the co-construction of entrepreneurial sensemaking - an empirical examination of socially situated cognitive mechanisms in entrepreneurial cognitive development
This dissertation focuses on the topic of entrepreneurial cognitive development during business opportunity development. Business opportunity development takes place in a social context and is affected by the entrepreneur’s (inter)action with relevant stakeholders (Clarke & Cornelissen, 2011). Entrepreneurial researchers acknowledge the socially situated nature of entrepreneurial cognition (Mitchell et al., 2011). The research question central to this thesis is the following:
How do socially situated cognitive mechanisms affect entrepreneurial cognitive development during business opportunity development?
To answer this question, we undertook four empirical studies among entrepreneurs who participated in an institutional incubation/acceleration program.
In the first empirical study we explore the effect of two feedback mechanisms – coaching and business panel presentation - on entrepreneurial cognitive development during opportunity development. To do so, we use the grounded theory approach and draw on data from weekly logbooks that the entrepreneurs kept. Our analysis yields a taxonomy in which we distinguish between four categories of entrepreneurs – based on the amount of prior entrepreneurial experience and the nature of their value proposition - which we label, respectively: ‘Greenhorns’, ‘Cowboys’, ‘Trappers’ and ‘Saloon-owners’. The results show that panel feedback leads to learning of declarative knowledge among entrepreneurs, while coaching feedback fosters the development of reflective, meta-cognitive or ‘deeper-level’ entrepreneurial learning. We find that experienced entrepreneurs report this type of learning more often than novice entrepreneurs, while novice entrepreneurs report more learning of declarative knowledge. This study contributes to our understanding of feedback processes by the identification of complimentary effects of coaching and panel feedback mechanisms on the cognitive development of entrepreneurs.
In the second study, we examine the concept of sensebreaking and how third parties affect entrepreneurial cognitive development by means of sensebreaking. Sensebreaking is analysed in terms of its mechanisms of redirecting, reframing and questioning described by Vlaar et al. (2008). The results show that the mechanisms of redirecting and reframing affect entrepreneurial cognitive development differently. The results contribute to a more nuanced understanding of how different feedback mechanisms affect entrepreneurial cognition. Particularly, we found that reframing can prove valuable in creating ‘cognitive space’ for novel assessments and subsequent decision-making about the value of a resource. Meanwhile, redirecting facilitates incremental learning episodes, such as shifting the entrepreneur’s attention to a different market or a novel partner in value creation.
In the third empirical study we explore the cognitive dimension of developing a market orientation. A market orientation is defined as sensemaking reflected in mental models used by entrepreneurs. Taking a grounded theory approach, we examine sensemaking processes of entrepreneurs who are engaged in solving problems encountered in the creation of (superior) customer value during business opportunity development. The results of our analysis yield six market-oriented mental models which are used by entrepreneurs. Our findings contribute to the conceptualization of the role and significance of stakeholders in solving problems related to creating (superior) customer value and underline the role of the social context in entrepreneurial sensemaking. In addition, the findings show that market-oriented mental models used by experienced entrepreneurs are more general and tacit in nature and reflect a more expertly skilled performance as described by Dreyfus & Dreyfus (2005) and affects the way that experienced entrepreneurs could communicate their market-oriented problem to other members of the venture in the case of venture growth and the ensuing development of a venture-level market orientation.
The fourth empirical study contains an analysis of entrepreneurial sensemaking of the business model artifact. The business model is the organizational and financial ‘architecture’ of a business (Teece, 2010). Approached in its most abstract capacity of a model, the business model artifact can fulfill different purposes (Osterwalder et al., 2005). We distinguish between four purposes for which the business model artifact can be used, namely: understanding, communicating, analyzing and managing the firm’s value creation logic. The results of our study show that entrepreneurs make sense of the business model artifact mainly for purposes of understanding and developing the venture’s value creation logic. Our findings also show that entrepreneurs with a STEM education (in science, technology, engineering and mathematics) are twice as likely to use the communication purpose. The results of this study show that when used for its communicative purpose, the business model artifact provides entrepreneurs with a mechanism to involve relevant stakeholders in the creation of shared meaning, crucial for the successful creation of value (Clarke & Cornelissen, 2014). In the four empirical studies we identify different mechanisms – feedback mechanisms, sensebreaking mechanisms, market-oriented mental models and the business model artifact – which shape entrepreneurial sensemaking. Those mechanisms are socially situated, cognitive mechanisms by which third parties can shape entrepreneurial cognition. We conclude that the socially situated cognitive mechanisms we identify are enabling and facilitating instruments for the co-construction of entrepreneurial sensemaking, and ultimately for the development of entrepreneurial cognition during opportunity development.
With the results of the empirical studies in this dissertation we contribute to conceptualizing the co-constructed nature of entrepreneurial sensemaking. In particular, this dissertation contributes to empirical insights into the role of language in entrepreneurial cognitive development. Language provides a means to verbalize one’s ideas and shapes entrepreneurial cognition (Clarke & Cornelissen, 2014). The results of our research show language enables (meta-)cognitive development of entrepreneurs by means of socially situated cognitive mechanisms and demonstrate how entrepreneurs develop (meta-)cognitive skills through communicative interaction. Furthermore, this dissertation contributes methodically: By employing the diary method, we answer to Shepherd’s (2015) call for methodological experimentation and modernisation in scientific entrepreneurship research.
On a practical level, entrepreneurs can leverage the insights from the empirical studies to reflect on and become (more) aware of being a particular ‘type’ of entrepreneur, particularly related to their previous entrepreneurial experience and the type of opportunity they are developing. For example, novice entrepreneurs can use cognitive development in terms of declarative knowledge provided by panel members to create focus in the business opportunity they are developing. In addition, trainings in using the business model artifact for different purposes provide entrepreneurs with an instrument to not only formulate and define, but also to analyze and communicate their opportunity’s value creation logic. And by becoming aware and reflective of the stakeholder orientation (as part of the entrepreneur’s market orientation) entrepreneurs can be more intentional about the set-up of a ‘community of inquiry’ (Shepherd & Patzelt, 2017) in which they can engage in thought exchange and leverage feedback from relevant stakeholders that help to shape the business opportunity.
Students and academic researchers can benefit from our findings as well. Corbett for example (2005) proposed that students in entrepreneurship courses should learn more about how to adapt their original ideas in reaction to changes suggested by potential customers and other actors in the market place. The socially situated cognitive mechanisms analyzed in this dissertation are suitable for stimulating and sustaining effective feedback-based (entrepreneurship) education because they can easily be integrated into experiential learning approaches which put emphasis on the development of soft skills, presentational skills and interpersonal communication, and which are considered important for higher education in general (Kolb & Kolb, 2005) and in entrepreneurial thinking in particular (Krueger, 2007). The training in and subsequent conscious leverage of these mechanisms by individuals or in teams could be particularly valuable for multidisciplinary trajectories, not only in entrepreneurship education but also for multidisciplinary research projects.
This dissertation also provides useful insights for the design of business incubation/acceleration programs. Our research findings show that socially situated cognitive mechanisms represent enabling tools for actors in business support settings to ‘steer’, focus and target practice-based entrepreneurial learning. For example, policy-makers can leverage the conceptualization of the process and outcomes of stakeholder interaction offered in the empirical studies in order to develop indicators for monitoring and evaluation of the efficient use of both coaching and panel interactions.
There are a few limitations to the research undertaken in this dissertation. Firstly, our research population consists of a relatively small number of entrepreneurs, a constraint often encountered in qualitative research; secondly, the diary data is a very ‘raw’ form of data because the entrepreneurs were free to write down thoughts about their development, only guided by the four ‘topics’ within each weekly diary, and subsequently entrepreneurs varied in terms of content and frequency of self-reporting. A third limitation is that the data stems from a sample of entrepreneurs who are part of a research incubation/acceleration program, entailing the possibility of a biased research population characteristically unwilling or unable to independently pursue business development but clever enough to seek help. However, this thesis contributes to the conceptualization of entrepreneurial cognitive development by identifying how socially situated cognitive mechanisms are relevant for the cognitive development of entrepreneurs. By doing so, this thesis provides ‘legwork’ by laying a basis for the design of further, explanatory studies in the area of entrepreneurial cognitive development.
In terms of avenues for future research, we discern the following topics worth investigating: For one, the employment of self-reports as a valuable method of data collection in entrepreneurship studies, in parallel to Foo, Uy & Baron (2009) who advocate a more extensive use and critical evaluation of these methods. Second, future studies should focus on the relationship between socially situated cognitive mechanisms and venture survival, growth and employment generation - this which would yield valuable insights into the role that co-constructed sensemaking plays in the commercial success of entrepreneurial ventures.
