One of the central concerns of the entrepreneurship field is new venture opportunity, particularly the related processes of discovery, evaluation, and exploitation (Shane & Venkataraman, 2000). While entrepreneurial opportunities are usually created by external factors, the resulting opportunities can only be transformed into an enterprise through the processes of discovery and exploitation by individuals (Venkararaman, 1997). Furthermore, only some individuals are able to discover and successfully pursue the entrepreneurial opportunities (Baron, 2004; Corbett, 2007). For this reason, the study of the individual-situation nexus is a meaningful endeavor to further understand new venture opportunities (Baron, 2004). In addition, individual mental processes or cognitive properties have been regarded as critical factors in explaining the variability of entrepreneurial behaviors (e.g., Shaver & Scott, 1991; Venkataraman, 1997; Shane & Venkataraman, 2000; Mitchell, et al., 2007; Baron, 2004; Corbett, 2007).
Entrepreneurial cognition has been defined as: "the knowledge structures that people use to make assessments, judgments, or decisions involving opportunity evaluation and venture creation and growth" (Mitchell et al, 2002, p. 91). These same authors more recently noted that the central question for research on entrepreneurial cognition is "How do entrepreneurs think?" (Mitchell et al, 2007) because this would provide much greater understanding of their subsequent decisions and actions. Given there are no optimization processes or simplistic mechanisms in discovering complex entrepreneurial opportunities (see Venkataraman, 1997 and Shane & Venkataraman, 2000 for further review), individuals' different cognitive structures play a critical role in identifying entrepreneurial opportunities. Furthermore, Busenitz et al (2003) posed a question, "... why, faced with an identified opportunity, entrepreneurs will act and non-entrepreneurs will not? (p. 299)" To answer this question, we need to look more closely at the cognitive processes which entrepreneurs and non-entrepreneurs go through in their evaluations of new venture opportunities. While the field of entrepreneurship has made much progress in this cognition-based research, there are still many unanswered 'why' and 'what' questions regarding individual differences, particularly in opportunity discovery, evaluation, and exploitation (Baron, 2004; Shane & Venkataraman, 2000).
The purpose of our study is to contribute to this stream of research by examining types of cognitive properties that foster entrepreneurial thinking; situational factors such as motivation and types of knowledge that are influential; and to test how these individual level differences and situational factors jointly influence the likelihood of entrepreneurial choice. By exploring the key factors and the cognitive processes through which ordinary people or nascent entrepreneurs make decisions when new venture opportunities are present, we hoped to better understand the whole picture of entrepreneurial processes and develop the ways to nurture entrepreneurial initiations among would-be-entrepreneurs. Also, we suggest countermeasures to remove (cognitive) barriers that hamper and inhibit entrepreneurial thinking.
The entrepreneurial process is comprised of a number of phases, and various categories have been developed to characterize them (Baron, 2007; Brockner et al., 2004; Shook et al., 2003). We include existing and widely known concepts, from cognition studies, self-efficacy (Bandura, 1997), risk perception (Simon et al., 2000), and opportunity recognition (Matlin, 2002) in the proposed model (see Figure 1). In addition, we introduce two new concepts to the model that have not been considered in the past research: cognitive multilateralism (i.e., cognitive breadth and tolerance of different ideas in problem solving) and referent criterion (i. …