Metacognition and entrepreneurial action: The mediating role of a strategic mindset on promoting effort and innovative behavior in frugal entrepreneurs

This study tests a situated metacognitive model of entrepreneurial action to highlight how action (or inaction) during the entrepreneurial process is influenced by both individual traits and one's metacognitive ability, namely one's strategic mindset. Integrating theory on resourcefulness and metacognition, we show how entrepreneurs who are more frugal tend to engage in less action in developing their new venture (i.e., enacting fewer innovative behaviors and putting forth less effort) as compared to less frugal entrepreneurs. However, we explain that this direct (negative) relationship is mediated by one's strategic mindset, such that the indirect effect of frugality on both innovative behavior and level of effort enacted towards one's new venture is positive (rather than negative). Overall, this study extends the construct of strategic mindset to the entrepreneurship literature and highlights the crucial role that metacognition can play regarding one's socio-cognitive decision-making process and subsequent entrepreneurial behaviors. •Extends and validates the construct of strategic mindset to entrepreneurship.•Highlights the downside to frugality in entrepreneurial contexts.•Frugality is negatively related to effort and innovative behaviors.•Strategic mindset is positively related to effort and innovative behaviors.•Through strategic mindset, the effect of frugality on effort and innovative behavior is positive.