Entrepreneurial Strategic Decision‐Making: A Cognitive Perspective

Citation

Douglas, D. (2009), "Entrepreneurial Strategic Decision‐Making: A Cognitive Perspective", International Journal of Entrepreneurial Behavior & Research, Vol. 15 No. 5, pp. 521-524. https://doi.org/10.1108/13552550910983077

Interest in human cognition can be traced back to classical Greek scholars and has held prominence in the field of psychology for many‐a‐year. Subsequently the cognitions associated with strategic decision‐making (SDM) has seen a steady increase in attention by researchers from within the broad field of business and management. Within this domain, there has also been a growing number of enterprise‐related journal outputs over the last couple of decades that have focused on the concept of entrepreneurial cognition. Yet few so far have attempted such a purposeful anthology as has been undertaken in this book. Targeted at undergraduates and academics in the field of entrepreneurship, Entrepreneurial Strategic Decision‐Making: A Cognitive Perspective, co‐edited by Patrick A.M. Vermeulen and Petru L. Curşeu (both from Tilburg University, The Netherlands), brings together a collection of authors' works that are evidently placed within the small‐and‐medium‐sized enterprise domain. Drawing from eleven other colleagues' research, along with that of the editors, their stated aim is to “fill a gap in the entrepreneurship cognition literature”. It explores factors that appear to influence entrepreneurial strategic decisions by means of a “dual process” cognitive theoretical framework. Following a short introductory chapter on entrepreneurial strategic decision‐making (ESDM) by Vermeulen and Curşeu, where they introduce the context of SMEs and entrepreneurs' latent applications of cognition to strategic decision‐making; the book's 11 subsequent chapters are assigned to one of two sections: Part One, “Overview of the literature” (Chapters 2‐4) and Part Two, “Empirical studies” (Chapters 5‐12). A short description of each of the 11 chapters follows.

Opening the literature review section, chapter 2, “The Decision‐making entrepreneur: a literature review” (Petra Gibcus, Patrick A.M. Vermeulen and Elissaveta Radulova), the authors review so‐called rational approaches to decision‐making. They also introduce a strategic framework for decision‐making, advancing a triad of components: the entrepreneur, the environment and the decision‐making process. In chapter 3, “The psychology of entrepreneurial strategic decisions” (Petru L. Curşeu, Patrick A.M. Vermeulen and René M. Bakker), the authors address psychological perspectives on decision‐making. Personal psychological aspects of the decision maker are considered, including that of heuristics, biases and human cognitive emotions that may have an affect on entrepreneurial decision‐making processes. Finally the literature review is concluded with chapter 4, “The role of cognitive complexity in entrepreneurial strategic decision‐making” (Petru L. Curşeu). This review introduces the notion of cognitive complexity and its involvement in the processes of entrepreneurial strategic decision‐making. A consideration of methodologies proffers the cognitive mapping approach as a stated “valid technique” for eliciting and representing human cognitions and, in this case, entrepreneurs' cognitive complexities.

The empirical section starts with chapter 5, “Strategic decision‐making processes in SMEs: an exploratory study” (Petru Gibcus and Peter van Hoesel). This chapter presents findings from an inductively based qualitative study that the authors claim reveals the processes of decision‐making by the entrepreneurs sampled. A three‐stage process that also highlights two distinctive “decision moments” is presented. From this a set of hypotheses is advanced. Chapter 6, “Entrepreneurial decision styles and cognition in SMEs” (Gerardus J.M. Lucas, Patrick A.M. Vermeulen and Petru L. Curşeu). Here the authors explore the cognitive dimensions of the decision‐making process. Based on Gibcus et al.'s (2008) taxonomy of five entrepreneurial types (“Daredevils”, “Lone Rangers”, “Doubtful Minds”, “Informers Friends'” and “Busy Bees” – as introduced in chapter 2) the authors contend that different types of entrepreneurs apply different cognitive strategies to their decision‐making. Chapter 7, “Entrepreneurial decision‐makers and the use of biases and heuristics” (Marijn J.J. de Kort and Patrick A.M. Vermeulen). Following on from the last chapter on types of entrepreneurs, this chapter advances how different entrepreneurial types use biases and heuristics. Particularly that of the overconfidence bias and the representative heuristic is singled out for attention when considering entrepreneurial strategic decision‐making. Chapter 8, “Risk, uncertainty and stakeholder involvement in entrepreneurial decision‐making” (Jaap van den Elshout and Patrick A.M. Vermeulen). The role of stakeholders as mediators in strategic decision‐making is considered within this chapter. Their involvement in between notions of risk and uncertainty on the one‐hand and the perceived (and eventual real) entrepreneurial strategic decision‐making outcomes on the other‐hand is explored.

In chapter 9, “Entrepreneurial experience and innovation: the mediating role of cognitive complexity” (Petru L. Curşeu and Dinie Louwers), the authors introduce findings from two empirical studies that explored the notion of cognitive complexity as a mediating role in strategic decision‐making. Demographic factors attributed to the sample entrepreneurs are considered against the outcomes of their strategic decision‐making. The authors also consider the introduction of innovation as another mediating construct within demographic milieu. Again, as with earlier authors, the potentially detrimental role that heuristics and biases may play in decision‐making is considered within notions of cognitive complexity theories. Chapter 10, “Social capital, cognitive complexity and the innovative performance of SMEs” (Daniëlle G.W.M. van Gestel). Within this chapter the author proffer the positive influences that so called “social capital” can have on cognitive complexity and entrepreneurial decision‐making processes. This is further explored for the effects of social capital on the innovative performance of small‐and‐medium‐sized enterprises. Chapter 11, “Cognitive complexity, industry dynamism and risk taking in entrepreneurial decision‐making” (Sjoerd Bosgra). This concluding “empirical” chapter concentrates on the moderating role “industry dynamism” and change may have in relation to both cognitive complexity and that of entrepreneurial strategic decision‐making, especially under conditions of risk.

In the final chapter of the book (chapter 12) “Conclusions: an outline of ESDM research” (Petru L. Curşeu and Patrick A.M. Vermeulen), the editors review the previous chapters' contributions. They put forward nine “key” issues explored by authors within the body of the text. They range from questioning whether entrepreneurial strategic decision‐making is a rational process and whether it is similar to that found in large companies – through to the notion of a unified ESDM theory and its integrative ability to incorporate diverse factors such as human emotion, information processing and motivational attributes.

Little purpose would be served in singling‐out any one chapter's contribution for praise or critique over that of any other. Overall the contributions from the scholars has, as I stated from the onset, offered a constructive collection of academic works advancing the notion of entrepreneurial strategic decision‐making. If one were to critique the book in its entirety – there are two features that would benefit from further elaboration and justification. The first is on the book's core focus and the second is on methodological approaches. The focus of the book is strategic decision‐making by entrepreneurs within the context of SMEs. This perhaps does not always appear central to the overarching themes emergent from the contributions – and perhaps, nor ought it? Further clarity of why strategy, as a corporate‐cognitive activity, is at the core of the book's focus could be useful. Do small business entrepreneurs, for example, solely engage in strategic thinking and decision‐making as they go about their lives in sustaining and conceivably developing their enterprises? From some aspects of the findings reported, insight into entrepreneurs' decision‐making per se is advanced. This in itself makes a contribution to better understanding of the processes by which entrepreneurs go about making “entrepreneurial” decisions, which is undoubtedly insightful, be it either at a strategic level or, more commonly, not.

On the issue of methodology, one is not questioning the efficacy of the qualitative approach underpinning the collective works of the authors, but maybe they could be further justified both in terms of their selection and application. The predominant elicitation and analytical approaches applied are those of interviews and cognitive mapping. A respondent's dialogue can often give insight into the windows of a person's mind, even if arguably somewhat opaquely. However, some concluded results emanating from the application of interviews, even when of a semi‐structured nature, would benefit from further justification. Talking the reader through examples of the processes of interview data elicitation that culminated in viable and reliable conclusions could enhance some of the research presented.

Regarding the application of cognitive mapping, benefit would have been gained from its justification over that of other cognition‐centred methods (for example: cognitive task analysis, critical incident, repertory grid, verbal protocol analysis, etc). There is perhaps an over‐acceptance of the validity of cognitive mapping, and whilst cognitive‐causal mapping has been of interest within the social‐science research community for over 30 years, a more critical appraisal of its limitations may have been helpful. For example, one source that is referenced in its defence (Hodgkinson and Clarkson, 2005), also state the limitations to‐date of such methods when beset with the dilemmas of attempting to capture anything other than “… the essence of actors” thoughts and belief systems' (emphasis in original) (Hodgkinson and Clarkson, 2005, p. 6). Thus a realistic evaluation of what can be adjudged from such mapping techniques may have enhanced the validity of argument put forward. Finally, as a corollary to this methodology critique, a consideration of a multi‐modalities, or even a mixed‐methods approaches, may have offered further credence to the often single method approaches described within the text.

In summary, this book is a commendable source of reference for entrepreneurship researchers. It offers insight into a number of focused research accounts that may assist other researchers in their entrepreneurship research proposals and execution. Whilst the individual research accounts and their subsequent findings do not appear to offer anything particularly revelatory to the field, their collective presentation conveys some ideas for future research direction in furthering the entrepreneurship agenda. Commanding a price of around £65.00 for 245 pages of actual text makes it a somewhat expensive purchase for an average undergraduate student. Nevertheless the literature review section (chapters 2‐4) would be of particular value to such early scholars of the field. The book is highly recommended for both postgraduate entrepreneurship students and would be worthy of filling a space on any active entrepreneurship researcher's bookshelf.