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Thinking Fast and Missing the Opportunity: An investigation into cognitive processing style and opportunity recognition.

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Date Issued:
2015
Abstract/Description:
Research on opportunity recognition and entrepreneurial cognition suggests that entrepreneurs are likely to use and potentially benefit from heuristics (Baron, 1998, 2004; Busenitz (&) Barney, 1997). Some heuristics, particularly well-refined and accurate prototypes, may be valuable to entrepreneurs in recognizing opportunities (Baron, 2004). I seek, however, to consider how other types of heuristics that lead to irrational, biased, and inaccurate judgments (e.g., the betrayal heuristic) relate to opportunity recognition (Baron, 2004; Kahneman (&) Lovallo, 1993). I specifically consider the underlying causal process through which the use of these types of heuristics diminishes the ability to recognize opportunities. I posit that these heuristics reduce the ability to recognize opportunities by causing entrepreneurs to consider less information regarding potential opportunities. Further, I propose two individual differences that allow certain entrepreneurs to mitigate the negative effect that these bias-causing heuristics have on entrepreneurs' ability of form the belief that they have recognized an opportunity. I test my theory with two experimental designs that use a product from a technology transfer office that has been licensed by entrepreneurs and applied to a real-world market. This allows me to isolate the underlying variables of interest and to affix my theorizing to a well-documented phenomenon (the licensing and application of tech-transfer technology/products by entrepreneurs) (Gregoire (&) Shepherd, 2012; Mowery, 2004; Shane, 2001). Results show that some heuristic may cause individuals to consider less information about an opportunity, which reduces their likelihood of forming an opportunity recognition belief. Post hoc analyses suggest that this indirect effect may be conditional on how reflective an individual is and that entrepreneurs may be more reflective than non-entrepreneurs. The major contribution of this dissertation is to examine the theoretical underpinnings as to why certain types of heuristics inhibit entrepreneurs from forming the belief that they have recognized an opportunity. Specifically, I suggest and show that bias-causing heuristics reduce the amount of information that entrepreneurs consider about an opportunity and, as such, inhibit opportunity recognition beliefs. Second, I provide some support for the notion that reflective individuals are more likely to form the belief that they have recognized an opportunity because they consider more information about the opportunity when they initially rely on a bias-causing heuristic. Lastly, this dissertation provides initial support for the notion that entrepreneurs may be more reflective than non-entrepreneurs. Overall, I hope to point out that although a heuristic-dependent processing style has been shown to be beneficial with regard to opportunity recognition (Baron, 2004), the failure to consider the downside of certain heuristics and benefits related to overcoming these heuristics may limit our understanding of the opportunity recognition process.
Title: Thinking Fast and Missing the Opportunity: An investigation into cognitive processing style and opportunity recognition.
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Name(s): Letwin, Chaim, Author
Ford, Cameron, Committee Chair
Folger, Robert, Committee CoChair
Schminke, Marshall, Committee Member
Ciuchta, Michael, Committee Member
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2015
Publisher: University of Central Florida
Language(s): English
Abstract/Description: Research on opportunity recognition and entrepreneurial cognition suggests that entrepreneurs are likely to use and potentially benefit from heuristics (Baron, 1998, 2004; Busenitz (&) Barney, 1997). Some heuristics, particularly well-refined and accurate prototypes, may be valuable to entrepreneurs in recognizing opportunities (Baron, 2004). I seek, however, to consider how other types of heuristics that lead to irrational, biased, and inaccurate judgments (e.g., the betrayal heuristic) relate to opportunity recognition (Baron, 2004; Kahneman (&) Lovallo, 1993). I specifically consider the underlying causal process through which the use of these types of heuristics diminishes the ability to recognize opportunities. I posit that these heuristics reduce the ability to recognize opportunities by causing entrepreneurs to consider less information regarding potential opportunities. Further, I propose two individual differences that allow certain entrepreneurs to mitigate the negative effect that these bias-causing heuristics have on entrepreneurs' ability of form the belief that they have recognized an opportunity. I test my theory with two experimental designs that use a product from a technology transfer office that has been licensed by entrepreneurs and applied to a real-world market. This allows me to isolate the underlying variables of interest and to affix my theorizing to a well-documented phenomenon (the licensing and application of tech-transfer technology/products by entrepreneurs) (Gregoire (&) Shepherd, 2012; Mowery, 2004; Shane, 2001). Results show that some heuristic may cause individuals to consider less information about an opportunity, which reduces their likelihood of forming an opportunity recognition belief. Post hoc analyses suggest that this indirect effect may be conditional on how reflective an individual is and that entrepreneurs may be more reflective than non-entrepreneurs. The major contribution of this dissertation is to examine the theoretical underpinnings as to why certain types of heuristics inhibit entrepreneurs from forming the belief that they have recognized an opportunity. Specifically, I suggest and show that bias-causing heuristics reduce the amount of information that entrepreneurs consider about an opportunity and, as such, inhibit opportunity recognition beliefs. Second, I provide some support for the notion that reflective individuals are more likely to form the belief that they have recognized an opportunity because they consider more information about the opportunity when they initially rely on a bias-causing heuristic. Lastly, this dissertation provides initial support for the notion that entrepreneurs may be more reflective than non-entrepreneurs. Overall, I hope to point out that although a heuristic-dependent processing style has been shown to be beneficial with regard to opportunity recognition (Baron, 2004), the failure to consider the downside of certain heuristics and benefits related to overcoming these heuristics may limit our understanding of the opportunity recognition process.
Identifier: CFE0005648 (IID), ucf:50163 (fedora)
Note(s): 2015-05-01
Ph.D.
Business Administration, Dean's Office CBA
Doctoral
This record was generated from author submitted information.
Subject(s): Opportunity Recognition -- Cognition -- Heuristics
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFE0005648
Restrictions on Access: campus 2020-05-15
Host Institution: UCF

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