Uncertainty, Cognition, Opportunity noticing, Discovery, Creativity, International entrepreneurship,

The philosophy and methodology of Bayesian statistics bring with it a "style of reasoning" which may inform organizational researchers as they seek to conceptualize and model managerial decision-making processes. The style of reasoning of the Bayesian approach, in which posterior probabilities of the hypothesis are rigorously and continuously updated given new data, appears to closely model the researched observed decision behavior of a very important subset of managers: innovative entrepreneurs. That is, Bayesian reasoning may serve as a model of the cognitive processes undertaken by innovative entrepreneurs as they engage in knowledge creation through a recombination of resources in response to new information from the environment (Schumpeter, 1934). Modeling disciplined intuitive implementation of Bayesian reasoning may assist researchers in building a cognitive theory of how and why innovative entrepreneurs are better at estimating the probabilities of success of newly recognized opportunities than the general public. Because innovative entrepreneurs are thought to play a very important role in the development of economic growth and productivity (Baumol, Sheshinski & Strom, 2007), a theory of their decision processes may assist organizational researchers devoted toward uncovering the here-to-fore poorly understood cognitive dynamics of the innovative entrepreneur, and may play a role in enhancing the efficacy of managerial decision behavior more generally. Keywords: Entrepreneurial Decision-Making, Bayesian CognitionThis paper focuses upon how a Bayesian approach to reasoning might supplement theory development in entrepreneurial decision-making research. More specifically, the research herein presented seeks to examine how the ontological and epistemological tenets of Bayesian reasoning may inform theory development and knowledge creation in the sub-field of organizational research devoted to conceptualization of the decision-making behavior undertaken in innovative entrepreneurial endeavors. The inductive "style of reasoning" of the Bayesian approach, when applied to understanding and developing models of the decision-making behavior of the innovative entrepreneur, may benefit organizational research devoted toward uncovering these here-to-for poorly understood cognitive dynamics. This paper proposes a Bayesian model of innovative entrepreneurial decision-making, and to highlight how understanding Bayesian reasoning may lead to insight in understanding how and why innovative entrepreneurial decision-making differs from the dynamics of usual practice in general management decision-making.