A selection of interesting research and articles we found recently on entrepreneurial decision making.
What do we know about entrepreneurial decision making?
Dean Shepherd and his colleagues point out that judgment and decision-making research has a long tradition in management and represents a substantial stream of research in entrepreneurship. Despite numerous reviews of this topic in the organisational behaviour, psychology, and marketing fields, reviews in the field of entrepreneurship are lacking. This absence is surprising given the extreme decision-making context faced by many entrepreneurs—such as high uncertainty, time pressure, emotionally charged and consequential extremes—and the large number of studies in the literature (602 articles in the authors’ initial screen and 156 articles in a refined search).
In this review, the authors
(1) inductively categorise the articles into decision-making topics arranged along the primary activities associated with entrepreneurship—opportunity assessment decisions, entrepreneurial entry decisions, decisions about exploiting opportunities, entrepreneurial exit decisions, heuristics and biases in the decision-making context, characteristics of the entrepreneurial decision maker, and environment as decision context;
(2) analyse each context using a general decision-making framework;
(3) review and integrate studies within and across decision-making activities; and
(4) offer a comprehensive agenda for future research. The intention is that such a review, integration and research agenda will make a valuable contribution to management scholars interested in decision making and/or entrepreneurship.
Full details are available at: Dean A. Shepherd, Trenton A. Williams and Holger Patzelt. 2015. Thinking About Entrepreneurial Decision Making: Review and Research Agenda.
Journal of Management, 41(1), 11-46.
The role of Qing (positive emotions) and Li (rationality) in Chinese entrepreneurial decision making
Yunxia Zhu considers the role of emotion (or affect) in decision making. The intellectual debates on wise entrepreneurship behaviour such as decision making tend to focus on the relationship between economic rationality and morality, while overlooking the important role emotion plays. Zhu proposes a theoretical framework based on the Confucian concepts of ren (love and compassion) and yi (righteousness or rightness) and studies their practical manifestation in qing (positive emotions) and li (rationality) for decision making.
Drawing on 32 in-depth interviews and 52 vignettes with Chinese SME entrepreneurs, Zhu found that qing (emotions) plays an essential role in decision making. Chinese entrepreneurs had to deal with the dilemma relating to qing (positive emotions) and li (rationality) holistically to reach a balanced outcome in their everyday business practices.
As a major contribution, this paper extends the study of Confucian ethics by highlighting ren-yi as an important perspective for understanding Chinese entrepreneurial decision making and also for promoting the affective dimensions for entrepreneurial ethical decision making in general.
Read more about these concepts and findings in: Yunxia Zhu. 2015. The Role of Qing (Positive Emotions) and Li (Rationality) in Chinese Entrepreneurial Decision Making: A Confucian Ren-Yi Wisdom Perspective.
Journal of Business Ethics, 126(4), 613-630.
Does decision-making rationality moderate entrepreneurial orientation and international performance?
Deligianni and colleagues examined how entrepreneurial orientation (EO) influences international performance (IP) of the firm, taking into account the moderating effect of decision-making rationality (DR) on the EO–IP association. Such an investigation is significant because it considers the interplay of strategic decision-making processes supported by the bounded rationality concept in entrepreneurship.
Drawing from a study on activities of 216 firms in the United States and United Kingdom, the evidence suggests that DR positively moderates the EO–IP association. The findings suggest that managers can improve IP by combining EO with rational (analytical) processes in their strategic decisions.
Read further in: Deligianni, I., Dimitratos, P., Petrou, A. and Aharoni, Y. 2015. Entrepreneurial Orientation and International Performance: The Moderating Effect of Decision-Making Rationality.
Journal of Small Business Management. doi: 10.1111/jsbm.12152.
Managerial impact on strategic change: review and assessment
The dynamic managerial capabilities literature has developed over the past decade to the point where a review and synthesis of relevant literature can move the scholarly conversation forward. The concept of dynamic managerial capabilities—the capabilities with which managers create, extend and modify the ways in which firms make a living—helps to explain the relationship between the quality of managerial decisions, strategic change and organisational performance. Authors Constance Helfat and Jeffrey Martin clarify theoretical constructs and their relationships, review and synthesize empirical research on the role and impact of managerial capabilities directed toward strategic change, and suggest avenues for future research.
The review begins with an overview of theoretical conceptions of dynamic managerial capabilities. Then the authors organise the remainder of the review around the three core underpinnings of dynamic managerial capabilities: managerial cognition, managerial social capital and managerial human capital.
In the review, Helfat and Martin examine evidence from studies of dynamic managerial capabilities and reinterpret evidence prior to the introduction of the dynamic managerial capabilities concept through that lens. Consistent with the dynamic managerial capabilities concept, empirical research shows that managers differ in their impact on strategic change and firm performance and that differences in managerial cognition, social capital and human capital lead to different outcomes.
More details are available at: Constance E. Helfat and Jeffrey A. Martin. 2014. Dynamic Managerial Capabilities: Review and Assessment of Managerial Impact on Strategic Change.
Journal of Management, December 11, 0149206314561301.