Changing cognitive frames - changing organizational forms: an entrepreneurial theory of organizational development

Abstract

This paper discusses the notion of development in firm organizations on the basis of a comparison with ontogenetic phenomena in nature and offers a behavioral foundation that highlights in particular the impact of bounded rationality, cognition and social learning. On this basis the paper explores the role of entrepreneurship and its cognitive underpinnings, particularly with regard to the nucleus (multi-person) firm, i.e. a newly started entrepreneurial business. If the entrepreneurial venture is successful and grows, the increasing business volume requires that the firm organization also be expanded. Its size then sooner or later reaches a stage where the cognitive underpinnings of the firm change qualitatively in a way that forces the firm into major restructuring. At this point developmental paths can branch off in quite diverse directions, some of which are briefly highlighted.