From Heuristics to Hybrid Intelligence: AI’s Transformative Effects on Entrepreneurial Decision-Making and Opportunity Recognition

This study examines how Artificial Intelligence (AI) reshapes entrepreneurial opportunity recognition by transforming the cognitive processes by which entrepreneurs evaluate and interpret business opportunities. Rather than treating AI as purely informational aid, this study investigates how human heuristics and algorithmic biases jointly condition AI’s influence on entrepreneurial judgment and cognitive processing. This study adopted an explanatory sequential mixed-methods design. Survey data from 150 startup founders were analyzed using partial least squares structural equation modeling (PLS-SEM) to test the direct, mediating, and moderating relationships among AI use, cognitive decision-making quality, heuristics, algorithmic bias, and opportunity recognition quality. Semi-structured interviews with 22 entrepreneurs were then analyzed using the Gioia methodology to uncover the cognitive mechanisms underlying these relationships. The results show that AI use enhances opportunity recognition, both directly and indirectly, by improving the quality of cognitive decision-making. However, this effect is contingent on cognitive forces at both human and algorithmic levels. Human heuristics weaken the cognitive benefits of AI, while algorithmic biases, such as automation bias and anchoring, introduce additional distortions in the evaluation. Qualitative evidence reveals that opportunity recognition increasingly emerges from hybrid cognitive systems in which intuition, analytical reasoning, and algorithmic cues interact, sometimes reinforce, and sometimes undermine judgment. This study advances entrepreneurial cognition theory by conceptualizing algorithmic bias as a distinct cognitive mechanism and demonstrating how AI creates hybrid cognitive systems that reconfigure opportunity recognition. The findings move beyond the binary views of intuition vs. analytics and offer a multilevel explanation of when and how AI improves or distorts entrepreneurial judgment.