreneurship education and capability development.

The study defines university students’ entrepreneurial opportunity identification capability as the aptitude to efficiently organize and utilize appropriate knowledge and technologies to identify opportunities amid environmental change. Grounded theory analysis of interviews with 21 exemplary student entrepreneurs produced a structural model comprising implicit capabilities (entrepreneurial drive and environmental insight) and explicit capabilities (learning, networking, and integration). This framework opens the black box of opportunity identification for university students by detailing dimensions and their interrelations. The research contributes theoretically by introducing and operationalizing a concept specific to university student entrepreneurs, integrating cognitive and process views into a unified model with clarified elements and linkages. Practically, the model offers universities a basis to assess current competencies, target sub-competency development, and guide reforms in entrepreneurship education. For students, understanding the structure supports accurate self-assessment, strategic capability development, and potentially higher-quality entrepreneurial endeavors and success rates. Future work should broaden samples, develop measurement scales, and use quantitative methods to validate and refine the structure.

The study’s primary data come from a limited sample of outstanding university student entrepreneurs, which may not fully capture all elements of opportunity recognition ability among college students. Time and resource constraints prevented large-scale empirical testing of the proposed model. Future research should expand the sample to include a broader range of students, develop a measurement scale for university students’ opportunity recognition ability, and employ quantitative methods to validate the model’s robustness.