Cognitive representations of institutional change : Similarities and dissimilarities in the cognitive schema of entrepreneurs

Purpose – The purpose of this paper is to examine the cognitive factors explaining how exogenous institutional change (IC) impacts on organizational actions. Design/methodology/approach – The authors interviewed 121 Romanian entrepreneurs, 69 before and 52 after Romania's ascension to the EU and used cognitive mapping to elicit their cognitive schemas about this macro‐IC. Similarities and differences between cognitive structures are explored and the aggregated cognitive maps before and after the IC are created, in order to understand how managerial cognition changed following IC. Findings – The results show that the richness of the cognitive schemas before the IC is lower than after the IC took place. Furthermore, the entrepreneurs who framed the IC as a threat adopted isomorphic actions and reported less positive organizational outcomes as compared to the entrepreneurs that represented the IC as an opportunity. Research limitations/implications – The research described is exploratory in nature and opens new interesting research directions in the cognitive pillar of institutional theory. Moreover, a cognitive mapping technique is used to elicit and represent managerial cognition and in this way adds to the methods used in institutional research. Practical implications – The results presented in this paper help policy makers to understand that the impact of exogenous IC on organizational actions is not direct, but mediated by the cognitive representations developed by strategic decision makers. Originality/value – The paper integrates institutional theory with the work on cognition and explores how cognitive representations affect the relation between environmental pressures and organizational responses.