Wise choices: how thoroughness of opportunity appraisal, incentives, and performance evaluation fit together

Firms need to invest their scarce resources into the 6 most promising new business opportunities (e.g., new engineer- 7 ing technologies). Yet, the literature on strategic entrepreneurship 8 pays little attention to how, and how thoroughly, firms appraise 9 potential opportunities based on technical as well as managerial 10 criteria. Given that such evaluation takes considerable time, en- 11 ergy, attention, and skill on the part of employees, we propose that 12 firms need to establish a fit between the thoroughness of opportu- 13 nity appraisal and their reward as well as performance evaluation 14 practices. Evidence from a double-respondent sample of 565 Danish firms supports our theoretical expectations.