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Sílvia Fernandes Costa, António Caetano, Arjan J. Frederiks and Susana C. Santos

Entrepreneurial cognition emphasizes the role of mental structures to explain how entrepreneurs think and act. The literature presents several perspectives on what these mental structures might be. Several studies have used the prototype perspective to explain entrepreneurial activities. Prototypes are abstract mental representations of objects or events, necessary to perform recognition and categorization processes, such as opportunity recognition. Even though prototype theory is very well rooted in cognitive psychology, there is no conceptual overview on how prototypes explain entrepreneurial activity. In this study we focus on prototype theory within entrepreneurship research, to have a deeper understanding on how these cognitive structures trigger entrepreneurial activity. A better understanding of prototype theory within entrepreneurship research, contributes to a better understanding of what prototypes are, and how prototypes can explain how entrepreneurs think and act. Therefore, in this chapter we have three main goals: (1) we aim to understand the foundations of entrepreneurial cognition within cognitive psychology; (2) to identify how prototype theory has been used within entrepreneurship research; and (3) to draw conclusions for future research on the predictors of entrepreneurial activities at a cognitive level, mainly at the opportunity recognition stage. Based on both our findings and the gaps in the literature that we identified, we present a research agenda for better understanding of the use of prototypes in entrepreneurship.