ABSTRACT

Hayek's oft-neglected cognitive theory, articulated in The Sensory Order, provides a foundation for a theory of innovation that integrates cognition, experience, and the importance of freedom for the creation of entirely new conceptual categories and fundamentally innovative entrepreneurial endeavors. For Hayek, one sees only what one is prepared to see; that is, we can notice sensory and other phenomena only after we have classified the data into often-implicit abstract categories that are mediated to us physiologically. Learning takes places by using received categories while innovation takes place by creating new categories or moving data from one category to another, which is often an attempt to resolve anomalies. The new perceptual awareness required for discovery leads, in turn, to new categorizing and new perceptual horizons. Such innovation often requires not just freedom of imagination, but freedom of action, for one has to be able to try out many different perceptual possibilities.