RESEARCH GAPS:

“We know little about the cognitive processes engaged in by returnee entrepreneurs in linking the
identification of opportunities in their home emerging economies to how they assemble the
necessary resources and capabilities to create their ventures and how this varies over the
development phase of the venture or in subsequent ventures.” (Wright et al., 2012, p. 250)

Socio-cognitive approach to knowledge transfer

- Social-cognitive model of knowledge transfer attends to the role of mental models (i.e., cultural and
private models) of individuals who (send and) receive the knowledge, how individuals process the
knowledge (i.e. cognitive disposition) in response to the feedback they receive from practicing and
interacting with other people. Social-cognitive theory posits that knowledge transfer stems from
recursive processes which involve: (1) cognitive context (cultural and private (mental) models of
individuals); (2) cognitive content (thinking categorically or/and reflectively); and (3) environmental
feedback (practices and social interactions). Different from positivist and social constructionist
approaches, social-cognitive approach emphasises individuals’ understanding and interpretation.
According to this approach, knowledge is not contained in disembodied structures such as text,
practices, or routines but in individuals who give and receive the knowledge. Knowledge is not
transferred through practices but through the minds of individuals involved in the transfer process.

Social-cognitive theory “attends to the intricate role of cultural model (i.e. an interpretation which
is frequent, well organized, memorable, which can be made from minimal cues, contains one or
more prototypic instantiations, and is resistant to change) and private mental models and how
these are applied categorically and/or reflectively by the person in response to socio-cultural
feedback mechanisms, and subsequently, how this leads to (and explains) very different meaning
(knowledge transfer) outcomes.” (Ringberg and Reihlen, 2008, p. 919)

Socio-cultural feedback or environmental feedback such as social interaction impacts the existing
knowledge structures or mental models of the thinking subjects (i.e. individuals). It is the cognitive,
emotional, and volitional processes of individuals that make environmental feedback meaningful.

- “People with similar education and training, and engaged in the same practices may end up
producing different conceptualisations of a given phenomenon and/or activity due to unique
mental models (mental models may originate from a person’s creative (and even unintended)
combination of existing cultural models as well as cognitive dispositions), cognitive dispositions
(i.e., self-reflection, critical thinking, acumen, memory, etc.), and life experiences” (Ringberg and
Reihlen, 2008, pp. 919-920).

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- The cognitive understanding relies not only cultural and private models but equally on how these
are applied by cognitive processing. Cognitive processing/thinking includes categorical and
reflective processing. “In categorical thinking, people establish meaning by automatically
integrating incoming stimuli based on existing cultural and private models.” Conversely, in reflective
thinking, people “sustain a high level of cognitive responsiveness and combine/extend internalized
cultural and private models in thoughtful (creative, reasoned) ways to improve their sense making.”
- “The success of knowledge transfer obviously relies on receivers’ ability to apply relevant material
(cultural and private) models and decide when such are deemed suboptimal, triggering reflective
thinking” (Ringberg and Reihlen, 2008, p.293).
- Knowledge transfer is much more complex because there is interaction between cognitive
processes and environmental feedback.
- The socio-cognitive approach broadens traditional positivist and social constructionist positions by
situating sense making within the mind (and body) that may be influenced but rarely determined
by environmental feedback mechanisms (Bandura, 1986; Bunge, 1996).

Mental models

- “Mental models are deeply ingrained assumptions, generalisations, or even pictures or images that
influence how we understand the world and how we take action. Very often, we are not consciously
aware of our mental models or the effects they have on our behaviour.” (Senge, 1990, p. 8)

COGNITIVE PERSPECTIVE

Cognitive perspective can prove beneficial to researchers who want to understand

entrepreneurship as a process. “Cognitive perspective emphasises that everything we think, say, or
do is influenced by our mental process” (Baron, 2004, p. 221). “Mental processes are the cognitive
mechanisms through which we acquire, store, transform, and use information” (Baron, 2004, p.
221).

Cognitive structure

Deep cognitive structures of expert entrepreneurs (e.g., maps, scripts, schemas, etc., and the deep
beliefs and assumptions driving them).
Cognitive structures represent and contain knowledge (Busenitz and Lau, 1997, p. 28). Similar
constructs include scripts, schemas, knowledge structures, and interpretive systems (Busenitz and
Lau, 1997, p. 28).

Cognitive styles (intuitive and analytic/rational) (Examples in entrepreneurship research: (Corbett,

2002; Krueger and Kickul, 2006; Barbosa et al., 2007; Kickul et al., 2009)

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An individual’s cognitive style examines his preference for processing information when carrying out
a learning activity (Valley (1997) in Corbett (2002)).

“As Allinson and Hayes (1996) explain, those who focus on the right brain process information
through immediate judgment based on feeling and the adoption of a global perspective. These
individuals are seen as being more intuitive than their “left brain” counterparts. Those that focus on
left-brain processing are called analysts and rely on judgment based on mental reasoning and a
focus on detail. Essentially, the cognitive processes of the analyst work in a more straightforward,
logical pattern, whereas the intuitivist takes a broader perspective and incorporates many different
inputs at once.” Intuitive thinking people tend to come up with more opportunities.

Cognitive properties: the ability to combine concepts and information into new ideas (Shane and
Venkataraman, 2000)

Cognitive entrenchment

“high level stability in one’s domain schemas” (Dane, 2010, p. 579). Dane (2010) argue that because
of cognitive entrenchment, experts may be restricted in their ability to identify optimal solutions to
problems to adapt to novel situations, and to generate radically creative ideas within their domain.
When people become experts in a certain field, they struggle to set aside the knowledge they have
acquired to predict how novices would approach problems. Cognitive entrenchment can hinder
experts to accommodate new rules and principles. In other words, when people are cognitively
entrenched, they are blocked from potentially superior solutions (they tend to stick to their expert
domain schema).

Entrenchment is particularly costly when circumstances change such that greater flexibility is
needed.

Cognitive process

Cognitive processes refer the manner in which knowledge is received and utilized (Busenitz and Lau,
1997, p. 28). Sometimes cognitive processes refer to cognitive heuristics (Busenitz and Lau, 1997).

e.g., pattern recognition, decision making

Heuristics
“Closely related to the cognitive structure is the process by which the knowledge is received
and utilized, sometimes referred to as cognitive heuristics (Shaver & Scott, 1991; Schneider &
Angelmar, 1993). In this context, heuristics are specific informal rules-of-thumb or intuitive
guidelines that yield quick and usually acceptable solutions to problems (Tversky &
Kahneman, 1974; Nisbett & Ross, 1980).” (Busenitz and Lau, 1997, p. 29).

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“Shaver and Scott (1991) noted that three cognitive heuristics are apt to influence the start-
up process: availability, representativeness, and anchoring” (Busenitz and Lau, 1997).

Cognitive biases
Cognitive biases may influence the decision of an individual to become an entrepreneur. Examples
of cognitive biases include optimistic bias (believe that everything will turn out well), the planning
fallacy, and the illusion of control.
“Cognitive biases are often seen as subjective or predisposed opinions that emanate from specific
heuristics (Bazerman, 1990). Biases and heuristics will be used here to refer to these simplifying
strategies that are assumed to be generally efficient mechanisms for making decisions,
particularly in uncertain environments” (Busenitz and Lau, 1997).
Cognitive factors/mechanisms
Cognitive factors help explain why some people recognise profitable opportunities. Examples
include basic perceptual processes (object or pattern recognition; signal detection theory), a
modern framework for understanding how individuals regulate their own behaviour (regulatory
focus theory), and the concept of a mental schema that assists individuals in their search for
opportunities (entrepreneurial alertness) (Baron, 2004).
Cognitive factors can affect entrepreneurs’ success. Examples of cognitive factors that
entrepreneurs are more adept at than other people: counterfactual thinking, heuristic processing,
and systematic processing. Counterfactual thinking is imagining what might have been. Heuristic
processing means quick and effortless processing of information. Systematic processing means
effortful and thoughtful processing of information. Entrepreneurs may be more adept in using
counterfactual thinking, and know when to switch from heuristic processing to systematic
processing (Baron, 2004).
Entrepreneurial cognition

“Entrepreneurial cognition is defined as the knowledge structures that people use to make
assessment, judgement, or decisions involving opportunity evaluation, venture creation and
growth” (Mitchell et al., 2002, p. 97).

“Research in entrepreneurial cognition is about understanding how entrepreneurs use simplifying

mental models to piece together previously unconnected information that helps them to identify
and invent new products or services, and to assemble the necessary resources to start and grow
businesses” (Mitchell et al., 2002, p. 97).

Knowledge structures are mental models (cognitions) that are ordered in such a way as to optimise
personal effectiveness within given situations (Mitchell et al., 2002, p. 97).

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 Four key ideas:

- Opportunity recognition and evaluation: interpret and frame

- Sense making – how do I make meaning out of what is going on

- Sense giving – how do I make sense of what is happening and what my idea is to the other
who may invest in my idea

- Collective cognition – how do we make connections with others who may provide
resources and how do we help others see what we see as an entrepreneur

Absorptive capacity
Absorptive capacity suggest the importance that different types of human capital might play in the
opportunity recognition process (Corbett, 2002).
Experiential learning
Kolb (1984) defines experiential learning as a process by which knowledge is created
through the transformation of experience.  Experiential learning occurs through a process
of acquisition and transformation of information (or knowledge?).

Theory of information acquisition (Kolb (1984) cited in Corbett (2002)) – Learning modes

The concept “prehension” was introduced in the theory of information acquisition. Prehension
refers to two different ways through which people can acquire information: through direct
experience (apprehension) or recreation of experience (i.e. comprehension). Corbett (2002)
consider them two modes of learning. People learn by apprehension when they focus on present
situation and not in a critical manner (in an acritical manner) to develop their unique personal
knowledge. When individuals acquire information through apprehension they rely on their feelings
to digest the direct, concrete occurrence that they are currently experiencing. People learn by
comprehension when they focus on the past and critically interpret the information and create
social knowledge (i.e. an objective social process based on words, symbols, and images). When
individuals acquire information through comprehension they are relying on their ability to think
through abstract concepts and reinterpret prior information.

Why do different people recognise different opportunities?

Individuals rely on different combinations of learning modes (information acquisition), cognitive
style (information processing), and human capital (previous knowledge and experience) to
recognise opportunities. In his study, Corbett (2002) adopts the definition of human capital of
Becker (1964): human capital is the ability to make productive use of his previous knowledge and
experience in a market.

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 COGNITION MEASUREMENT AND RECONTEXTUALISATION

Cognitive entrenchment I have gained deep knowledge in the field that I Dane (2010)
(negatively influence have worked or studied in the host country
recontextualisation)
Categorical processing I tend to use what I already know to solve Ringberg and Reihlen
(negatively influence problems in a new situation (2008)
recontextualisation)
Reflective processing I spent time thinking about what I already know Ringberg and Reihlen
(positively influence before applying it to solve problems in a new (2008)
recontextualisation) situation
Apprehension I rely on my feelings to digest the direct, concrete Corbett (2002)
(negatively influence occurrence that I am currently experiencing
recontextualisation)
Comprehension I use past knowledge to help make sense of newly Corbett (2002)
(positively influence acquired information
recontextualisation)
Intuitive thinking/Intuitivist I base my judgement on my feeling Corbett (2002)
(have not come up with I base my judgement by thinking broadly
hypothesis)
Analytical thinking/Analyst I focus on details Corbett (2002)
(have not come up with I base my judgement on logical reasoning
hypothesis)

References

Barbosa, S. D., Gerhardt, M. W. and Kickul, J. R. (2007) 'The role of cognitive style and risk preference
on entrepreneurial self-efficacy and entrepreneurial intentions', Journal of Leadership &
Organizational Studies, 13(4), pp. 86-104.
Baron, R. A. (2004) 'The cognitive perspective: a valuable tool for answering entrepreneurship's basic
“why” questions', Journal of business venturing, 19(2), pp. 221-239.
Becker, G. S. (1964) 'Human capital theory', Columbia, New York.
Busenitz, L. W. and Lau, C.-M. (1997) 'A cross-cultural cognitive model of new venture creation',
Entrepreneurship: Theory and Practice, 20(4), pp. 25-40.
Corbett, A. C. (2002) 'Recognizing high-tech opportunities: A learning and cognitive approach',
Frontiers of entrepreneurship research, 1(2), pp. 49-61.
Dane, E. (2010) 'Reconsidering the trade-off between expertise and flexibility: A cognitive
entrenchment perspective', Academy of Management Review, 35(4), pp. 579-603.
Kickul, J., Gundry, L. K., Barbosa, S. D. and Whitcanack, L. (2009) 'Intuition versus analysis? Testing
differential models of cognitive style on entrepreneurial self‐efficacy and the new venture creation
process', Entrepreneurship Theory and Practice, 33(2), pp. 439-453.
Krueger, N. and Kickul, J. (2006) USASBE conference, Tuscon, AZ.

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Mitchell, R. K., Busenitz, L., Lant, T., McDougall, P. P., Morse, E. A. and Smith, J. B. (2002) 'Toward a
theory of entrepreneurial cognition: Rethinking the people side of entrepreneurship research',
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Ringberg, T. and Reihlen, M. (2008) 'Towards a Socio‐Cognitive Approach to Knowledge Transfer',
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Senge, P. M. (1990) 'The fifth discipline', The Art & Practice of Learning Organization. Doupleday
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Shane, S. and Venkataraman, S. (2000) 'The promise of entrepreneurship as a field of research',
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Shaver, K. G. and Scott, L. R. (1991) 'Person, process, choice: The psychology of new venture
creation', Entrepreneurship theory and practice, 16(2), pp. 23-45.
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Context and Knowledge Spillovers', in West Meets East: Building Theoretical Bridges. Emerald
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