The impact of judgment and framing on entrepreneurs’ decision-making

Emami, Amir; Welsh, Dianne H.B.; Ramadani, Veland; Davari, Ali

doi:10.1080/08276331.2018.1551461

Cited by 25 publications

(26 citation statements)

References 36 publications

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“…Contrary to these theories, the prospect theory ( Kahneman and Tversky, 1979 ) states that investors’ decisions and choices are based on their perceptions of their own utility, and they do not use all of the available information ( Wang, 2017 ), as a result of which irrational decision-making takes place. The prospect theory also suggests that investors’ decisions are affected by potential losses and gains ( Scalco et al, 2015 ) and that, when the option of profit and loss exists, investors prefer profit over loss ( Emami et al, 2020 ). In other words, investors’ decisions are based on perceived gains instead of perceived losses ( Kahneman and Tversky, 1979 ; Baker et al, 2019 ).…”

Section: Introductionmentioning

confidence: 99%

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

et al. 2020

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The paper examines the direct and indirect effects (via investors' risk perception) of heuristic biases on investors' irrational behavior in decision-making. The study also investigates the moderating effect of investors' extraversion on both the direct and the indirect associations between heuristic biases and irrational decision-making. Based on survey data collected from 247 investors registered in various brokerage houses in Pakistan and the analyses (mediation and moderation) performed using the Process Macro technique (proposed by Hayes, 2017) in SPSS, the results of this study reveal that heuristic biases positively affect investors' irrational decision-making both directly and indirectly via risk perception. The results reveal that extraversion moderates both direct and indirect associations between heuristic biases and investors' irrational behavior in decision-making. Our findings carry useful practical implications for organizations' policymakers.

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Section: Introductionmentioning

confidence: 99%

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

et al. 2020

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“…Intuition and rationality should be carefully balanced to synergistically benefit from their advantages and to minimize backlash on the effectiveness of entrepreneurial choices produced by a one-sided, partial approach to decision making (Organ & O'Flaherty, 2016). Sacrificing intuition on the altar of rationality is thought to undermine the entrepreneurs' ability to timely frame the competitive challenges they have to overcome in order to ensure the success of the entrepreneurial venture (Emami et al, 2020). Moreover, it paves the way for a detrimental delay in making appropriate organizational and management choices, which puts the viability of the entrepreneurial venture under stress (Acciarini et al, 2020).…”

Section: Key Referencesmentioning

confidence: 99%

A round of dancing and then one more: embedding intuition in the ballet of entrepreneurial decision making

et al. 2021

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The dance metaphor allows us to figuratively depict entrepreneurial decision making processes. Being conventionally conceived of as a sequence of purposeful behaviors rooted in a rational cognition process, entrepreneurial decision making can be featured as a ‘ballet’. This interpretation puts in the background the improvisational nature of decision making, which revokes ‘lindy hop’ as a dance style. The article intends to illuminate the role of intuition, highlighting its overlap with rationality in the entrepreneurial decision making dance. For this purpose, a bibliometric analysis followed by an interpretive literature review advances a comprehensive report of 66 peer-reviewed journal articles published from 1995 to 2019, constructing evidence on the nature of entrepreneurial decision making and on the interplay between intuition and rationality. Literature is categorized in five clusters, which are reciprocally intertwined. Firstly, intuition is unconsciously used as a strategy to deal with the uncertainty that inherently affects entrepreneurial ventures. Secondly, intuition is rooted in the entrepreneurs’ impulsivity, that echoes the role of emotions in decision making. Thirdly, the merge of rationality and intuition improves the entrepreneurs’ ability to keep up with the erratic rhythm of the decision making dance. Fourthly, the mix of intuition and rationality serves as a catalyst of entrepreneurs’ ability to thrive in complex and unpredictable environments. Fifthly, intuition generates drawbacks on entrepreneurs’ meta-cognitive knowledge, which should be carefully recognized. Embracing the dance metaphor, intuition turns out to be crucial to make entrepreneurs able to fill in the gap between rationality and uncertainty.

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“…Typically, the entrepreneurial cognition literature depicts this opportunity construct as the connection of supply with unmet demand, whether both the supply and demand already exist (but are not yet “aware” of each other) or whether one or both have yet to be created (Sarasvathy et al , 2003). The essence of entrepreneurship is the uncertain pursuit of new value (Emami et al , 2020a; Packard, 2017) toward creating a better (i.e. higher-valued) future (see Dimov, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

On the cognitive microfoundations of effectual design: the Situated Function–Behavior–Structure framework

Emami

Packard

Welsh

2020

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PurposeThe purpose of this article is to extend effectuation theory at the front end by building cognitive foundations for the effectual design process.Design/methodology/approachWe adopt an integrative conceptual approach drawing on design cognition theory to explain entrepreneurial cognition.FindingsWe find a significant gap in the entrepreneurial cognition literature with respect to effectuation processes. We thus integrate the Situated Function–Behavior–Structure framework from design theory to elaborate on the cognitive processes of effectuation, specifically with regard to the opportunity development process. This framework describes the cognitive subprocesses by which entrepreneurs means and ends are cyclically (re)formulated over time until a viable “opportunity” emerges, and the venture is formalized, or else, the entrepreneur abandons the venture and exits.”Practical implicationsUnravelling this entrepreneurial design process may facilitate more appropriate and effective design work by entrepreneurs, leading to more successful product designs. It also should facilitate the development of better design techniques and instruction.Originality/valueThis research contributes to new cognitive foundations for effectuation theory and entrepreneurial process research. It better explains how means are transformed into valuable goods over time through an iterative reconsideration of means-ends frameworks. This theoretical elaboration will expectedly facilitate additional research into the iterative cognitive processes of design and enable more formulaic design thinking.

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The impact of judgment and framing on entrepreneurs’ decision-making

Cited by 25 publications

References 36 publications

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

A round of dancing and then one more: embedding intuition in the ballet of entrepreneurial decision making

On the cognitive microfoundations of effectual design: the Situated Function–Behavior–Structure framework

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