The Effects of Organizational Bureaucracy and Capital Constraints on the Development of Entrepreneurial Cognitions

Abstract

Entrepreneurs are made, not simply born. Sorensen (2007: 409)IntroductionEntrepreneurship researchers have long focused on finding unique dispositional traits among entrepreneurs and assumed that entrepreneurs form a class of their own (e.g., Evans & Leighton, 1989; Parker, 2004; Shane, 2003; Simon, Houghton, & Aquino, 2000). Although they raised possibility that genetic factors influence entrepreneurial behavior, studies that relate traits to entrepreneurs have shown inconsistent results (Mitchell, Busenitz, Lant, Mcdougall, Morse, & Smith, 2002; Wood, 2012; Zhao & Seibert, 2006). Furthermore, differences in personality among entrepreneurs may be greater than those between entrepreneurs and non-entrepreneurs (Gartner, 1985). Yet, entrepreneurship researchers persist in thinking that entrepreneurs are members of a homogeneous group that is unique (Mitchell, Busenitz, Bird, Gaglio, McMullen, Morse, & Smith, 2007). This insight has led to a new stream of research known as entrepreneurial cognitions (Walsh, 1995).Entrepreneurial cognitions are defined as the knowledge structures that people use to make assessments, judgments, or decisions involving opportunity evaluation, venture creation, and growth (Mitchell et al., 2002: 97). Entrepreneurial research has shown that entrepreneurs use these cognitions as simplified mental models to piece together information that non-entrepreneurs would perceive as unconnected (Baren, 2000; Keh, Foo, & Lim, 2002; Markman, Balkin, & Baron, 2002). Further, entrepreneurs use ways of thinking that differ from non-entrepreneurs to identity new products or services, evaluate opportunities, and allocate resources to create new ventures and expand businesses (Mitchell et al., 2002). According to entrepreneurial literature, there are three types of entrepreneurial cognitions or cognitive scripts (Leddo & Abelson, 1986: 121) - arrangements, willingness, and ability (Mitchell, Smith, Seawright, & Morse, 2000).Walsh (1995) argued that psychologists usually paid attention to link between cognitions and consequences while origins of cognitions are underexplored. This can also be applied to entrepreneurial research. The entrepreneurial literature has focused on theorizing and examining effects of entrepreneurial cognitions on a series of outcomes in field of entrepreneurship. For example, Mitchell, Smith, Seawright, and Morse (2000) provided evidence that entrepreneurial cognitions are universal across countries. They found that entrepreneurial cognitions were related to venture creation decision. Simon and Houghton (2002) developed a conceptual model of how specific entrepreneurial constructs affected decision to pioneer. Keh, Foo, and Lim (2002) investigated how entrepreneurs used their cognitive processes to evaluate opportunities under risky conditions. Gatewood, Shaver, Powers, and Gartner (2002) found that entrepreneurial was related to to stay with an entrepreneurial task. Smith, Mitchell, and Mitchell (2009) proposed that entrepreneurial leads to new transaction commitment, which results in new value creation.However, antecedents of entrepreneurial cognitions have received relatively less attention. Mitchell, et al. (2007) appealed that how individuals acquire their entrepreneurial cognitive structures is one of central questions in field of entrepreneurial cognition. Consistent with this argument, we aim to explore antecedents of entrepreneurial cognitions. This paper is based on central tenet of social cognitive theory, which is concerned with influence of person-environment interaction. According to social theory, individuals are influenced by configuration of forces that involve two factors - one is cognition and motivation and another is situation (Fiske & Taylor, 1984: 4-5). …