COMSATS Institute of Information Technology Department Of Management Sciences Lahore

An Entrepreneurial decision process model describing opportunity recognition.

Submitted To: Shahzad Gafoor

Submitted by: Ahmed Aitsam BBA-FA08-005

An Entrepreneurial decision process model describing opportunity recognition.

This paper is about how an entrepreneur took a decision. And what are the traits by which he differs from others. And what are the unique capabilities that help him to grab opportunity. This will expand our knowledge towards information processing framework of entrepreneur (I-Pe) that maps out entrepreneurial opportunity recognition process. This information processing framework of entrepreneur explains that hoe various entrepreneurial needs and attitudes as well as entrepreneurial motivator. How an entrepreneur process opportunity related information in order to reach accepts or reject of potential opportunity. An entrepreneur Bill Day (winner of 2000 Ernst and young entrepreneur of the year award in New Zealand). He is owner of sea works a new Zealand based marine contractor firm. Once he interviewed about his failures. He explains many with humor. But he also declare himself a role model in succes side. This interview tells the ability to bounce back from failures and Bill day's psychological characteristics play important role in business success.

Entrepreneurial cognitive process and culture:

A research demonstrated that entrepreneur compared to non-entrepreneur have distinct cognition. This research by "Mitchell et al" finding suggest that => There are similarities in venture creation decision process across cultures. =>Entrepreneurs seek and diagnose opportunities and then access required resources to exploit it. Another research of "Wright et al" describe entrepreneurial cognition as more extensive use of heuristics(ways of enhancing the discovery of information) and individual belief that impact on decision making. This contrast with more systematic and structurally coordinated managerial decision making. Mitchell attempts to isolate psychographic or demographic characteristics that are common or unique to all entrepreneurs have generally met with failures.

Information processing:
In order to understand behavior and how people structure their decision, psychologists have number of frameworks. In I-P framework it is believed t*hat cognition involves only a few basic cognitive processes such as recognition, categorization, and association and the information flows can be modeled. One particular group terms "young connectionist upstarts". Searle relates following points. =>Humans have variety of ways of accessing features of world to themselves. This includes perception, thought, language, belief etc. =>people hold such beliefs that how things in reality. To extent they succeed or fail. They are said o be true or false. =>true representation of reality are influenced by number of cultural, economical and psychological factors.

An entrepreneurial cognitive and decision process model:

"Wright et al" argue that entrepreneurial cognition refers to more extensive use of entrepreneurs of heuristics and individual beliefs that impact on decision making. And contrast with managerial systematic decision making and also entrepreneur decisions are influenced by their individual beliefs and values. Heuristics are time saving and mental shortcuts that reduce complex judgment to simple rule of thumb. Condition for which people choose heuristics are (1) when there is no time for lengthy analysis. (2) When there is information overload. (3) When there is little information available. And also some other factors like emotions and biases. For example in the

case of Bill day fun element considered to be more important and issue of overcoming a challenge is driving factor. The need of innovation is also a recurring element. Decisions are often filter through attitudes, belief and values. Filtering of information that conflicts with preconceptions may result in poor assessment of risk. Intrinsic motivation is crucial element for creative behavior such as exited, interested and challenged by work task. And in contrast extrinsic motivation such as reward and competition. And some psychological factors are also include like intelligent cognition requires activation of perception, memory, attention, motivation and learning, none of which can be studied in isolation.

Conclusion:
This paper has identified cognitive elements, filters, amplifiers. Need and psychological mechanism driving successful entrepreneur decision behavior. And give a clear understanding of opportunity seeking and recognition process. Motivators intrinsic, extrinsic and psychological factors. It explains how manager differs from others. The entrepreneur is free to act consistently with the need of information. The attitudes, the hunger for generating opportunity related information cues, and the manner in which they process and act upon such information that stimulates their intrinsic motivational triggers.