Entrepreneurial Strategic Decision-Making

Entrepreneurial Strategic Decision-Making

A Cognitive Perspective

Patrick A.M. Vermeulen and Petru L. Curseu

Strategic choices made by entrepreneurs have major consequences for SME performance. This book explores the factors that influence entrepreneurial strategic decisions using a cognitive theoretical framework.

Chapter 6: Entrepreneurial Decision Styles and Cognition in SMEs

Gerardus J.M. Lucas, Patrick A.M. Vermeulen and Petru L. Curseu

Subjects: business and management, entrepreneurship


Gerardus J.M. Lucas, Patrick A.M. Vermeulen and Petru L. Curs eu ¸ 6.1 INTRODUCTION This chapter focuses on decision-making in small and medium-sized enterprises (SMEs). The success of an SME depends to a large extent on effective strategic decision-making (Robinson and Pearce, 1983). However, not much is known about the decision processes that underlie the decisions of SME entrepreneurs. In contrast to decision-making in large enterprises, decision-making procedures in SMEs involve fewer actors or just one actor and generally do not involve organizational politics. Hence, it has been argued in the literature that explaining decision-making processes in SMEs requires new models (Brouthers et al., 1998; Papadakis et al., 1998; Gilmore and Carson, 2000). Busenitz and Barney (1997) argued that entrepreneurs are more likely to fall prey to biases in decision-making and to improperly rely on heuristics compared to decision-makers in large firms. This implies that decision-making by entrepreneurs in SMEs is indeed a distinct phenomenon, with its own characteristics and peculiarities. Given that in a typical SME one or only a few individuals are involved in decision-making, we assume that the decision-making style of such an entrepreneur is bound to have an impact on the decision process, as well as on its outcomes. Chapter 2 argued that a variety of entrepreneurial types can be distinguished. The most relevant difference in this regard is their approach to decision-making and their perception of what is important in this process. Gibcus et al. (2008) provide us with a taxonomy of entrepreneurial types...

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