Linking Experience to Intuition and Cognitive Versatility in New Venture Ideation: A Dual‐Process Perspective

Abstract

As many high-profile business leaders purport to make decisions based on gut feelings, a growing number of management scholars are seeking to explain how leaders use intuition in organizational settings. In line with dual-process theories, management scholars argue that the most effective decision makers are cognitively versatile, which means that they are able to 'switch cognitive gears' between intuition and analysis and, more importantly, that they are able to use both types of processing at high levels. Although this has important implications, the actual use of intuition as well as cognitive versatility have received limited scholarly attention. Motivated by the desire to address this gap, we pose the following research question: To what extent is experience associated with a) intuition and b) cognitive versatility, and with what effects? We consider the influence of domain-specific experience because this is considered to be a prerequisite for intuition, and we explore the effects in the context of new venture ideation which is a precursor to and the lifeblood of entrepreneurial action, not only for founders of new ventures but also for managers of existing organizations who seek to drive innovation and be entrepreneurial. We build on insights from the dual-process Cognitive-Experiential Self-Theory, as well as the literature on managerial and entrepreneurial intuition, to develop a conceptual model, which we test on data collected from 74 technology-entrepreneurs via think-aloud protocol analysis and an online survey. We find that experienced entrepreneurs are able to use both intuition and analysis extensively during new venture ideation, and that the use of intuition is most effective for new venture ideation when used together with analysis -both at high levels -in a cognitively versatile strategy.

The Heuristics and Biases of Top Managers: Past, Present, and Future

“…This research contributes to the literature on dual‐process theory in management studies by showing that prior entrepreneurial experience in a given domain enhances the ability of entrepreneurs to make effective use of intuition and analysis in concert, thus enabling them to generate more and better quality (i.e., more innovative) new venture ideas than novices. Baldacchino et al's (2023) findings extend earlier work suggesting that experience facilitates the development and deployment of context‐dependent heuristics that aid decision making (Day and Lord, 1992), effectively turning them into performance‐enhancing managerial capabilities, rather than detrimental rules of thumb (Maitland and Sammartino, 2015), as commonly viewed by heuristics and biases researchers.…”

“…In this special issue, the study of Baldacchino et al (2023) builds on the insights of a prominent parallel‐competitive dual‐process theory — Epstein's cognitive‐experiential self‐theory (Epstein, 1994; Epstein and Pacini, 1999) — in conjunction with the growing literature on managerial and entrepreneurial intuition. Based on a think‐aloud protocol analysis and accompanying survey of 74 technology entrepreneurs, Baldacchino et al (2023) find that, in the process of new venture creation, experienced technology entrepreneurs employ a combination of intuitive and analytical information processing strategies, extensively, in a cognitively versatile manner, switching back and forth as necessary.…”

“…In this special issue, the study of Baldacchino et al (2023) builds on the insights of a prominent parallel‐competitive dual‐process theory — Epstein's cognitive‐experiential self‐theory (Epstein, 1994; Epstein and Pacini, 1999) — in conjunction with the growing literature on managerial and entrepreneurial intuition. Based on a think‐aloud protocol analysis and accompanying survey of 74 technology entrepreneurs, Baldacchino et al (2023) find that, in the process of new venture creation, experienced technology entrepreneurs employ a combination of intuitive and analytical information processing strategies, extensively, in a cognitively versatile manner, switching back and forth as necessary. This research contributes to the literature on dual‐process theory in management studies by showing that prior entrepreneurial experience in a given domain enhances the ability of entrepreneurs to make effective use of intuition and analysis in concert, thus enabling them to generate more and better quality (i.e., more innovative) new venture ideas than novices.…”

Cognition in Human Resource Allocation for Digital Product Creation

“…- [11] Many business leaders, including Elon Musk and Richard Branson, publicly emphasized the importance of intuition in making some of their most fundamental business decisions [12] [13]. Management scholars argue that strategic decision-makingbusiness decisions by managers to achieve and sustain competitive advantage [14] relies on intuitive and rational cognition [8] [15]. Intuitive cognition is fast, automatic, and non-conscious, e.g., jumping away from a car that would hit us [15].…”

“…Scholarly attention has delved into the involvement of intuitive and rational processes in business decisions. Prior research has shown that some business contexts allow combining these tworeferred to as cognitive versatility [8] more easily than others. For example, negotiations between rational, data-driven engineers and intuitive, subjective designers in the design evaluation highlighted alignment challenges [9] [10].…”