The role of xperience on techno-ntrepreneurs’ ecision making iases


Pouria Nouri, Behrooz Jamali and Ehsan Ghasemi


Entrepreneurs are the driving force behind the prospect and growth of the societies. Sound and wise decisions pave the way for them to carry out these highly important functions. Entrepreneurs are to discover and exploit opportunities. Therefore, they must gather sufficient and pertinent information. Entrepreneurs, like most human beings face complex and ambiguous decision-making situations, not to mention their lack of time and source to gather and process the data. Under these circumstances, entrepreneurs are prone making biases decisions. There are many reasons identified for this entrepreneurial decision making biases, such as the high cost of rational decision making, limitations in information processing, differences in their styles and procedures, or information overload, environmental complexity, environmental uncertainty. These biases are neither totally harmful nor completely useful and have to be seen as natural human characteristics. What makes entrepreneurial decision-making biases important is their effects on the decisions and thus the outcome of the enterprises. Entrepreneurial decision-making biases, deliberate or unintentional can seal the fate of the enterprises, therefore studying them meticulously is crucial. Literature has shown that experience could be an effective factor in decision-making biases. In this paper, we try to find out the impact of experience in Iranian high tech entrepreneurs’ major decision-making biases by a qualitative approach. Finally, it was concluded that experience is influential in shaping overconfidence bias.


DOI: j.msl.2012.06.026

Keywords: Entrepreneurship ,Entrepreneurial decision making Biases ,Overconfidence ,Qualitative study

How to cite this paper:

Nouri, P., Jamali, B & Ghasemi, E. (2012). The role of xperience on techno-ntrepreneurs’ ecision making iases.Management Science Letters, 2(6), 1957-1964.


References

Abelson, R.P., & Levi, A. (1985). Decision-making and decision theory. In G. Lindzey and E.

Aldrich, H.E., & Zimmer, C. (1986). Entrepreneurship through social networks. In D.L. Sexton Publishing, 3-23.

Bazerman, M. (1994). Judgment in Managerial Decision Making. Wiley Publications, New York.

Baron, R. A. (1998). Cognitive mechanism in entrepreneurship: Why and when entrepreneurs think differently than other people. Journal of Business Venturing, 13, 275-294.

Bobocel, D. R., & Meyer, J. P. (1994). Escalating commitment to a failing course of action: Separating the role of choice and justification. Journal of Applied Psychology, 79(3), 360–363.

Busenitz, L.W, & Barney, J.B. (1997). Differences between entrepreneurs and managers in large organizations: biases and heuristics in strategic decision–making. Journal of Business Venturing, 12, 9-30.

Cooper, A.C, Woo, C. Y., & Dunkelberg, W.C. (1988). Entrepreneurs' perceived chances for success. Journal of Business venturing, 3(2), 97-108.

Forbes, D.P. (2005). Are some entrepreneurs more over confident than others? Journal of Business Venturing, 20(5), 623-640.

Geletkanycz, M.A., & Blacks, B. (2001). Bounded by the past experienced based effects on commitment to strategic status quo. Journal of Management, (27) 3-21.

Gilbert, D.T. (1992). Blurry words and fuzzy deeds: The attribution of obscure behavior. Journal of Personality and Social Psychology, 62(1), 18-25.

Kahneman, D., & Lovallo, D. (1993). Timid choices and bold forecasts: A cognitive perspective on risk – taking. Management science, 39 (1), 17-31.

Manimala, M.J. (1992). Entrepreneurial heuristics: a comparison between high PI and low PI venture. Journal of Business Venturing, 7(6), 477 – 504.

Palich, L., & Bagby, D. (1995). Using Cognitive theory to explain entrepreneurial risk – talking: challenging conventional wisdom. Journal of Business Venturing, 10(6), 425 – 438.

Schwenk, C. (1985). Management illusions and biases, their impact on strategic decisions. Long Range Planning, 18(5), 74-80.

Shepherd, D.A., Zacharakis, A., & Baron, R. A. (2003). VC'S decision process evidence suggesting more experience may not always be better. Journal of Business venturing, 18(3), 381-401.

Simon, M., Hougton, M., & Aquino, K. (1999). Cognitive Biases Risk perception and venture formation: How individuals decide to start companies. Journal of Business Venturing, 15, 113- 134.

Simon, M., & Houghton, S. (2003). The relationship between overconfidence and the introduction of risky products: evidence from a field study. Academy of Management Journal, 46(2), 139- 150.

Taylor (1975). Age and experience as determinants of managerial information processing and decision making performance. Academy of Management Journal , 18(1), 74-81

Wells, W.A. (1974). Venture Capital Decision Making. unpublished doctoral dissertation Camegie Mellon University, PA.