In this topic we look at entrepreneurial cognition in order to better understand how entrepreneurs think. This may enable us to better identify opportunities. Being able to see these new opportunities is the first step to acting upon them and setting up a new venture. It is this unique mindset that we want to develop as an entrepreneur.
Welcome to Topic 7: Entrepreneurial Cognition: Theory and Practice. In this topic, you will learn about:
- How the entrepreneurial mind assists with identifying opportunities for new ventures
- How entrepreneurial passion can drive or motivate the entrepreneur
- The importance of perspective taking and prospective thinking
- Experiential learning
- How you can train yourself to think like an entrepreneur.
These relate to the Subject Learning Outcomes:
- Discuss the importance of entrepreneurship as a driver of growth and how it varies from "business as usual".
- Explain the fundamental role of entrepreneurs as change agents.
Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.
Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.
Experiential learning requires us to learn by doing. In other words, by gaining experiences. Entrepreneurs develop their mindset by experiencing different situations than they would otherwise.
This week, your task is to change your mode of travel for one (1) journey.
You might usually take the bus but this week, take the train instead. Or you might usually drive whereas this week, you could walk. It does not matter what change you make, as long as it disrupts your usual routine.
This new mode of transport may be slower and more active if you are changing to walking or cycling or even roller-skating, for example. It may also be faster if you are using a car or train in place of a slower form of transportation. Your mode of transportation may be shared where you usually travel alone or vice versa.
Post a reply in Topic 7: Forum activity 1 to explain what your change of transportation was, how this changed the experience that you would otherwise have had, and whether you observed different things to what you would usually on this journey because of the change in transport mode.
You can also navigate to the forum by clicking on 'ENT100 Subject Forum' in the navigation bar for this subject.
To practice perspective taking, you are going to write a post in your reflective journal. This post is titled ‘a day in the life of...’
Select someone from the following images who you feel is different to you in some way. Simply note down which person you chose and write a description of what you think their day might look like. Think about their routine, what they do during the day what their experiences might be and weave this into your narrative.
You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
With this task we will put into practice our perspective taking and prospective thinking. Look at the scenario photographs and observe what is happening in the different scenes. Study the scenarios carefully and think about what the people in this scene are doing. Consider any pain points that may present themselves.
Be ready to talk the class through the perspectives you have considered.
As passion is an important aspect of intrapreneurial cognition, we will explore this in more depth. You need to research entrepreneurs talking about their work. Do this by looking at videos, listening to podcasts or reading interviews.
Find two (2) examples in which an entrepreneur talks about what drives them. In other words, where they talk about their entrepreneurial passion.
Compare and contrast the two entrepreneurs, paying careful attention to what they are saying. What similarities can you identify? What have you learnt about how important passion is to these two entrepreneurs?
Note the answers down in your reflective journal and be ready to share this with the class.
Read through the topic content and action the learning tasks within it.
Assessment 2 – Finalise your case study assessment.
Having an entrepreneurial mindset leads to an inquisitive attitude. By asking questions such as “What if we did not have to commute to work?” or “What if vehicle ownership was not required but you could still have access to a car?” These types of questions inspired ventures like ride sharing, short-term bicycle or electric scooters use in various cities around the world, or even the development of autonomous vehicles. Asking questions in this “what if” format allows the entrepreneur to question a current situation and produce different scenarios. It is this forward-thinking characteristic that is at the heart of the entrepreneurial mindset (Laverty & Littel 2019).
What is entrepreneurial cognition?
Cognition can be described as mental processes including remembering, understanding language, solving problems, making decisions and so on. It encompasses the processing of information and the application of knowledge (Frederiks et al. 2019).
Entrepreneurial cognition is defined as the knowledge structures used by entrepreneurs to make assessments, judgements or decisions involving the evaluation of opportunities, venture creation and growth (Mitchell et al. 2002).
When looking at the same information, different people might perceive it differently or interpret it in their own ways. Entrepreneurs often notice things that others do not notice. This is a skill that is key to identifying opportunities.
Entrepreneurial cognition has been studied, so that we can better understand how entrepreneurs think. If we understand how entrepreneurs make sense of the world and process information, we may be able to better identify opportunities. Being able to see these new opportunities is the first step to acting upon them and setting up a new venture. It is this unique mindset that is at the core of being an entrepreneur.
Experiential learning
There are some factors that have been shown to impact the entrepreneur’s ability to identify opportunities. These include prior knowledge, perception, cognition and experience as set out in Kolb’s experiential learning model (Kolb 1983). Watch the following video to learn more about the ideas behind experiential learning.
Prior knowledge
Prior knowledge is an important aspect of entrepreneurial cognition. This is knowledge gained through previous experience. It can assist entrepreneurs identify more opportunities. For example, social and environmental knowledge was found to assist entrepreneurs recognise opportunities for sustainable development (Shepherd & Patzelt 2018). However, prior knowledge can also hold individuals back and lead to a lack of progression if the entrepreneur becomes caught up in this knowledge.
Entrepreneurial passion and motivation
Personal values are key to defining entrepreneurial motivation. Some authors studying creativity and entrepreneurship have found that intrinsic motivators can drive individuals (Amabile 1993; Birley & Westhead 1994; Cardon et al. 2009; Douglas & Shepherd 2002). However, most economics and entrepreneurship studies argue that financial rewards are the primary driver behind entrepreneurial motivation (Baumol 1990; Kuratko et al. 1997; Langan-Fox & Roth 1995; Shepherd & Patzelt 2018)
Passion can be described here as “a strong inclination towards an activity … that one loves and finds important, that is self-defining and in which considerable time and energy are invested” (Houlfort et al. 2015, p. 85). As part of entrepreneurial cognition, passion has been shown to act as an underlying force, fueling emotional reward or feedback that the entrepreneur experiences when engaging in activities of deep interest to them (Frederiks et al. 2019). Passion is seen as something that motivates and drives the entrepreneur. Different studies have looked at how to measure intrapreneurial passion (Cardon et al. 2013), the importance of intrapreneurial passion in identifying new opportunities (Shepherd & Patzelt 2018) and the importance of passion in entrepreneurial motivation (Cardon et al. 2009).
Perspective taking and prospective thinking
Research shows that prospective thinking and perspective taking enable entrepreneurs to produce new venture ideas of higher quality (Frederiks et al. 2018). Inexperienced entrepreneurs can benefit from actively using perspective taking and prospective thinking processes (Frederiks et al. 2019; Ku 2014). The skills associated with entrepreneurial cognition that have been discussed here are all things that can be learnt and practiced.
Perspective taking
Perspective taking is when we put ourselves in somebody else’s shoes. In other words, we try to understand the way someone else might think, feel or act and we try to understand why this is.
Gillian Ku (2014) defines perspective taking as “the active cognitive process of imagining the world from another’s vantage point”.
Slightly different to empathy (where we try to feel the other person's feelings), perspective taking is a thought process. Perspective taking is about understanding another person's viewpoints.
Imagine a debate where there are two quite different views for or against a particular motion. Rather than only aligning yourself with one view, perspective taking requires you try to understand the other point of view.
One of the benefits of perspective taking is that it allows us to consider other interests and priorities, which can enable problem-solving. It can also make us more creative and it leads to deeper, more complex thinking (Ku 2014).
If we apply perspective taking, we can identify pain points. Being able to identify these pain points, or problems that affect others, we can identify a potential market for our entrepreneurial venture. To foster this ability, it is important to approach problems from all sides.
Watch the following video, which visualises and explains perspective taking in more detail.
Prospective thinking
Prospective thinking is where we consider what the future might look like.
Prospective thinking is mentally simulating the future. This type of thinking facilitates our ability to prepare for things that may happen and actively shape future well-being (Prospective Psychology 2014).
Being able to predict what people will do in the future requires us to make assumptions about what motivates people, their goals and beliefs and their personality. Understanding what the future might look like or forecasting also requires us to analyse trends or indicators that give us clues as to what may happen.
Knowledge check
Complete the following two (2) tasks. Click the arrows to navigate between the tasks.
Key takeouts
Congratulations, we made it to the end of the topic! Some key takeouts from Topic 7:
- Entrepreneurial cognition is the knowledge structures used by entrepreneurs to make assessments, judgements, or decisions involving the evaluation of opportunities, venture creation and growth.
- Prospective thinking and perspective taking enable entrepreneurs to produce new venture ideas of higher quality.
- Inexperienced entrepreneurs can benefit from actively using perspective taking and prospective thinking processes.
- As part of entrepreneurial cognition, passion has been shown to act as an underlying force, fueling emotional reward or feedback.
Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your seminar.
The following learning task will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
In-seminar learning task
The in-seminar learning task identified below will be completed during the scheduled seminar. Your lecturer will guide you through this task. Click on the following heading to read more about the requirements for your in-seminar learning task.
Based on your self-directed tasks on observing several scenarios, your lecturer will guide you through a group seminar exercise.
Welcome to your post-seminar learning task for this week. Please ensure you complete this after attending your scheduled seminar with your lecturer. Your lecturer will advise you if this is to be completed during your consultation session. Click on the following heading to read more about the requirements for your post-seminar learning task.
So far in your self-directed learning, as well as in our seminars and in any of the group or class discussions, we have looked at several entrepreneurs. In your reflective journal, collect a list of these entrepreneurs starting with those that made the most impact on your personal learning. You must write down at least five (5) examples.
For each example, explain why this entrepreneur is important to you and what you have learnt from them. Try to justify your statements. For example, “this inspired me because...”; “this changed the way I thought about entrepreneurship because…”; and “I could relate to this entrepreneur because...”.
Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your consultation session.
Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
The following additional resources can be used to extend your understanding of this topic:
- Sutherland, R 2012, Perspective is everything, streaming video, YouTube.
- Wallach, A 2017, 3 ways to plan for the (very) long term, streaming video, YouTube.
References
- Amabile, TM 1993, ’Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace,’ Human Resource Management Review, 3(3):185-201.
- Baumol, W 1990, ‘Entrepreneurship: Productive, unproductive, and destructive,’ Journal of Political Economy, 98(5:1):893-921.
- Birley, S & Westhead, P 1994, ‘A taxonomy of business start-up reasons and their impact on firm growth and size,’ Journal of Business Venturing, 9(1):7-31.
- Cardon, MS, Wincent, J, Singh, J & Drnovsek, M 2009, ‘The nature and experience of entrepreneurial passion,’ Academy of management review, 34(3):511-532.
- Cardon, MS, Gregoire, DA, Stevens, CE, & Patel, PC 2013, ‘Measuring entrepreneurial passion: conceptual foundations and scale validation,’ Journal of Business Venturing, 28(3):373-396.
- Douglas, EJ & Shepherd, DA 2002, ‘Self-employment as a career choice: Attitudes, entrepreneurial intentions, and utility maximization,’ Entrepreneurship Theory and Practice, 26(3):81-90.
- Frederiks, AJ, Englis, BG, Ehrenhard, ML, & Groen, AJ 2019, ‘Entrepreneurial cognition and the quality of new venture ideas: An experimental approach to comparing future-oriented cognitive processes’, Journal of business venturing, 34(2):327-347.
- Houlfort, N, Fernet, C, Vallerand, RJ, Laframboise, A, Guay, F & Koestner, R 2015, ‘The role of passion for work and need satisfaction in psychological adjustment to retirement,’ Journal of Vocational Behavior, 88:84-94.
- Kolb, DA 1983, Problem management: Learning from experience, The executive mind, 28.
- Kolb, DA 2014, Experiential learning: Experience as the source of learning and development, FT press.
- Ku, G & Brewis, K 2017, The power of perspective taking, London Business School, https://www.london.edu/think/power-of-perspective-taking
- Kuratko, DF, Hornsby, JS & Naffziger, DW 1997, ‘An examination of owner’s goals in sustaining entrepreneurship,’ Journal of Small Business Management, 35(1):24.
- Langan-Fox, J & Roth, S 1995, ‘Achievement motivation and female entrepreneurs,’ Journal of Occupational and Organizational Psychology, 68(3):209-218.
- Laverty, M & Littel, C 2019, Entrepreneurship, Openstax, https://openstax.org/books/entrepreneurship/pages/1-3-the-entrepreneurial-mindset
- Mitchell, RK, Busenitz, L, Lant, T, McDougall, PP, Morse, EA & Smith, JB 2002, ‘Towards a theory of entrepreneurial cognition: rethinking the people side of entrepreneurship research,’ Entrepreneurship theory and practice, 27(2):93-105.
- Prospective Psychology 2014, Welcome to prospective psychology, University of Pennsylvania, https://www.prospectivepsych.org/
- Shepherd, DA & Patzelt, H 2018, Entrepreneurial cognition, Palgrave MacMillan.
