A Cognitive Perspective
Chapter 3: The Psychology of Entrepreneurial Strategic Decisions
3. The psychology of entrepreneurial strategic decisions Petru L. Curs eu, Patrick A.M. Vermeulen and ¸ René M. Bakker 3.1 INTRODUCTION We make choices every day. Some of them are trivial (for example, choosing between wearing the black or the brown shoes), while others bear major consequences for ourselves or for others around us (for example, deciding to relocate a business). For some of our decisions we can estimate with relative certainty the probability of the outcomes associated with all the alternatives we consider, whereas for others it is impossible to do so. In some of our choices we use already existing strategies or heuristics, while in others we search for additional information and even create new alternatives by combining that which we already know. Some choices are based on routines triggered by repetitive stimuli, whereas others we label ‘strategic’; those which often involve the planning of actions in an uncertain and unpredictable future. The question that arises is, what renders a decision strategic? Is it the importance of its consequences, the amount of knowledge required to make a choice, the procedures used to decide, or all of them together? In principle, the literature on strategic decision-making (SDM) agrees that strategic decisions involve a commitment of large amounts of organizational resources in order to attain organizational goals through appropriate means. Although the SDM process has been extensively studied in large companies, in small and medium-sized enterprises (SMEs) little to no attention has been shown to how entrepreneurs decide in highstake situations....
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