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CT articles summary entrepreneurship
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Contemporary Theories summary of articles for the case “entrepreneurship”.
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Contemporary articles assignment1. Grégoire, D. A., Barr, P. S. and Sheperd, D. A.(2010). Cognitive processes of
opportunity recognition: The role of structural alignment. Organization Science, 21(2),
413-431.
Introduction Organizations operate in dynamic environments with rapid changes;
strategically adapting to those changes causes a competitive advantage but, uncertainty
about the origin, extent and consequences of environmental changes makes the task of
recognizing opportunities as challenging as it is relevant. Managers are more focused to
identify threats than opportunities.
Baron (2006) states that opportunity recognition involves pattern recognition (‘’connect the
dots’’). However other researchers state that it is the ability to process information, the use of
prior knowledge etc. It remains difficult to determine exactly how opportunity recognition is
fostered by the attention allocated toward environmental signals
Unanswered questions:
1. What cognitive process(es) supports individual efforts to recognize opportunities?
2. What is the specific role of prior knowledge in this process(es)?
Defining Opportunity Recognition Ongoing debate; do opportunities objective artifacts
waiting to be ‘’discovered’’ or do they arise out of subjective interpretations and creative
actions of individuals. In general: opportunities arise from changes; opportunities are courses
of action that seek to derive benefits from these changes.
McMullen & Shepherd (2006) emphasize the distinction between two nested phases of
entrepreneurial action. The first phase concerns the formation of subjective beliefs than an
opportunity exists for those with the relevant abilities and means to exploit it. The second
concerns the evaluation of the opportunity to oneself; whether one has the means and
motivations to act on the opportunity.
Process of recognizing opportunities is an effort to make sense of signals of change to form
beliefs regarding whether or not enacting a course of action to address this change could lead
to net benefits. The outcome of this process lies in those subjective ex ante beliefs that an
opportunity exists – or not-.
Structural Alignment and the Recognition of Opportunities Baron (2006) state that
individuals notice various events and utilize cognitive frameworks to determine whether
events form a discernible pattern. Likewise, opportunity prototypes of expert entrepreneurs
are richer than those of novices.
Individuals make sense of new information by mentally comparing this new information with
what they already know. The ‘’discernment’’ of opportunity-relevant patterns involve
cognitive efforts to consider the ‘’resemblance’’ between events in the outside world and
mental models of situations.
Structural alignment is a cognitive tool that people use to compare things; e.g. whether a new
objective resembles anything they have seen before. Observed similarities help to understand
the new object. The alignment proceeds at two levels: 1) superficial features = relate to the
basic parts of a mental representation, along with their attributes and characteristics. 2)
, structural relationships = refer to the links that unite different superficial features within a
mental representation. First-order structural relationships consists of one-to-one functional
relationships between superficial features. Higher-order relationships include more abstract
‘’relationship between relationships’’.
Proposition 1: In their efforts to recognize opportunities, individuals will mentally compare
the superficial features and structural relationships of signals from their environment with
the features and relationships of contexts where this information could be meaningful.
Preponderant Role of Aligning Structural Relationships Processing superficial features
and structural relationships involves different sets of cognitive structures and dynamics.
Likewise, the two play different roles in recognizing opportunities. Superficial features
influence the search and retrieval of information from memory. Superficial features of a new
stimulus may lead one to recall corresponding features from memory. Memory is often
influenced by prior experiences or familiarity; this may narrow down the range of
superficially related domains that are accessed. Structural relationships are involved in higher-
order reasoning processes. The processing and alignment of structural relationships influences
category formation, learning and problem solving. Structural relationships are particularly
important when making inferences about new stimulus.
Efforts to recognize opportunities will emphasize the consideration and alignment of
structural relationships. 1) When stimuli are encoded in a rich and deep manner, reasoning
based on structural relationships is more fostered. 2) noticing the alignment of structural
relationships, generate more brain activation; allows to compare / recognize meaningful
patterns.
Proposition 2: The process of recognizing opportunities will involve greater cognitive effort
(attention) to align structural relationships than to align superficial features.
Role of Prior Knowledge Prior knowledge explain why some individuals recognize
opportunities. Prior knowledge provides a basis from which to interpret and use new
information. Cognitive research indicates that prior knowledge fosters the consideration of
structural relationships. E.g. experts in a domain find it naturally easier to reason in terms of
structural relationships because they have richer mental representations with which to work.
Proposition 3: In the process of recognizing opportunities, reliance on higher levels of prior
knowledge will be associated with greater cognitive effort (attention) to algin structural
relationships than to align superficial features.
Research Methodology Test whether the process of recognizing opportunities involves
discrete forms of reasoning. Conduct verbal protocol strudy; think out loud as they consider
what possible opportunities could be pursued with these new technologies. Analyze
transcriptions of participants’ verbalized thoughts for evidence.
Research Material research material from publicly available descriptions of two new
technologies exploited in niche markets.
Sample senior executives with new-venture founding and managing experience in two
industries: life-science technologies and marketing services; two distinct groups to generalize
findings.
Data Analysis and Coding Schemes Analyze participants’ verbalization using content
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