Entrepreneurial Cognition of the Business Model Construct: A Mixed Methods Study of STEM and non-STEM Entrepreneurs

Journal of Small Business Strategy 2021, Vol. 31, No. 03, 148-163 ISSN: 1081-8510 (Print) 2380-1751 (Online) ©Copyright 2021 Small Business Institute® www.jsbs.org Introduction 1University Medical Center Utrecht, Universiteitsweg 98, 3508 GA Utrecht, The Netherlands. gabikaffka@hotmail.com 2University of New Mexico, USA & LM Thapar SOM, India. ilayaraja@gmail.com 3University of Groningen, 9712 CP Groningen, The Netherlands, a.j.groen@rug.nl 4University of Amsterdam, 1012 WX Amsterdam, The Netherlands, jk@kraaijenbrink.com Entrepreneurial cognition of the business model construct: A mixed methods study of STEM and non-STEM entrepreneurs Entrepreneurial cognition, Socially situated cognition, Business model, Opportunity development, Abductive analysis APA Citation Information: Kaffka, G. A., Singaram, R., Groen, A. J., & Kraaijenbrink, J. (2021). Entrepreneurial cognition of the business model construct and the influence of founders’ education. Journal of Small Business Strategy, 31(3), 148-163. Managerial cognition literature within strategy features numerous studies that examine the cognitive influences of CEOs and top management teams on the strategy process in established firms (for reviews see Bromiley & Rau, 2016; Narayanan et al., 2011). Similarly, entrepreneurial cognition of the entrepreneurs – knowledge structures that include the cognitive scripts, schemas and processes related to new venture decision-making – plays an important role in strategy generation and execution of new ventures (Payne et al., 2005; Maron et al., 2019). Design of the initial business model (BM) is crucial to the strategy formulation of new ventures and it is certainly subject to the influence of the entrepreneurs’ cognitive processes (Morris et al., 2006; Zott & Amit, 2007). BM design and innovation led by entrepreneurs contribute significantly to the overall firm innovation which remains the bedrock for the survival and growth of these firms (Dunne et al., 2016; Ahluwalia et al., 2017; Barwinski et al., 2020). Hence, recent studies on the role of managerial cognition on BM design have called for more research attention into this subject (Foss & Saebi, 2017; Frankenberger & Sauer, 2019). According to the theoretical perspective of socially situated cognition, entrepreneurial opportunities are cocreated through the shared cognition distributed among entrepreneurs and their stakeholders (Mitchell et al., 2011; Dew, Grichnik, Mayer-Haug, Read & Brinckmann, 2015). Scholars have argued that the BM aids opportunity co-creation by acting as “the cognitive link between entrepreneurial appraisal of the opportunity and its exploitation” (George & Bock, 2011, p. 88). Similarly, Doz and Kosonen (2010, p. 371) suggest that a new venture’s BM functions as the ”cognitive structure” that provides “a theory of how to set boundaries to the firm, how to create value, and how to organize its internal structure and governance.” Taking a cognitive approach, Martins et al. (2015) showed that entrepreneurs could innovate the BMs of their firm through analogical reasoning and conceptual combinations. Building on this, we argue that entrepreneurial cognition could enable entrepreneurs to leverage the cognitive functions of the BM while designing the value creation elements of the construct as real attributes of their new venture (Massa et al., 2017). Despite the breadth of extant research on BMs Applying the theory of socially situated cognition, we study how entrepreneurs cognitively process the business model construct during the early stages of launching technology-based new ventures. Through an abductive reasoning procedure, we aggregate four underlying socially situated cognitive functions of the business model and describe how these functions facilitate opportunity development. We examine if the entrepreneur’s educational background (STEM vs non-STEM) influences their cognitive processing of the construct. We discuss the contribution of our study to the literature on managerial cognition, business models, and to practice in detail. Gabi A. Kaffka1, Raja Singaram2, Aard J. Groen3, Jeroen Kraaijenbrink4