Entrepreneurship

Cognitive Foundations of
Entrepreneurship: Creativity and
Opportunity Recognition

Why are some successful?

Opportunities

Individuals

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Right Person, Right Place,

Right Time
Better access to crucial information
information helpful in recognizing
opportunities or formulating new
ideas
Better able to utilize informationto
combine it or interpret in ways that
reveal the opportunities overlooked
by others
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Three Key Processes

Idea generation
Creativity
Opportunity recognition

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A Cognitive Perspective

Human cognitionthe mental

processes through which we
Acquire information
Enter it into storage
Transform it
Use it to accomplish a wide range of
tasks
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Ideas
Occur when individuals use existing
knowledge they have gained (and
retained) from their experience to
generate something newthoughts
they did not have before.

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The Raw Materials

The raw materials for new ideas
and for recognizing opportunities
are present in the cognitive systems
of specific persons as a result of
their life experience.
Unique experience

Knowledge

Idea generation

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Memory
Working memoryholds limited
amount of information for brief
periods
Long-term memoryretains vast
amounts of information for long
periods
Procedural memoryautomatic
knowledge gained through practice
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Mental Frameworks
Mental scaffolds
help us to
understand new
information and to
integrate it (often
in original ways)
with information
we already
possess

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Types of Frameworks
Schemascognitive frameworks
representing our knowledge and
assumptions about specific aspects
of the world
Prototypesabstract, idealized
mental representations that capture
the essence of a category of objects

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Mental Shortcuts
Heuristicssimple rules for making
complex decisions or drawing
inferences in a rapid and seemingly
effortless manner
Availability heuristicthe more
easily we bring information to mind,
the more importance we assign to it

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Thinking Tilts
Optimistic biasexpect things to
turn out well without basis
Confirmation biasnotice, process,
and remember information that
confirms current beliefs
Illusion of controlassume that our
fate is under our control

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Creativity
Items or ideas produced are both
Novel (original, unexpected)
Appropriate or useful

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Concepts
Building blocks of creativity
Internal mental structures developed
to organize information
Categories for objects or events that
are somehow similar to each other
in certain respects

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Escaping Mental Ruts

Concepts can be stretched in
several different ways
Combination
Expansion
Analogy

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Human Intelligence

Individuals abilities to
Understand complex ideas
Adapt effectively to the world
Learn from experience
Engage in various forms of
reasoning
Overcome a wide range of
obstacles
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Kinds of Intelligence

Analytic intelligence
Creative intelligence
Practical intelligence
Social intelligence
Successful intelligence

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Successful Intelligence
Practical
Intelligence

Analytic
Intelligence

Successful
Intelligence

Success

Creative
Intelligence

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Confluence Approach

Creativity emerges from a confluence of

Intellectual abilities
Broad, rich knowledge base
Appropriate style of thinking
Personality attributes
Intrinsic, task-focused motivation
Environment supportive of creative ideas

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Broad, Rich Knowledge Base

Having varied work
experience
Having lived in many
different places
Having a broad social
network

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Opportunity Recognition
Some people are more likely to
recognize opportunities because
They have better access to certain
kinds of information
They are able to utilize the
information once they have it

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Superior Utilization of
Information
Richer and better-integrated stores
of knowledge
Higher in intelligence
Higher in practical intelligence
Higher in creativity

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Regulatory Focus Theory

Promotion focusattain positive
outcomes
Prevention focusavoid negative
outcomes
Successful entrepreneurs adopt a
mixture of these two perspectives

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Increasing Opportunity
Recognition

Build a broad, rich knowledge base

Organize your knowledge
Increase your access to information
Create connections between the
knowledge you have
Build your practical intelligence
Temper eagerness for hits with
wariness of false alarms
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