Conference Programme

Research on entrepreneurial cognition assumes that greater interpretive capacity (IC) reduces uncertainty and promotes business ownership. This expectation, we argue, holds only when uncertainty is informational and yields to additional interpretation. When prescriptions across policy domains are misaligned, a condition we term residual institutional ambiguity (RIA) and measure as state-level entropy in enforcement, integration, and benefits regimes, additional interpretation reveals that prescriptions across domains contradict, and coherent expectations cannot be constructed. This matters especially for business ownership, which requires sustained multi-domain engagement and forecloses selective decoupling. High-IC actors rationally defer commitment, a pattern we term competence-induced caution. Dense co-ethnic communities independently compress IC returns by generating collective interpretations of institutional conditions that partially substitute for individual judgment. Using 2001–2020 ACS microdata on immigrant business ownership across U.S. states, we find that the positive association between IC and ownership attenuates as cross-domain contradiction increases, and co-ethnic density independently compresses IC returns. We contribute to entrepreneurial cognition and institutional theory by distinguishing informational uncertainty from specifying a boundary condition on the view that institutional contradictions are generative, and recasting dense co-ethnic communities as collective interpretive systems that compress returns to individual interpretive capacity.