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CHAPTER THREE: DIAGRAMMATIC SYNOPSIS: COGNITIVE ADAPTABILITY
INTRODUCTION
By recognising well-established psychological constructs relevant to understanding entrepreneurs, researchers have extended the on-going work in different disciplines by seeking to augment and create closer conceptual links between entrepreneurship and cognitions. The central premise of the cognitive perspective is that entrepreneurial behaviour emerges as a result of the entrepreneur’s underlying cognitions.
(Markman, Balkin & Baron 2002:149)
Entrepreneurship is a relatively new field of inquiry (Sánchez 2011:427). The first studies in the field were carried out from the perspective of personality traits (Van Den Broeck et al. 2005:369); which made important contributions but also had its limitations in attempting to explain entrepreneurial behaviour. Faced with these limitations, certain authors chose to use the cognitive approach as an alternative (e.g. Vecchio 2003:303). The cognitive approach is characterised by the study of certain types of cognitions that could explain aspects such as how to define and differentiate an entrepreneur, entrepreneurial behaviour and business success, among others (Sánchez 2011:427). Researchers using this approach believe that cognitive aspects are the elements that differentiate entrepreneurs from non-entrepreneurs. These cognitive aspects can range from beliefs to values, cognitive styles and mental processes.
In the last decade the field of cognitive psychology has made important contributions to understanding the field of entrepreneurship in areas such as the cognitive styles of entrepreneurs (Bridge, O’Neil & Cromie 2003:1), enterprising self-efficacy (Markman, Baron & Balkin 2005:1), decision-making heuristics (Mitchell et al. 2007:1), the knowledge structures of entrepreneurs (Smith, Mitchell & Mitchell 2009:815), etc. Knowing how these cognitive elements function has helped us to understand how entrepreneurs perceive and interpret information and how they use it to make the decision to start a successful business
One of the most developed and fertile cognitive constructs is metacognition (Garcia et al. 2014:311). One product of metacognition is cognitive adaptation, understood as the ability to evolve or to adapt decisions in a suitable and effective way based on feedback from the context (inputs) in which the cognitive processing takes place (Haynie & Shepherd 2009:695). This ability to adapt is made possible through strategies that promote the process of thinking about thinking, i.e. metacognition. In the context of entrepreneurship, cognitive adaptability is a key competency. For this reason, this chapter seeks to understand the construct of metacognition and cognitive adaptability in the context of an entrepreneurial environment.
The chapter starts with a discussion of the origin and evolution of social cognition theory. The trait and cognition approaches are explored in the context of entrepreneurial cognitions. The entrepreneurial environment exemplifies the dynamic and challenging environment which needs to be understood in context. Entrepreneurial cognition research investigates entrepreneurs’ ways of thinking and thus places the entrepreneur as the research focus (Mitchell et al. 2007:1). Metacognitive theory forms the foundation of the study. According to the influential model developed by Nelson and Narens (1990a:1; 1994:1), metacognition is defined as the monitoring and control of cognitive processes. By this view, metacognition is essential for the supervision of our perceptions, thoughts, memories and actions. The individual dimensions of cognitive adaptability are discussed in the context of entrepreneurship. The chapter concludes with a combined conceptual framework of cognitive adaptability in an entrepreneurial environment.
SOCIAL COGNITION THEORY: ORIGIN AND EVOLUTION
The Social Cognition Theory represents an approach to the study of human cognition and information processing that assumes the motivations, emotions and other attributes of the individual impact cognition and subsequently how the individual interprets the social world (Showers & Cantor 1985:275; Tetlock 1990:212). It has been the subject of thoughtful research since the time of Aristotle and there are generally two approaches to the study of human cognition that have dominated the last century of theoretical and methodological development: the elemental and holistic approaches (Haynie 2005:28). Those who subscribe to the ‘elemental’ approach describe the study of the mind as being akin to the study of chemistry, where ideas, memories and attributions are analogous to elements. Individual elements (e.g. memories) are associated with other elements (e.g. attributions) to facilitate cognition and sense. Currently this approach dominates the domain of cognitive science research.
The ‘holistic’ approach to studying human cognition has its origins with Kant (1781:58). Kant argued for studying the mind holistically because ‘perception is furnished by the mind and is not inherent in the stimulus’. Gestalt psychology adopted this perspective and Lewin (1951:101) brought these ideas into social psychology emphasising the environment as perceived by the individual, with a further emphasis on the total situation. These ideas represent the origins of social cognition and a domain of inquiry and research within the field of social psychology (Haynie 2005:28).
Social cognition provides a foundation for studying the broad spectrum of social psychological topics. Generally defined, social cognition investigates how people think about themselves and how they view other people, for example addressing people’s mental capacity and resources, their judgement and inferential tactics and even their cognitive architecture, as related to human behaviour and interaction. Although this definition appears somewhat broad, it indeed captures the heterogeneity within social cognition’s empirical domain. Insight into people’s intrapsychic processes gives social psychologists considerable insight into human relations and social interactions (Operario & Fiske 1999:63).
Research in social cognition shares three basic features: a commitment to mentalist interpretations, a commitment to process analysis and cross-fertilisation between cognitive and social psychology (Lewin 1951:99). At the core of social cognition research is the idea that the individual exists within a psychological field composed of two component pairs. Pair 1 describes the person-situation. The person brings values, beliefs and perceptions which act on the environment (situation) to constitute the field. The second pair of factors cuts across this field to determine behaviour and consists of cognition-motivation. Cognition contributes the person’s interpretation of the world, and motivation (its strength) predicts whether behaviour will occur (Lewin 1951:99). While the dominant theoretical paradigms around which scholars have based social cognitive research have evolved through improvements in neuroscience, technology, advances in linguistics, memory systems and research methodologies, the widespread use of the computer in the late 1960s fundamentally altered the focus of cognition research and spawned the ‘cognitive revolution’ (Haynie 2005:29).
To appreciate the insights that social cognition has given the field, the study needs to trace the scientific development that led to the contemporary perspectives in social cognition. There are three general themes that have characterised the evolution of social cognition from its early beginnings in the 1970s to contemporary research throughout the 1990s. The individual as a Consistency Seeker proposed that individuals are motivated to resolve perceived discrepancies between cognitions. This is a major emphasis of the first-generation models (Tetlock 1990:212). The individual as a Naive Scientist proposed that, given time, people will gather data and arrive at a logical conclusion . This is a major emphasis of the second-generation models (Tetlock 1990:212). The individual as Cognitive Miser proposed that individuals are limited in their processing capacity so they take short-cuts where they can. This is a major emphasis of the third-generation models (Tetlock 1990:212). The individual as a Motivated Tactician proposes that individuals respond to multiple contextual moderators of information processing in a theoretically principled and creative way. This is a major emphasis of the fourth-generation model (Tetlock 1990:214), which is linked to the dual-process model.
Based on the research problem, it is likely that cognitive miser individuals generally rely more heavily on automatic, heuristic-based processing than on purposeful “thinking about thinking”. This study seeks to find the bridge between cognitive misers and motivated tacticians.
COGNITION AND ENTREPRENEURSHIP
At present, there still does not appear to be a satisfactory answer to the question: Why are some people and not others able to discover and exploit particular entrepreneurial opportunities? It has been asserted that two broad categories of factors influence the probability that particular people will discover particular opportunities: 1) the possession of the information necessary to identify an opportunity; and 2) the cognitive properties necessary to exploit it (Shane & Venkataraman 2000:220). According to these criteria, then, research that contributes to a better understanding of information processing and entrepreneurial cognition has an important role to play in the development of the entrepreneurship literature. The field of entrepreneurship seeks to understand how opportunities are discovered, created and exploited, by whom and with what consequences (Shane & Venkataraman 2000:218). Although the person – the entrepreneur – is central to the creation of new ventures, entrepreneurs themselves are seldom explicitly taken into account in formal models of new venture formation. For example, notwithstanding the important role that entrepreneurs play in forging new ventures and creating new jobs, research to identify attitudes, traits, behaviours, or other characteristics that distinguish entrepreneurs from others remains questionable. Trait and cognition are two major approaches to distinguish entrepreneurs from non-entrepreneurs and to understand how people make decisions (Das & Teng 1997:70).
The trait approach
The belief that entrepreneurs have distinctive personality characteristics has a long tradition in entrepreneurship studies, and research based on this premise is generally known as the trait approach (Das & Teng 1997:69). Several psychological traits have been studied in an attempt to differentiate entrepreneurs and non-entrepreneurs (Brockhaus & Horwitz 1986:25). Some of the more important ones include need for achievement, locus of control, tolerance of ambiguity and risk propensity. The trait approach asserts that entrepreneurs can be recognised by traits such as risk propensity, need for achievement and locus of control (Palich & Bagby 1995:426). However, research using the trait approach has had limited success in explaining entrepreneurial behaviours and perceptions. For instance, some studies have shown that risk propensity, the personality trait that determines the tendency and willingness of the individual to take risks, does not explain why entrepreneurs are willing to undertake a business venture. The failure of past ‘entrepreneurial personality’-based research to clearly distinguish the unique contributions to the entrepreneurial process of entrepreneurs as people, has created a vacuum within the entrepreneurship literature that has been waiting to be filled (Das & Teng 1997:70).
The cognitive approach
Given the limited success achieved with the trait approach, some researchers have turned to a more cognition-oriented approach to studying entrepreneurial risk behaviour (Palich & Bagby 1995:425). Recent evidence suggests that this approach more effectively explains entrepreneurial behaviour and perception. The cognitive approach is concerned with the entrepreneur’s preferred way of gathering, processing and evaluating information (Das & Teng 1997:71). For example, researchers have shown that entrepreneurs exhibit systematic cognitive biases and overestimate their chances of success. The application of ideas and concepts from cognitive science has gained currency within entrepreneurship research, as evidenced by the growing accumulation of successful studies framed in entrepreneurial cognition terms. The cognitive perspective provides us with some useful lenses through which to explore entrepreneur-related phenomena and to address some of the meaningful issues that, up until this point, have remained largely underexplored.
DECLARATION
ABSTRACT
ACKNOWLEDGEMENTS
LIST OF TABLES
LIST OF FIGURES
ABBREVIATIONS, ACRONYMS AND GLOSSARY
CHAPTER ONE: DIAGRAMMATIC SYNOPSIS
1.1 INTRODUCTION AND BACKGROUND TO THE STUDY
1.2 BACKGROUND AND IMPORTANCE OF A STUDY ON ESTABLISHED ENTREPRENEURS
1.3 DEFINITION OF TERMS
1.4 LITERATURE REVIEW
1.5 THE RESEARCH PROBLEM
1.6 PURPOSE OF THE STUDY
1.7 RESEARCH OBJECTIVES
1.8 HYPOTHESES
1.9 RESEARCH DESIGN AND METHODOLOGY
1.10 IMPORTANCE AND CONTRIBUTION OF THE STUDY
1.11 DELIMITATION
1.12 OUTLINE OF THE STUDY
CHAPTER TWO: DIAGRAMMATIC SYNOPSIS: PERSONALITY TRAITS
2.1 INTRODUCTION
2.2 THE CONSTRUCTS OF PSYCHOLOGY, PERSONALITY AND PERSO-NALITY TRAITS
2.3 HISTORICAL DEVELOPMENTS OF THE TRAIT THEORY
2.4 THE TRAIT APPROACHES TO PERSONALITY: ALLPORT, EYSENCK AND CATTELL
2.5 THE BIG FIVE PERSONALITY TRAIT MODEL
2.6 A COMBINED BIG FIVE PERSONALITY TRAIT CONCEPTUAL MODEL OF AN ENTREPRENEUR
2.7 CONCLUSION
CHAPTER THREE: DIAGRAMMATIC SYNOPSIS: COGNITIVE ADAPTABILITY
3.1 INTRODUCTION
3.2 SOCIAL COGNITION THEORY: ORIGIN AND EVOLUTION
3.3 COGNITION AND ENTREPRENEURSHIP
3.4 THE CONSTRUCT OF ENTREPRENEURIAL COGNITIONS CONCEPTUALISED
3.5 THE CONSTRUCT OF METACOGNITION CONCEPTUALISED
3.6 METACOGNITIVE THEORY
3.7 COGNITIVE ADAPTABILITY
3.8 A COMBINED CONCEPTUAL MODEL OF THE COGNITIVE ADAPTABILITY
OF AN ENTREPRENEUR
3.9 CONCLUSION
CHAPTER FOUR: DIAGRAMMATIC SYNOPSIS: THE RELATIONSHIP BETWEEN PERSONALITY TRAITS AND COGNITIVE ADAPTABILITY
4.1 INTRODUCTION
4.2 THE RELATIONSHIP BETWEEN PERSONALITY TRAITS AND COGNITIVE ADAPTABILITY
4.3 A COMBINED CONCEPTUAL FRAMEWORK OF THE PERSONALITY TRAITS AND COGNITIVE ADAPTABILITY OF ESTABLISHED ENTREPRENEURS
4.4 CONCLUSION
CHAPTER FIVE: DIAGRAMMATIC SYNOPSIS: RESEARCH METHODOLOGY
5.1 INTRODUCTION
5.2 THE RESEARCH PROBLEM
5.3 RESEARCH OBJECTIVES
5.4 HYPOTHESISED MODEL OF PERSONALITY TRAITS AND COGNITIVE ADAPTABILITY
5.5 VARIABLE MEASUREMENT
5.6 HYPOTHESES TESTED
5.7 RESEARCH DESIGN
5.8 DEVELOPING THE OVERALL PERSONALITY AND COGNITIVE ADAPTABILITY MEASUREMENT INSTRUMENT
5.9 MEASURES FOR BIG FIVE PERSONALITY TRAIT DIMENSIONS
5.10 PRETESTING THE MEASUREMENT INSTRUMENT
5.11 SAMPLING AND SAMPLING SIZE
5.12 DATA COLLECTION
5.13 DATA ANALYSIS DESIGN
5.14 CONCLUSION
CHAPTER SIX: DIAGRAMMATIC SYNOPSIS: RESEARCH FINDINGS
6.1 INTRODUCTION
6.2 DATA AND MEASURES
6.3 VALIDITY AND RELIABILITY OF THE MEASURING INSTRUMENT
6.4 OPERATIONAL DEFINITIONS AND NEW HYPOTHESES OF THE SUBCOMPONENTS
6.5 DESCRIPTIVE STATISTICS
6.6 STRUCTURAL EQUATION MODELLING (SEM) FOR THE FIVE PERSONALITY TRAIT DIMENSIONS
6.7 REGRESSION ANALYSIS
6.8 CONCLUSION
CHAPTER SEVEN: DIAGRAMMATIC SYNOPSIS: CONCLUSIONS AND RECOMMENDATIONS
7.1 INTRODUCTION
7.2 FINDINGS OF THE LITERATURE REVIEW: A SYNOPSIS
7.3 Research objectives revisited
7.4 CONTRIBUTION OF THE STUDY
7.5 LIMITATIONS OF THE STUDY
7.6 RECOMMENDATIONS FOR FUTURE RESEARCH
7.7 SUMMARY AND CONCLUSION .
REFERENCES
APPENDIXES
