Business models and heuristics: how do they work together?

Building on cognitive theories and business model literature, the object of this paper is to analyze to what extent entrepreneurs rely on heuristics to develop business models. While recent research has referred to a cognitive perspective on business modeling, it is still unclear how the cognitive founda- tions of such modeling happens. Despite the constraining effects that management and entrepreneur- ship literature has attributed to these cognitive tools, we argue that in making sense of uncertainty, “fast and frugal” heuristics provides entrepreneurs with robust strategies to connect the dots that give rise to startups and their business models. The paper makes two main contributions. First, we introduce the heuristic of similarity into the business modeling literature. Second, through the results of a qualitative survey, we conceptualize and theorize on the cognitive activity of business modeling, presenting it as an iterative process of configuring heuristics.