Generative AI and the ability of entrepreneurial opportunities to generate sustained competitive advantages

Research Summary This paper examines how generative artificial intelligence (GenAI) affects the ability of entrepreneurial opportunities to generate sustained competitive advantage. We argue that GenAI's impact is conditional on how those opportunities are formed. Discovery opportunities originate from exogenous industry shocks. However, widely available GenAI tools are likely to commoditize opportunity recognition in these settings and thus reduce advantages that might have been generated by exploiting these opportunities. Creation opportunities emerge endogenously, under conditions of Knightian uncertainty, through entrepreneurial action and interaction with the environment. However, GenAI cannot fully resolve the Knightian uncertainty inherent in creation settings, so sustained advantage here depends on whether resources and capabilities developed through creating an opportunity are inimitable. Unawareness opportunities rely on competitive neglect. GenAI may reduce the advantages of firms in these settings when it makes rents legible to potential competitors and when search is directed toward these invisible markets. Managerial Summary Generative artificial intelligence (GenAI) tools like ChatGPT and Claude help entrepreneurs spot opportunities, but every competitor can potentially access the same tools. Whether GenAI can create sustained competitive advantages, this paper argues, depends on how an opportunity is formed. When opportunities arise from entrepreneurs noticing an external market shift, GenAI levels the playing field by commoditizing recognition and pushes entrepreneurs to win through execution and hard‐to‐copy complements. When opportunities are created through actions and interactions of entrepreneurs with their environments, GenAI does not fully remove the uncertainty that makes these efforts entrepreneurial but can speed up experimentation. When opportunities emerge from entrepreneurs operating in markets neglected by competitors, GenAI may have a limited effect on advantage unless it makes invisible markets publicly known.