Despite the promising findings of this study, it is surprising to discover that opportunity identification is found to have a negative impact on lower cost of SMEs. Alvarez and Busenitz (2001) and Liu (2006) explain that the cognitive trait of the entrepreneur is under the spotlight to explain entrepreneurship and, eventually, competitive advantage and superior performance of the firm. However, opportunity identification that measures the cognitive ability of the entrepreneur to spot opportunity from the environment was found to have a negative impact on lower costs of SMEs. A possible reason is the active and intensive effort put in by the entrepreneurs to identify opportunities around them might have caused them to neglect committing the firm to efficiently evaluating and harvesting these opportunities. A strong ability to identify opportunities might present entrepreneurs with too many options, thus making them indecisive over the best opportunity to pursue. Since a firm can rarely possess both efficiency and flexibility at the same time (Grant, 1991), the entrepreneur’s decision might be to forgo efficiencies that will grant them lower cost to ensure the firm’s flexibility to adapt to better methods or opportunities in future.