Introduction and Context

Abstract

Working as an organizational psychologist in academia and practice, I became increasingly aware of the effect of individual differences in thinking and perception, the impact on interrelationships, and the subsequent influence on growth and performance of the organization. However, I found that the differences in cognitive or structural complexity (Kelly 1955), referred to in psychological theory, did not explicitly inhibit organizational growth and performance in research or in practice. In addition, business and academic literature centered on underperforming or fast-growth organizations, with the result that the interaction of entrepreneurial and senior manager cognition was largely ignored in established entrepreneurial organizations in which the founders were still involved as strategic decision makers with the senior management team. My grounding in classic organizational theory such as lifecycle growth models, psychological contract, systems thinking, and traditional models of management and leadership, provided an intellectual context in which I started to consider the above issues in the entrepreneurship environment. In doing this I was able to bring together my knowledge and experience in organizational development theory (Senge 1990; Handy 1995) and cognitive psychological theory to provide insight into the phenomenon. I began to extend my reading to include how interrelationships and information flow link individuals within the organization, and why it forms an integral aspect of organizational growth and performance.

Glossary of Terms

A Glossary of terms is provided for consistency and clarity because many concepts referenced have various definitions and interpretations. The following are presented in alphabetical order.

Adaptive Capacity

 The ability of an organization to adapt when the system in which it operates is changing.

Absorptive Capacity

 A firm’s ability to recognize the value of new information, assimilate it, and apply it to commercial ends which is increased by having prior knowledge.

Causal Ambiguity

 The firm cannot determine the causes of performance due to complexity, tacit information, or complex interactions.

Cognition

 Cognition is defined as the transformation, reduction, elaboration, storage, and recovery of information (Neisser 1967). The use of the phrase ‘entrepreneurial cognition’ refers to the mental representations or schemas that entrepreneurs use to represent new and existing information, decision-making, and opportunity recognition.

Cognitive Duality

 The ability of an individual to use both short cut mental representations and linear causal reasoning when making a decision or evaluating an opportunity.

Continuous Growth

 For the purposes of this study, the concept of established entrepreneurial organizations as continuous-growth organizations is derived from the lifecycle and stage literature (Achtenhagen 2010, Penrose).

Entrepreneur

 The use of the term is consistent with Schumpeter (1934) definition as the founder of a new business and innovator, drawing a distinction between managers and entrepreneurs.

Entrepreneurial Process

 The process approach used by Sarasvathy (2001, 2008) to study entrepreneurial activity captures the interaction between entrepreneurial cognition and senior manager perception in the context of the organization.

Established Organizations

 Established entrepreneurial organizations are regarded as continuous-growth organizations in excess of ten years and are differentiated from early or high-growth companies (Achtenhagen et al. 2010) in lifecycle and stage models.

Explicit Knowledge

 Quantifiable and relatively easily transferred and systematically communicated between individuals. It can be captured and is sometimes documented.

Gestalt Psychology

 The whole is more than the sum of its parts. Developed by German Gestalt psychologists referring to patterns that cannot be reduced.

Growth

 A significant factor in the presentation of the pattern of growth in this book, is that ongoing growth is defined by the established entrepreneurial organizations. These definitions, by the founder and management team, are considered as contributing to the strategic direction of each business reflecting heterogeneity. In addition, but not central to the empirical data presented, is the traditional assumptions and definitions of growth drawn from academic literature to provide an academic framework.

Imprinting

 In line with prior work in psychology, imprinting is time-sensitive (i.e., occurs at sensitive stages of life) learning process that initiates a development trajectory (i.e., produces persistent outcomes).

Interplay

 For the purposes of this study the words interplay or interaction are used interchangeably to describe the reciprocal action between the entrepreneur and senior managers.

Narratives

 Narratives are constructed stories and accounts of events that are shared to convey meaning between individuals.

Ongoing

 When concepts such as cognitive processes, interrelationships and growth and/or behavior occurs during a given period of time, or stops and occurs again.

Organizational Climate

 Shared perceptions of practices, procedures and policies among an organization’s actors with regard to these fundamental properties. (Reichers and Schneider 1990)

Paradox

 Paradox is used here as a set of interrelated concepts that exist at the same time, but persist over a period of time and contradict each other.

Phenomena

 The phenomena in this work is the observable interrelationship between the entrepreneur and senior management over a period of the investigation.

Tacit Knowledge

 Socially and culturally specific knowledge that resides and is stored within individuals. Being understood without openly expressing your thoughts.

Temporal Facets

 Time is given theoretical meaning in this work by defining the points within. There are several examples in the text that reflect the development of changing interrelationship patterns over time.