Exploring how entrepreneurs make decisions on the growth of their business: A cognitive perspective




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De Montfort University


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Peer reviewed


The purpose of this study was to explore how entrepreneurs, who are past the start-up stage of business, evaluate and make decisions on growth opportunities. Small business growth is a complex, dynamic and episodic phenomenon and prior research on firm growth has emphasised cross-sectional approaches, rather than view growth as a dynamic process over time. Understanding small business entrepreneurs’ cognition and behaviours when making opportunity-related decisions will show how growth decisions are made. It is still unclear what cognitive styles and knowledge structures entrepreneurs use to process and frame information for opportunity-related decision-making. A closer look at opportunity evaluation, decision-making and entrepreneurial cognition revealed fragmentation, research gaps and areas for future research recommended by key scholars. As a consequence of this, an integrated process approach was taken using these three research streams. Specifically, a cognitive style lens, as a complex construct with multiple dimensions was used for viewing opportunity-related decisions, an approach missing from the opportunity evaluation literature. Additionally, the study was conceptually underpinned by dual process theory, the cognitive experiential self-theory or CEST. A longitudinal, concurrent triangulation design was used to explore the decision-making process over five time points in a two-year period. A mixed methods approach supported the pragmatic paradigm for an exploratory study. A multiple-case strategy used a sample of 11 small manufacturing entrepreneurs, from novice to mature, with 3-30 years’ experience as owner-manager. Data was collected at each time point using semi-structured interviews and two style assessments, the CoSI and REI. Quantitative data was analysed using descriptive statistics and thematic analysis for the qualitative data. Combining interviews and psychometric questionnaires for triangulation produced robust findings. Data was used to construct cognitive maps and cognitive complexity for insight. Findings showed entrepreneurs were high on more than one style and switched between styles according to context, demonstrating styles were orthogonal. A unique finding was a synthesised, versatile style observed as a ‘mirror effect’ between the analytical and intuitive styles. Novices developed a more intuitive style over time, contingent with experience. A developing link in the novices’ mental structures showed how past experience increased cognitive complexity and connectivity. A further unique finding showed the central concept ‘Thinks it through’ in the decision process as a structural conduit or 'Hub' for both analytical and intuitive processing. Analysis suggested that cognitive complexity mediated the relationship between creative and experiential information styles and successful opportunity-related decision-making effectiveness. These unique findings show opportunity-related decisions as a dynamic, time-based process. The time-based model provided a framework for future opportunity evaluation research as a contribution to theory. Likewise, a dual process and information processing perspective has offered an alternative structure for examining opportunity evaluation. Finally, a teaching model was developed to improve metacognitive thinking and connectivity for decision-making effectiveness as a contribution to practice.





Research Institute