The Impact of Cognition on New Value Creation within the Institutional Theory Perspective

Abstract

This study aims to assess the effects of optimism and self-efficacy on entrepreneurs who intend to reform their market. Drawing on cognitive and institutional theory, the factors of optimism and self-efficacy were selected to better understand the association between entrepreneurial cognition and opportunity creation. This is a qualitative, multicase study where six Turkish entrepreneurial firms in the process of reforming and redefining their markets through new value creation, were selected on the basis of purpose sampling. While both optimism and self-efficacy significantly motivated entrepreneurs to create new value propositions, the effects of these factors varied across cases. In the sampling, all firms associated value creation with innovation. Moreover, firms tended to use informal/formal networks to create new value propositions and change current legitimacy. Only limited studies have reported on the effects of institutional environments and cognitive structure of entrepreneurs on value creation, particularly within emerging markets. Moreover, the concept of value creation, which involves redefining and reshaping the present market, is not recognized within either cognitive or institutional theory. Optimism and self-efficacy have previously been considered as independent concepts in the literature. However, in the current study, the two concepts are interrelated, thus contributing to the literature of entrepreneurship.