Origin of Value Creation: The Role of a Cognitive Shift in Entrepreneurial Problem Framing

Abstract

Highly successful entrepreneurial ventures and innovation often result from finding and solving problems that have not been solved before (i.e., entrepreneurial problems). The challenge in solving such problems is that value creators—individuals who intend to create value and solve entrepreneurial problems—often have incomplete information about the problems. The problem-solving perspective and entrepreneurship literature indicate that value creators benefit from relying on intuition or gut feeling to develop new problem frames or theories on the domains of problems. Novel problem frames are new, untested theories on the domains of problems. The frames provide the foundational assumptions about the problems so that problem-solvers can think of potential causes and solutions. Intuition is valuable given incomplete information and knowledge to form rational, analytic judgments and decisions. However, scholars caution that intuition often results in the exploitation of familiar experiences and mental models, which are rarely appropriate for entrepreneurial problems that often have unique traits and characteristics that differentiate them from previously solved problems. What can value creators do then to more effectively generate novel frames of entrepreneurial problems? This dissertation draws on Cognitive-Experiential Self-Theory (CEST) to propose that a cognitive shift from rational, analytic thinking to intuition is likely to generate novel frames for entrepreneurial problems. Evidence from an archival study and a randomized field experiment with samples of entrepreneurs provide support for the value of the proposed cognitive shift.