Abstract

In this article, we take note of advances in the entrepreneurial cognition research stream. In doing so, we bring increasing attention to the usefulness of entrepreneurial cognition research. First, we offer and develop a central research question to further enable entrepreneurial cognition inquiry. Second, we present the conceptual background and some representative approaches to entrepreneurial cognition research that form the context for this question. Third, we introduce the articles in this Special Issue as framed by the central question and approaches to entrepreneurial cognition research, and suggest how they further contribute to this developing stream. Finally, we offer our views concerning the challenges and opportunities that await the next generation of entrepreneurial cognition scholarship. We therefore invite (and seek to enable) the growing community of entrepreneurship researchers from across multiple disciplines to further develop the "thinkingdoing" link in entrepreneurship research. It is our goal to offer colleagues an effective research staging point from which they may embark upon many additional research expeditions and investigations involving entrepreneurial cognition. Introduction Echoing P T E & 1042-2587 © 2007 by Baylor University 1 January Although not exhaustive, our intensive editorial involvement in two conferences and three Special Issue (SI) volumes on entrepreneurial cognition has created within the Editorial Team a perspective that we believe will be constructive to building further research in the area. In this third SI article, we specifically address the development of research questions concerning entrepreneurial cognition inquiry. With this article and the other research articles presented within this SI volume, we therefore invite and seek to enable a growing community of entrepreneurship researchers from across multiple disciplines to further develop the "thinking-doing" link in entrepreneurship research. One of the main activities of the Second Entrepreneurial Cognition Conference (the 2005 Conference held at the Ivey Business School at the University of Western Ontario) was to spend some time working on the central questions in entrepreneurial cognition research. A variety of possible questions were developed (Appendix A). Since the conference, the Editorial Team has continued to discuss and work on this issue. After an extensive dialogue, what has emerged is a central question in entrepreneurial cognition research. This article proceeds in the following manner. First, we discuss the central research question to further enable entrepreneurial cognition inquiry. Second, we present the conceptual background and several representative approaches to entrepreneurial cognition research that form the context for this question. Third, we introduce the articles in this SI as framed by the central question and approaches to entrepreneurial cognition research and suggest how they further contribute to this developing stream. Finally, we offer our views concerning the challenges facing the next generation of entrepreneurial cognition scholarship. The Central Research Question Over the past 5 years, many scholars in the field of entrepreneurial cognition have been developing the research stream based upon a definition that is consistent with, and flows from, the previously noted beginnings. In our 2002 article, we defined entrepreneurial cognitions to be: the knowledge structures that people use to make assessments, judgments or decisions involving opportunity evaluation and venture creation and growth (Mitchell, Busenitz et al., 2002, p. 97). We note that in this definition, the key elements: knowledge structures (whether heuristical or scripted) and decision making (including assessment and judgment) are set within the larger context of entrepreneurship's distinctive and inclusive domain/situation At the Second Conference on Entrepreneurial Cognition at the Ivey Business School (fall 2005), we spent a substantial block of time discussing a variety of research questions that are germane to the area (Appendix A). Some of the questions generated were more extensive than others; but they all seem to further elaborate aspects of a simple four-word query: "How do entrepreneurs think?" Whether or not researchers are probing individual differences and why some people make better entrepreneurs than others, studying how 2 ENTREPRENEURSHIP THEORY and PRACTICE entrepreneurs develop unique knowledge structures and become experts in processing information, and/or examining individual contributions to the entrepreneurial function itself, it appears that such research emerges from the desire to better understand how entrepreneurs think. In Appendix A, we note and summarize the developmental discussions accomplished by our fellow scholars at the 2005 conference in pursuit of a better understanding of how entrepreneurs think. The integrated research question produced at the Ivey Business School conference served as our beginning point for the analysis undertaken in this article. Accordingly, we seek to prompt and facilitate the development of additional research questions central to the study of entrepreneurial cognition. Conceptual Foundations and Approaches A wide variety of issues, puzzles, and problems have prompted inquiry into, and as a result formed the research context for the area we now call entrepreneurial cognition research. Several such questions include the following: Why do some people become entrepreneurs while other equally (or more) talented people do not? Why is it that some people see opportunity while others, encountering the same experience and information, do not? Why do some people act and turn their ideas into business opportunities while others are satisfied to say that they had thought of that too? Why are some people content to stop after creating an invention while others cannot be content until their invention dominates the marketplace? What do entrepreneurs do? How do they do it? These questions address compelling issues that have long been central to scholars investigating entrepreneurship phenomena. From our vantage point, we suggest that beneath each of the questions that have given rise to the study of entrepreneurial cognition lies an underlying assumption: that entrepreneurship concerns itself with distinctive ways of thinking and behaving. This is also consistent with many seminal theorists in the field (e.g., The scientific milestones that mark the path of innovation in entrepreneurial cognition research have been set in place according to a "boundaries and exchange" logic In applying this logic, we first consider the conceptual foundations and then take note of several approaches that have been built upon them. In developing the fundamental conceptual cornerstones upon which central questions in entrepreneurial cognition research is based, we develop our explanation beginning with the more general and proceeding to the more specific: from articulating a foundation/general definition of cognitions toward our setting within this background, the definition of entrepreneurial DEFINITION • ENTREPRENEURSHIP THEORY and PRACTICE cognitions that we have previously offered (please see Foundations We start with Neisser's (1967) widely recognized perspective, which defines cognition to be: all processes by which sensory input is transformed, reduced, elaborated, stored, recovered, and used. Because entrepreneurial cognition research concerns the foregoing processes as they occur within a socioeconomic setting, recent research has drawn heavily (but more often only implicitly) upon the field of social cognition. The social cognition literature assists in describing the conceptual locale inhabited by the study of entrepreneurial cognition such that useful further definition is enabled At first glance, it would seem that the central question of a cognitive approach to the study of entrepreneurship would lead us to simply ask "how do entrepreneurs think, reason, and behave?" However, being insufficiently bounded, this question provides little, if any, basis to suggest that entrepreneurs think, reason, and behave differently from others concerning (for example) taking a shower, eating, buying a house, coaching softball, and so forth. Thus, a more directed question founded in a social cognition-based (person IN situation) view might read: "How do entrepreneurs think, reason, and behave such that they create value and wealth through the identification and implementation of market opportunities?" Accordingly, when we offer (as we have in the previous discussions) the succinct question "How do entrepreneurs think?" it is within the context of new value creation as the focal situation/objective that we intend it to be applied. Our paying attention to a focal objective provides a necessary point of convergence for theory and research in entrepreneurial cognition. This is because "focused-thinking"-type questions incorporate lessons cognitive psychologists have learned the hard way: that successful theory and research about cognition and cognitive processes requires investigators to pay strict attention to the tenets of human agency (e.g., even the wackiest, most 5 January, 2007 out-of-the-box creative thinker has a purpose: a problem to solve). Thus as a field, our discovery and our articulations concerning the patterns involved in any entrepreneurial person's perceptual and thinking processes make more sense in the context of a purpose or problem. 2 Accordingly, because explanations of behavior, especially cognitive behavior, are domain (context) specific, we can expect the patterns of entrepreneurial cognition that we study to vary depending on a person's purpose or problem. To proceed to ground effectively questions that are central to research, we therefore rely upon the assumption of directed human agency as it is manifest in the study of human decision making under information limitation-induced uncertainty (e.g., Approaches We ask: If entrepreneurs do not follow the normative/rational model in their thinking, what are they following? What do their cognitive processes and cognitions look like, and how do these lead to the creation of value and wealth? As noted, several substreams of research have emerged to address these questions. Some of these approaches focus more on the cognitive shortcuts people use instead of using the logical-rational model. Sometimes these shortcuts (cognitive heuristics) can be beneficial and even produce superior results. Researchers exploring, for example, entrepreneurial alertness, expert-based scripts/schema/schemata, counterfactual thinking, mental simulations, cognitive style, and so forth have produced provocative models of the ways in which entrepreneurs use beneficial shortcuts to identify opportunities or to pursue venture start-up. In other situations, these shortcuts can lead to errors: erroneous evaluations and decisions. Further research will no doubt shed light on the relationship between cognition and (for example) why entrepreneurs attempt to preserve and hang on when, in fact, the situation calls for an efficient failure. Other approaches such as effectuation focus more on what the entrepreneur does and how the situation effects the entrepreneur's thinking. We briefly summarize in the following discussion the entrepreneurial cognition approaches that have been developed to this point in time. We hasten to note that entrepreneurial cognition research is very much in the early stages of development. Our purpose in presenting these developing perspectives is to generate interest in testing and extending some of the theoretical models that have been developed to encourage interested scholars to rigorously replicate and build upon the seminal studies and to expand 2. Entrepreneurial cognition scholars have addressed this question in the examination of entrepreneurial intentions (e.g., 6 ENTREPRENEURSHIP THEORY and PRACTICE generally the further investigation of entrepreneurial cognitive dynamics and processes to all areas of the discipline's domain (e.g., new, small, and family businesses, corporate entrepreneurship, economic development, institutional entrepreneurship, etc.). Furthermore, we see complementarities among these various approaches for better understanding how entrepreneurs think. Over the past decade, then, the entrepreneurial cognition literature has seen a substantial development in the study of thinking and decision making, especially in the examination of cognitions relating to entrepreneurial decision making. The perspectives that we address here include: (1) the use of heuristic-based logic (e.g., Heuristics-Based Logic. "Heuristics" refers to simplifying strategies that individuals use to make decisions Perceived Connections and Alertness. Developing new ideas and the realization that some people seem particularly alert to new opportunities has had a growing presence in entrepreneurship research in the last decade. Perceiving and interpreting information, and reaching some unique conclusions about entrepreneurial opportunities, seem to involve some unique mental processes. The idea of alertness was initiated by Entrepreneurial Expertise. The development of research that uses expert information processing theory to examine differences in decision making between entrepreneurs and nonentrepreneurs traces its roots to the following idea: that because entrepreneurs develop unique knowledge structures and process information differently (they transform, store, recover, and use information differently than nonentrepreneurs [e.g., Mitchell, 1994; Effectuation. Decision making under uncertainty typically begins with determining the desired outcome or the probability that the outcome is likely to occur and then determining the best means to accomplish the outcome (e.g., Additional Developments. Additional approaches to probing entrepreneurial cognition will continue to emerge over time, and some of them will no doubt replace existing approaches because they better explain various aspects of the entrepreneurial cognition phenomenon. We think that the approaches represented by two recent theory papers have the potential to become known in such a manner. Baron (2006b) recently presented a paper at the Academy of Management meetings on entrepreneurial affect. Also, McMullen and Shepherd's (2006) recent article specifically addresses entrepreneurial action. Although little empirical work yet exists to test these two approaches, we see the possibility for work to develop around these perspectives of entrepreneurial cognition (for example, see Overview of Articles in the SI Although we believe that each author or author team should ultimately position their work in the entrepreneurial cognition research firmament, we nevertheless cannot help but observe that-of the five articles presented in this SI-some tend to fit more within a "person-centered" approach Cognitive style is the focus of Keith Brigham, Julio De Castro, and Dean Shepherd's article "A Person-Organization Fit Model of Owner-Managers' Cognitive Style and Organizational Demands," and these authors use the Allinson and Hayes (1996) measure of cognitive style along the intuition-analysis continuum. Consistent with Then, in their article "The Good, the Bad, and the Unfamiliar: The Challenges of Reputation Formation Facing New Firms," Eileen Fischer and Becky Reuber consider 9 January, 2007 the development of group-level cognition, but as it relates to the process by which stakeholder groups develop reputational beliefs about new firms. Using the PayPal organization as an example, the authors place a multidisciplinary lens on the issue of how reputations are formed, drawing on social cognition theory, signaling theory, and concepts from organizational behavior and marketing to develop a conceptual insight into the cognitive structures underlying reputation. Fischer and Reuber identify three key implications of their work. One is that initial reputations are not necessarily a liability of newness, and new firms may enjoy a slight benefit from being included in a set of existing organizations with positive reputations. The second is that negative information may not be "sticky" if it does not contrast strongly with category-based evaluations (it does not stand out). Finally, they offer three explanations for why reputations vary considerably across stakeholder groups. Next, the article by G. Page West, III, "Collective Cognition: When Entrepreneurial Teams, Not Individuals, Make Decisions," extends the cognitive entrepreneurship research question from how do entrepreneurs think, or how do people think entrepreneurially, to how do people in new venture top management teams think collectively. Drawing on the organization behavior and strategy of top management team literatures, West argues that while teams do not have cognitions per se, team perspectives of appropriate action (schema) are significantly more than the compilation of individual perspectives, and that the entrepreneurial team collective cognition (ETCC) is what drives many new venturestrategy decisions. Using an exploratory, longitudinal sample of 22 technology venture top management teams, he finds that among new venture team members, too much or too little integration (highly consistent or highly inconsistent views) or too much or too little differentiation (identifying too many or too few options and alternatives) adversely affect new venture performance. These results and the development of a sociocognitive grid methodology for measuring ETCC provide a foundation for extending entrepreneurial cognition research to the team level of analysis. The importance of understanding the cognitions of entrepreneurs within a situation is emphasized in Andrew Corbett and Keith Hmieleski's article "The Conflicting Cognitions of Corporate Entrepreneurs." This conceptual paper makes a contribution to the entrepreneurial expertise literature by extending the work of This SI volume concludes with an essay by Norris Krueger entitled "What Lies Beneath? The Experiential Essence of Entrepreneurial Thinking," in which Professor Krueger links explanations of how entrepreneurs think to the cognitive developmental influences on the deep belief structures of human beings. Specifically, he suggests that entrepreneurial cognition research should explore: (1) the deeply seated beliefs and belief structures that ultimately anchor entrepreneurial thinking and (2) how such beliefs change as entrepreneurs move toward a more professional, expert mindset. As a bridge, from the foregoing articles, to what the future might hold for entrepreneurial cognition research, we 10 ENTREPRENEURSHIP THEORY and PRACTICE now offer our views concerning the possibilities and challenges facing what might be termed as the "next generation" of entrepreneurial scholarship. Possibilities: Challenges for the Next Generation of Entrepreneurial Cognition Scholarship We clearly recognize that the accomplishments made through the publication of three ET&P SIs on entrepreneurial cognition and through other related work on entrepreneurial cognition fit only the first pieces together in the assembling of a much larger puzzle. We therefore discuss next several directions that we believe offer particularly rich areas for future research into how entrepreneurs think. We observe that to some extent, these challenges fall under Fiske and Taylor's (1984) major social cognitive categories: (1) person, (2) situation, (3) cognition, and (4) motivation, and have therefore used them as an organizing logic for our observations. Person Intermittently over the last half century, the question of whether behavior is to be explained by internal factors (the person) or by external factors (the environment) has captured attention in the field of psychology • How do entrepreneurial individuals acquire (learn) their cognitive structures and contents? • Is one method of learning better than another in developing the cognitions, attitudes, and intentions of entrepreneurship? • Do entrepreneurs pursuing noneconomic values (instead or in addition to economic values) think about their contexts differently? Do they formulate attitudes and intentions differently? • How does a prior/existing mental model of competition influence subsequent thoughts about the kind of venture to create? Attitudes toward venturing? Intentions to venture? Enactments of these thoughts, attitudes, and intentions? • In looking at a particular venture (opportunity or growth of venture) what is the effect of different mind maps (mental models) on subsequent choices and venture outcomes? • Under the transaction cognition theory • How do the individuals in a venture team dynamically change their entrepreneurial cognitions, attitudes, and intentions? 11 January, 2007 • How and to what effect do "affective experiences" inject a high emotion into the entrepreneurial cognition gestalt? To what extent is affect in entrepreneurship subject to reflection/meditation (i.e., a cognitive appraisal) versus invoked with minimal stimulus (affect primacy)? It is therefore our sense that the entrepreneurial cognition research stream provides a credible and effective means for the study of "person" (the individual entrepreneur) to continue its resurgence in the literature. Of course, given the social cognition gestalt, this resurgence appears not to occur in isolation, and that consideration of the role of situation is also necessary. We address this next. Situation (The Context) It is widely recognized that entrepreneurship invariably occurs within the context of change and high uncertainty. Many opportunities emerge out of environmental shifts and changes, where the established ways of doing things no longer work as effectively as they once did. Such environments are typically complex and highly uncertain (e.g., the future direction of the market tends to be relatively unpredictable). It can therefore be a substantial challenge for entrepreneurs to navigate amidst the turbulence and formulate the appropriate products and strategies to accommodate the changing marketplace. Such situations give rise to heuristic-, effectuation-, selection mechanism-, and action-based conceptualizations with their associated research possibilities. As previously noted, we suspect that entrepreneurs tend to use heuristic-based rather than systematic procession logic to accomplish such tasks. Such logic provides a means for entrepreneurs to navigate through change and often leads to seeing things in new ways and to perceiving opportunities that have previously gone undetected. More objectively oriented logic builds from proven information and defensible assumptions. To progress with a new opportunity based on a more objective logic, the preponderance of information and evidence needs to be in support of the identified idea. However, new opportunities are much less likely to evolve from the minds of those who are more factually based. If one is too factually based in their processing of information, they can quickly become overwhelmed by the situation and by their limited informationprocessing capacity. If instead, or in addition, individuals use effectuation logic in a situation, the perception of opportunity is more subjectively determined as individuals in unpredictable and dynamically changing environments recognize, attend to, and find differing values in the resources they control. To progress with a new opportunity based on this logic, individuals need not necessarily seek out new information, but find useful, effective, and novel (to them) ways to leverage and apply their human, social, and financial capital.