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In this paper, we reflect on an expanding literature that links theories of cognition and business models. Managers hold in their mind perceptual constructs or schemas of the business model. These guide the process of distinguishing between options and making choices. Those familiar with business model development will easily recognise that the perceptual construct provides only a summary of the business model, and that a more complex conceptualisation of how business model elements interact is needed. The business model is then much more than a visualisation. It is a schematic model of theorised interaction that is created, shaped, and shared over time. The underlying processes of this creation, shaping, and sharing are cognitive activities taking place at individual, organisational, and inter-organisational levels. Theories of managerial and organisational cognition are thus critical to understanding the acts of business modelling and business model innovation. Here we suggest some of the ways that business model and cognition literatures can be connected, present existing literature, and reflect on future avenues of research to explore the cognitive foundations of business modelling.

Decision-making has long been recognized as being at the core of organizational life. Yet, the cognitive mechanisms by which managers make decisions represent a critical field of exploration. In this context, business models (BMs) are cognitive representations of organizational architectures that managers use to orient their firms in the business environment. While BMs – as managerial schemas – have been extensively studied for their beneficial applications at the strategic level, scholarly attention has rarely focused on their dark side. In this chapter, we point out that BM thinking – that focuses excessively on established schemas – might narrow managerial cognition in the process of fine-tuning the current BM; in the process, opportunities for more radical BM innovation can be overlooked. We systematize March and Simon’s contribution on managerial cognition into a more comprehensive conceptual framework by integrating the perspectives of Kahneman, Baron, and Gollwitzer. The result is an epistemologically coherent framework for managerial cognition and decision-making that focuses on how managers can overcome cognitive biases that derive from a reliance on established BMs as schemas. We close this chapter with directions for further research.

University–industry collaborations are an important driver of innovation that highlights the benefits of collaborative processes across organizational boundaries. However, like in most collaborative processes, many challenges remain when trying to manage the process of knowledge sharing and interaction in university–industry partnerships. In this chapter, the authors specifically investigate how leadership as a managerial dimension facilitates collaboration within university–industry joint laboratories. The authors present an explorative and inductive case study of eight joint laboratories set up by Telecom Italia within five major Italian universities. The results show that the laboratory directors play a crucial role in providing a dynamic and socially active working environment, which is enabled through a process of sensemaking and sensegiving. The authors, moreover, find that this process plays a crucial role by shaping effective communication channels that facilitate knowledge sharing and transfer of information. The authors find that this process ultimately acts as a mediator between charismatic leadership on the individual level and distributed leadership on the collective level.

We investigate how Salesforce’s key people used analogies and metaphors during the deployment of their (then) radical business model innovation. Our analysis shows how Salesforce’s entrepreneurial team skillfully used a mix of analogies and metaphors to communicate its innovations and differentiate the company from its competitors. We also show how business model innovators can weave together analogies and metaphors to create distinct meta-narratives that elicited strong emotions and helped construct a memorable organizational identity that galvanized stakeholders around the firm’s ecosystem appeal. We conclude by discussing the implications of our findings for business model and cognition research.

A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. But this logic constrains the subsequent search for new, alternative models for other technologies later on. This logic gives rise to two behaviors that affect the implementation of Open Innovation inside organizations. The well-known Not-Invented-Here syndrome constrains the use of Outside-in Open Innovation, while a new syndrome we identify, the Fear of Looking Foolish, constrains the use of Inside-out Open Innovation. We focus particularly on the latter behavioral constraint in this chapter and present three mini-cases that demonstrate the constraints in action. We then sketch possible managerial solutions to overcome these behaviors.

Business model innovation (BMI) constitutes a priority for managers across industries, but it represents a notoriously difficult innovation, with several challenges, many of which are cognitive in nature. The received literature has variously suggested that one way to overcome challenges to BMI, including cognitive ones, and support the cognitive tasks is using visual representations. Against this background, we aim at offering a contribution to the emerging line of inquiry at the nexus between business models (BMs), cognition and visual representations. Specifically, we develop a new method for visual representation of the BM in support of simplification of the cognitive effort and neutralisation of cognitive barriers. The resulting representation – a network-based representation, anchored on the activity-system perspective and offering complementarity and centrality/periphery measures – allows to visually represent an existing BM as a network (nodes and linkages) of interdependent activities and to express information related to the degree of centrality/periphery of single activities (nodes) with respect to the rest of a BM configuration. This information, we argue, is potentially very valuable in supporting the cognitive tasks involved in business model reconfiguration (BMR). We guide the reader to progressively appreciate how the development of the proposed method for visual representation is anchored to two main characteristics of BMR, namely the discovery-driven nature of BMR and the path-dependent nature of BMR. We offer initial insights on the cognitive value of such a type of representation in relationship to the simplification of the cognitive effort and the neutralisation of cognitive barriers in BMR.

In this chapter, the authors reflect on their experience of editing the first five volumes of the book series New Horizons in Managerial and Organizational Cognition. The authors summarize some of the contributions of articles published in the series, including those comprising this fifth volume. From its beginnings as a follow-up publication of the second Frontiers in Managerial and Organizational Cognition (MOC) conference, the series has moved in several directions exploring how the field is developing, and what new applications of MOC theories and methods are being explored. The authors identify and highlight several lines of investigation in particular: work that furthers their understanding of schema and cognitive mapping, work on framing, work on identity, work on heuristics and intuition, work on emotions, and modern methodological advances, enabled by IT and other technologies.

At the level of a cognitive schema, a business model is a mental map of a firm’s value-creating, value-delivering, and value-capturing activities and the linkages between them. An important question in the study of business models as cognitive schemas is whether and how schemas differ across industry actors and whether the differences are connected to the variation observed in actual business models in the industry. This chapter examines, in particular, the ways in which business model schemas of industry insiders differ from those of industry outsiders. Using data from interviews with chief executive officers (CEOs) of 30 legal-tech firms, we graphically construct and analyze the CEOs’ schemas of important causal interdependencies between their firms’ activities. The analysis shows systematic differences between insiders and outsider CEOs’ schemas. We theorize that these differences underlie insider and outsider CEOs’ distinct approaches to opportunity recognition, expertise perception, and value framing, and have consequences for actual business model evolution in the industry.