cognitive theory gp2
TRANSCRIPT
-
7/31/2019 Cognitive Theory Gp2
1/17
BY GROUP 2 ANAND
ANUDEEP AJ IT
SREE HARISH
SAGAR
Using Cognitive Theory To Explain
Entrepreneurial Risk-takingLesllie E Palich & D. Ray Bagby
-
7/31/2019 Cognitive Theory Gp2
2/17
Introduction
SCHUMPTER 1973KIRZNER 1973KNIGHT 1921
CANTILLION 1755GOVERNMENTSMIXED OPINIONS
COGNITIVE PROCESSESDECISION DIMENSIONSSPECIFIC HYPOTHESES
-
7/31/2019 Cognitive Theory Gp2
3/17
Categorization Theory
Acknowledges the power of cognitive heuristics toexplain human behavior & decision making.Categorization proves useful by allowing for efficient
storage of information. Assessments are likely to be similarly skewed ordistorted.
-
7/31/2019 Cognitive Theory Gp2
4/17
Entrepreneurs and Cognitive Process
Entrepreneurs are risk takers.They are more optimistic in their assessments of business situations.
Categorization by entrepreneurs and nonentrepreneurs.
-
7/31/2019 Cognitive Theory Gp2
5/17
Decision Dimensions
SWOT analysis
Provide a summary of business situations
Measure for Optimism/Pessimism.
Strength Weakness
Opportunities Threats
-
7/31/2019 Cognitive Theory Gp2
6/17
Specific Hypotheses
There will be no difference between in risk propensity between entrepreneurs and non entrepreneurs
H1 When presented with identical situations,
entrepreneurs will categorize them as having moreStrengths versus Weakness than non entrepreneursH2 When presented with identical situations,
entrepreneurs will categorize them as having moreopportunities versus threats than non entrepreneurs.
H3 When presented with identical situations,
entrepreneurs will categorize them as having morepotential for gain versus loss than non entrepreneursH4
-
7/31/2019 Cognitive Theory Gp2
7/17
Methods
Subjects
Random sample :548
members.Four pagequestionnaire withcover letter .
Non response.148 membersresponded out of 548(27%).
Scenario development
Stimuli consisted
of 3 scenario
Technological
developments
Changes incompetitive
environment
Trendstowards
internationalization
-
7/31/2019 Cognitive Theory Gp2
8/17
Measures
2 fromfaculty of agraduate business
school
1 frompractitioner
highly familiar withentrepreneurs and firms
Panel of 3entrepreneu
rshipexperts
-
7/31/2019 Cognitive Theory Gp2
9/17
Cont..
Panel members assign subject in 2 groups accordingto responses to 8 survey questions that capturedinformation e.g.
Founding new ventures .New innovationsRapid growthHigh profitability.Estimations of revenue growth.
-
7/31/2019 Cognitive Theory Gp2
10/17
Risk Propensity
Variables Mean S.D 1 2 3 4
Group 1.62 .49 - - - -
Risk Propensity
5.84 .92 -0.04
Strengths/ weakness
1.09 1.29 -0.25 0.14
Opportunities/threat
1.45 1.71 -0.20 0.11 0.23
Improve/deteriorates 1.07 1.31 -0.38 0.10 0.68 .46
-
7/31/2019 Cognitive Theory Gp2
11/17
Results of ANOVA comparing Risk Propensity
Group N Mean Risk Propensity
Entrepreneurs 35 5.89
Nonentrepreneurs 57 5.81
F 0.16 NS
-
7/31/2019 Cognitive Theory Gp2
12/17
Results of Multivariate and Univariate Analysis
Variables N MeanScores
WilkesLambda
F R square
Multivariate Model 0.86 4.79
Strengths/weakness 5.75 0.06
Entrepreneurs 35 1.48Nonentrepreneurs 55 0.84
Opportunities/Threats 3.80 0.04
Entrepreneurs 35 1.89
Nonentrepreneurs 55 1.18Improve/Deteriorate 14.58 0.14
Entrepreneurs 35 1.71
Nonentrepreneurs 55 0.67
-
7/31/2019 Cognitive Theory Gp2
13/17
Discussion
Entrepreneur is described as the risk propensity orrisk taking ability of an unique individual. According to cognitive theory entrepreneur actually do not take risk rather they tend to categorize the business situations by their schema accessibility (rose-colored glasses).Two condition necessary to support theory of entrepreneurial perception
Doesn't report greater risk propensity than their non-entrepreneur counterpartsMore optimistic cognitive structure
-
7/31/2019 Cognitive Theory Gp2
14/17
Implications
Lord and Maher 1990 stated that people do use simplified cognitiveprocess when they form perception.Categorization often lead to serious distortions in processing of information. This leads to two potential biases
Excessive optimism (by entrepreneur)Pessimism (by non-entrepreneur)
When trained to identify critical dimensions and important attributesin a business decision, both entrepreneurs and non-entrepreneurs may be alike
Finally systematic differences in cognitive process helps to distinguishhigh growth entrepreneurs from those who are interested in lifestyleenterprises. Thus a small business owners can identify opportunities
-
7/31/2019 Cognitive Theory Gp2
15/17
Limitations
Heuristics such as availability, representativeness were not considered.Response rate was less than ideal
Sample is limited to certain geographical areaThe human perceptions are prone to distortion dueto cognitive limitation of the observers. Hence it isimpossible to get the SWOT for future performance.Hence researchers cannot know certain quality of anindividual
-
7/31/2019 Cognitive Theory Gp2
16/17
Future research
Cognition affects entrepreneurship. Experience play a vital role in decision making but still questions like,how an entrepreneur adjust his decision frames?, Dosuccess and failure impact cognitive process?Remains un answered paving way for future research
-
7/31/2019 Cognitive Theory Gp2
17/17
Thank You