Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making

Rather than focusing on previously examined individual differences, this study examined differences in the decision-making processes used by entrepreneurs and managers in large organizations

Lowell W. Busenitz

2003

Scholarcy highlights

  • Rather than focusing on previously examined individual differences, this study examined differences in the decision-making processes used by entrepreneurs and managers in large organizations
  • Building on nonrational decision-making models from behavioral decision theory, we asserted that entrepreneurs are more susceptible to the use decision-making biases and heuristics than are managers in large organizations
  • To understand why entrepreneurs and managers in large organizations may vary in the extent to which they manifest biases and heuristics in their decision- making, it is important to understand the utility of nonrational decision-making
  • We examined differences between entrepreneurs and managers in large organizations with respect to two biases and heuristics: overconfidence and representativeness
  • Even after controlling for numerous factors, such as several traits and demographic factors, enduring support was found for the way entrepreneurs and managers in large organizations make decisions
  • Research has yet to establish performance implications, it is possible that the more extensive use of heuristics in strategic decision-making may be a great advantage during the start-up years

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