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Abstract

Judgment and decision-making research has a long tradition in management and represents a substantial stream of research in entrepreneurship. Despite numerous reviews of this topic in the organizational behavior, psychology, and marketing fields, this is the first review in the field of entrepreneurship. This absence of a review of entrepreneurial decision making is surprising given the extreme decision-making context faced by many entrepreneurssuch as high uncertainty, time pressure, emotionally charged, and consequential extremesand the large number of studies in the literature (e.g., 602 articles in our initial screen and 156 articles in a refined search). In this review, we (1) inductively categorize the articles into decision-making topics arranged along the primary activities associated with entrepreneurshipopportunity assessment decisions, entrepreneurial entry decisions, decisions about exploiting opportunities, entrepreneurial exit decisions, heuristics and biases in the decision-making context, characteristics of the entrepreneurial decision maker, and environment as decision context; (2) analyze each context using a general decision-making framework; (3) review and integrate studies within and across decision-making activities; and (4) offer a comprehensive agenda for future research. We believe (hope) that this proposed review, integration, and research agenda will make a valuable contribution to management scholars interested in decision making and/or entrepreneurship.

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... Building on the literature on entrepreneurial opportunity (e.g., M. H. Chen & Tseng, 2021;Tang et al., 2012), innovation (Phillips et al., 2015;Shepherd et al., 2015), and the broader emphasis on the critical importance of performance in the entrepreneurship literature (e.g., Ratinho et al., 2020), and in line with two major meta-analysis studies in the field (Araujo et al., 2023;Sarooghi et al., 2015), we focused on these three constructs as the major entrepreneurial outcomes. Sarooghi et al.'s (2015) meta-analysis observed a positive association between creativity and innovation, being stronger in larger and low-tech industries. ...
... Entrepreneurial cognition and action have been emphasized in psychological studies of entrepreneurship. Research on entrepreneurial cognition has studied entrepreneurs' beliefs about a potential opportunity situation (Shepherd et al., 2015). Entrepreneurial opportunity literature also emphasizes the psychological perspective by asking how entrepreneurs think (Krueger, 2003) and recognize new opportunities (Tang et al., 2012). ...
... The fundamental reason for a complex and indirect association between creativity and entrepreneurial outcomes is that the transformation of creative ideas into innovation, opportunities, or firm performance entails two different steps: idea generation and idea implementation (Rosing et al., 2011), which may involve paradoxes (Miron et al., 2004), tensions (Lewis et al., 2002), and dilemmas (Benner & Tushman, 2003), and requires certain psychological capabilities (Nyström, 1993). Successful entrepreneurs develop emotional and psychological capabilities over time that increase their resilience in dealing with uncertain and complex situations, which in turn reduces stress (Kuratko & Covin, 2025;Shepherd et al., 2015). Idea generation is about the exploration of new possibilities, which entails boldness, risk-taking, and outside-the-box thinking (March, 1991), whereas idea implementation is more concerned with efficiency, practicality, and customers' acceptance (Sarooghi et al., 2015). ...
Article
Contributing to ongoing conversations about the central role of creativity in entrepreneurship, we propose that creativity leads to positive entrepreneurial outcomes through a crucial mediating mechanism: entrepreneurial alertness. We conducted a multilevel meta-analysis of 92 published studies with 209 effect sizes extracted and a cumulative sample size of 927,615 participants. Our findings suggest that alertness fine-tunes creativity and channels it toward more promising opportunities, innovation, and firm performance. Integrating Schumpeterian and Kirznerian perspectives, this study provides a pragmatist view of entrepreneurship and paves the way for further theorizing the association between creativity and alertness in explaining entrepreneurial outcomes.
... ‫اشت‬ ، ‫ی‬ ‫اق‬ ‫ا‬ ‫به‬ ‫ی‬ ‫ده‬ (Cardon, Wincent, Singh, & Drnovsek, 2009) ‫ارز‬ ، ‫ی‬ ‫اب‬ ‫ی‬ ‫ا‬ ‫ی‬ ‫ده‬ (Girotra, Terwiesch, & Ulrich, 2010) ‫ا‬ ‫توسعه‬ ، ‫ی‬ ‫ده‬ (Promsiri, Sukavejworakit, & Virasa, 2018) Bjorklund, Bhatli, & Laakso, 2013;Davidsson, 2015;Dimov, 2007aDimov, , 2007bJennings et al., 2015;Kosa & Mohammed, 2017 ) ‫؛‬ 3 . ‫تناساب‬ ‫با‬ ‫ایده‬ ‫ارزش‬ ‫ها‬ ‫ی‬ ‫فرد‬ ( Anderson, Potočnik, & Zhou, 2014;Bennett & Chatterji, 2023;Bjorklund et al., 2013;Fayolle, Liñán, & Moriano, 2014;Hoyte, Noke, Mosey, & Marlow, 2019;Shepherd, Williams, & Patzelt, 2015;Yachin, 2019 ) ‫و‬ 4 . ‫کنترل‬ ‫پذیربودن‬ ‫ا‬ ‫ی‬ ‫ده‬ ( Dimov, 2007a( Dimov, , 2007bGemmell et al., 2012;Gundry, Ofstein, & Monllor, 2016;Hoyte et al., 2019;Klofsten, 2005;Kosa & Mohammed, 2017;Shepherd et al., 2015;Wood, McKelvie, & Haynie, 2014;Yachin, 2019 ( Bjorklund et al., 2013;Davidsson et al., 2021;Gemmell et al., 2012;Hoyte et al., 2019;Wood et al., 2014;Yachin, 2019 ( Bjorklund et al., 2013;Fayolle et al., 2014;Hoyte et al., 2019;Yachin, 2019 ( Jennings et al., 2015;Navis & Glynn, 2011 ( Fayolle et al., 2014 ) . ...
... ‫تناساب‬ ‫با‬ ‫ایده‬ ‫ارزش‬ ‫ها‬ ‫ی‬ ‫فرد‬ ( Anderson, Potočnik, & Zhou, 2014;Bennett & Chatterji, 2023;Bjorklund et al., 2013;Fayolle, Liñán, & Moriano, 2014;Hoyte, Noke, Mosey, & Marlow, 2019;Shepherd, Williams, & Patzelt, 2015;Yachin, 2019 ) ‫و‬ 4 . ‫کنترل‬ ‫پذیربودن‬ ‫ا‬ ‫ی‬ ‫ده‬ ( Dimov, 2007a( Dimov, , 2007bGemmell et al., 2012;Gundry, Ofstein, & Monllor, 2016;Hoyte et al., 2019;Klofsten, 2005;Kosa & Mohammed, 2017;Shepherd et al., 2015;Wood, McKelvie, & Haynie, 2014;Yachin, 2019 ( Bjorklund et al., 2013;Davidsson et al., 2021;Gemmell et al., 2012;Hoyte et al., 2019;Wood et al., 2014;Yachin, 2019 ( Bjorklund et al., 2013;Fayolle et al., 2014;Hoyte et al., 2019;Yachin, 2019 ( Jennings et al., 2015;Navis & Glynn, 2011 ( Fayolle et al., 2014 ) . ( Ge et al., 2022;Klofsten, 2005;Linder & Nippa, 2019;Walsh et al., 2020 ) ‫گرفته‬ ‫اائت‬ ‫نشا‬ ‫فرد‬ ‫بیرونی‬ ‫تجربه‬ ‫و‬ ‫درونی‬ ‫ادراک‬ ‫از‬ ‫که‬ ) ‫حافظه‬ ‫افزایش‬ ‫افراد،‬ ‫تمرکز‬ ‫تقویت‬ ‫بر‬ ‫و‬ ‫کوتاه‬ ‫دارد‬ ‫تاثیر‬ ‫وی‬ ‫خالقیت‬ ‫ظرفیت‬ ‫ارتقا‬ ‫و‬ ‫فرد‬ ‫مدت‬ ( Dimov, 2007a( Dimov, , 2007bHayton & Cholakova, 2012 ) . ...
... In the context of economics, risk refers to the possibility of actual returns deviating from the anticipated level of return (Armour and Teece, 1978;Fisher and Hall, 1969). For most entrepreneurs, risk is a term associated with financial loss (Shapira, 1995). Previous literature suggested that three factors drive entrepreneurs' perception of venture risks: 1) the investment required to start the venture; 2) uncertainty in the expected returns; and 3) possible losses may occur in the venture (Forlani and Mullins, 2000). ...
... Sarasvathy (2001) suggested that entrepreneurs who follow effectuation processes prefer to make entrepreneurial decisions based on risk that they could accept. Even though literature shows that entrepreneurs have great variances in risk perception and risk propensity in opportunity adoptions due to individual factors (Foo, 2011;Forlani and Mullins, 2000;Shepherd et al., 2015), they will not take action to invest in opportunities when they perceive true risk involved in the venture. In other words, entrepreneurs will not intentionally accept higher levels of risk when they assess an opportunity (Simon et al., 2000). ...
Article
Purpose Social media marketing is a great tool for entrepreneurs because of its low cost, fast response and rich interactions. This study aims to examine how entrepreneurs use social media as a tool of marketing and how social media resources influence entrepreneurial opportunity evaluation. Design/methodology/approach The authors designed a mixed methods study with an open-ended question survey and a conjoint experiment. The authors sent out an online survey through M-Turk and collected 355 valid responses from entrepreneurs. Findings The results show that entrepreneurs consider social media as important to their businesses and that entrepreneurs consider their social media resources when they evaluate entrepreneurial opportunities. Originality/value This study enriches the understanding of entrepreneurial social media marketing by revealing the granular and nuanced descriptions and interpretations of social media marketing from entrepreneurs’ perspectives. This study also contributes to the entrepreneurial marketing literature by showing how different social media resources influence entrepreneurs’ evaluations and pursuit of entrepreneurial opportunities.
... This may oversimplify the delicate interaction between stimuli and reactions, especially in complex circumstances such as sustainable business (Mehrabian and Russell, 1974). Another limitation is less exploration of bidirectional relationships (Shepherd et al., 2014); the S-O-R framework has historically taken a unidirectional approach, emphasizing the influence of stimuli on organisms and subsequent reactions (Shepherd and Patzelt, 2011). ...
... We additionally identified the moderating effects of a sustainable environment (response) on two organismal factors (motivation and education). Through this action, Our work has bridged a knowledge gap and benefited significantly from the ongoing advancement of a psychological framework, notable in the framework of S-O-R (Bonfanti et al., 2024;Shepherd et al., 2014), in the sustainable landscape of HEIs. In response to Null and Asirvatham's (2023) call that sustainable habits may be changed independently to comprehend sustainability from stakeholders' viewpoints, this work contributes to the S-O-R field. ...
Article
Purpose The multidimensional decision-making framework of sustainable entrepreneurship affects student behavior in higher education institutions. Thus, the sustainable entrepreneurship environment has long attracted scholars and policymakers. Based on “Stimulus Organism Response (SOR),” this study examines serial mediation of sustainable entrepreneurial education and entrepreneurial motivation to link sustainable entrepreneurial environment and intentions. Further, it also explored the moderating role of a sustainable entrepreneurial environment. Design/methodology/approach A quantitative study was conducted with a sample of 408 students of Indian higher education institutes in NCR using a purposive sampling technique. Smart PLS-SEM was utilized for assessing the structural model, and a goodness-of-fit assessment was done with Amos 22. Findings The findings revealed the significant impact of a sustainable entrepreneurial environment on sustainable entrepreneurial education, motivation and sustainable entrepreneurial intentions. Furthermore, sustained entrepreneurial education has the most important influence on student motivation and considerable serial mediation. Also, the moderating role of a sustainable entrepreneurial environment was found to be significant for linkages of entrepreneurial motivation and sustainable entrepreneurial education with sustainable entrepreneurial intentions. Practical implications The study will assist HEIs and scholars in understanding the role of sustainability in entrepreneurial courses to increase student intentions to start sustainable businesses. Social implications This study helps policymakers and HEIs understand what motivates students to pursue sustainable entrepreneurship. This research might improve the well-being of education stakeholders and the community in achieving sustainable development goals. Originality/value The study is the first to analyze how sustainable entrepreneurial education and motivation serially mediate the link between a sustainable entrepreneurial environment and aspirations to establish a sustainable business and contribute to the existing literature of SOR from a new perspective.
... The predominance of concepts like "social media," "entrepreneurial intention," and "the theory of planned behaviour" indicates a critical intersection between the discourse on digital entrepreneurship and decision-making processes and DEI. This convergence promotes an integrated research agenda that fills in the gaps in the literature about entrepreneurial decision-making identified by Ref. [60] and connects DEI studies with the broad field of digital entrepreneurship. Based on the ground-breaking research of [61], this study takes a sophisticated look at DEI's critical role in the game-changing dynamics of digital entrepreneurship. ...
... Further research should focus on how digital businesses can overcome societal obstacles while maintaining ethical standards, as the societal effects and ethical aspects of digital entrepreneurship call for a closer look. The integration of entrepreneurial decision-making theories [60] with DEI research can provide novel insights into the ways in which digital entrepreneurs navigate uncertainty and arrive at strategic decisions. The development of a thorough understanding of DEI in the context of digital technology depends on this integration. ...
Article
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This study provides a bibliometric analysis of scholarly works from 2010 to 2023 that discuss intentions for digital entrepreneurship. The report attempts to shed light on the primary contributors, research trends, and significance of this area in relation to digitalization and entrepreneurship. Using the Scopus database, a total of 134 pertinent scholarly publications were found and examined. Beginning with a summary of the publication trends for the given time period, the bibliometric analysis is conducted. It shows a consistent increase in the quantity of papers on digital entrepreneurial intention, demonstrating the scholars' growing interest and attention in this subject. To pinpoint the main contributors and their geographic distribution, the study goes further and looks at how publications are distributed across years, authors, institutions, and nations. The analysis identifies a number of productive scholars who have made significant contributions to the field of digital entrepreneurial intention in terms of authors. The understanding and growth of digital entrepreneurship have advanced significantly thanks to their knowledge and reliable publication output. The analysis also highlights networks and collaboration between institutions and authors, demonstrating the collaborative nature of this field of research.
... Previous studies have predominantly discussed businesses of relatively large size (Shepherd et al., 2015). In contrast, our focus is on individual businesses, a unique case arising during economic recession. ...
... For instance, Cramer et al. (2002) suggest that individuals with low risk aversion are more inclined towards entrepreneurship, highlighting the importance of risk preference. Similarly, the cognitive aspects of entrepreneurial decision-making, including cognition about opportunities, risks, and personal abilities, have been emphasized (Shepherd et al., 2015). Demographic factors ...
Article
Purpose This study investigates the impact of internal expectations, such as fantasy of success and fear of failure and external factors, such as social environment and past experiences, on entrepreneurial choice. Design/methodology/approach Based on achievement motivation and social cognitive theories, the authors construct hypotheses and use secondary data from the Global Entrepreneurship Monitor (GEM) database and Economic Freedom Index report to empirically test the hypotheses. The authors also use propensity score matching to solve the endogeneity issue and test the robustness. Findings Internal expectations (fantasy of success and fear of failure) on business outcomes inversely affect entrepreneurial choices, with a vibrant business environment amplifying and past failure experience mitigating these effects. Originality/value Due to the economic recession, governments encourage small businesses. Thus, the complexity of individual entrepreneurial motivations and influencing factors necessitate deeper exploration. This study is one of the first research offering insights into entrepreneurial motivations from combined dimensions and providing theoretical support for strategies promoting public entrepreneurship.
... It is well documented that individuals make systematic errors in various decision-making contexts, including specific areas such as finance (Frydman and Camerer, 2016;Malmendier, 2018;Thaler, 2005), organization (Camerer and Malmendier, 2007) or even accounting (Siegel and Ramanauskas-Marconi, 1989). They also suffer bias when making more general choices such as forecasting (Dong et al., 2021), forming beliefs (Alós-Ferrer and Garagnani, 2023) and assessing risk (Shepherd et al., 2015). Because these biases can lead to sub-optimal outcomes, utilizing choice architecture to minimize their effects has been demonstrated to improve decision-making and employee performance in some situations (e.g., Hossain and List, 2012;Huang et al., 2019). ...
Article
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There is a large literature evaluating the dual process model of cognition, including the biases and heuristics it implies. However, our understanding of what causes effortful thinking remains incomplete. To advance this literature, we focus on what triggers decision-makers to switch from the intuitive process (System 1) to the more deliberative process (System 2). We examine how the framing of incentives (gains versus losses) influences decision processing. To evaluate this, we design experiments based on a task developed to distinguish between intuitive and deliberative thinking. Replicating previous research, we find that losses elicit more cognitive effort. Most importantly, we also find that losses differentially reduce the incidence of intuitive answers, consistent with triggering a shift between these modes of cognition. We find substantial heterogeneity in these effects, with young men being much more responsive to the loss framing. To complement these findings, we provide robustness tests of our results using aggregated data, the imposition of a constraint to hinder the activation of System 2, and an analysis of incorrect, but unintuitive, answers to inform hybrid models of choice.
... An entrepreneur's success largely depends on the ability to make effective decisions; individuals with a high level of self-efficacy tend to possess decision-making skills even when available information is ambiguous. Shepherd et al. (2015) pointed out that entrepreneurial decisions are characterized by uncertainty, time pressure, and unforeseen consequences. Entrepreneurs with high confidence in themselves can make opportunity assessments and decisions accordingly. ...
Article
This research investigates the relationship between entrepreneurial self-efficacy (ESE) and sustenance. Using social cognitive theory (SCT) and self-determination theory (SDT) as theoretical underpinnings, a conceptual model is developed showing the relationships between ESE, decision-making, motivation, skills and competencies, relational support, knowledge, and sustenance of women entrepreneurs. A survey instrument was used to collect data from 396 respondents from the women entrepreneurs in the Dindigul district of southern Tamil Nadu, India. First, the measures' psychometric properties were tested using LISREL software for structural equation modeling. Second, hypothesized relationships were tested using PROCESS macros. The findings indicate (i) ESE is a significant predictor of entrepreneurial decision-making, motivation, and sustenance, (ii) entrepreneurial decision-making and motivation mediate the relationship between ESE and entrepreneurial sustenance, (iii) entrepreneurial knowledge moderates the relationship between ESE and entrepreneurial decision-making, and (iv) relational support (first moderator) and entrepreneurial skills (second moderator) moderate the relationship between motivation and entrepreneurial sustenance. The two-way interaction between ESE and entrepreneurial knowledge in influencing entrepreneurial decision-making and the three-way interaction between motivation, relational support, and skills and competencies in influencing entrepreneurial sustenance bring novelty to the model. To the best of our knowledge, this model's two-way interaction and three-way interaction of variables is the first of its kind in India, particularly about women entrepreneurs in India. It makes a pivotal contribution to entrepreneurship theory and practice.
... Specifically, entrepreneurs who proactively engage in external activities are likely to spend less time and effort in tackling routine management tasks. As decisionmaking processes are usually demanding, entrepreneurs who allocate more attention to external activities would find it difficult to make a large number of decisions on entrepreneurial activities on their own (Shepherd et al., 2015). In this regard, entrepreneurs may primarily focus on major decisions and distribute more decision-making authority over specific activities, such as personnel recruitment and supply chain management, to other individuals within the organization. ...
Article
Full-text available
Plain English Summary Political participation is recognized to influence how entrepreneurs set up decision-making processes in their ventures. We argue that entrepreneurs who participate in politics tend to direct more attention towards external activities. This outward focus encourages a shift towards a more decentralized decision-making system within their ventures. We also show that when entrepreneurs hold smaller ownership stakes in their ventures or operate in environments with significant government influence, their political participation tends to more strongly drive their limited attention towards external environment. Thus, the main practical implication of this study is that entrepreneurs are supposed to realize that their influence in ventures’ internal activities may decrease when they get involved in political activities.
... Despite the many benefits, entrepreneurial leadership also involves certain risks. The strong emphasis on innovation, quick decision-making, and autonomy can create a stressful environment that is difficult for employees to navigate (Shepherd et al., 2015). The challenge of balancing visionary leadership with practical implementation becomes more pronounced, particularly when the team is diverse and the company is scaling rapidly. ...
Article
Entrepreneurial leadership is crucial for the growth and success of startups, yet it also presents several challenges in talent acquisition and retention. This study examines these challenges using the Fuzzy DEMATEL method, which analyzes complex cause-and-effect relationships. Key challenges identified include risk-taking, overemphasis on innovation, inconsistent decision-making, lack of structured processes, and high workload expectations, all of which negatively affect employee retention and engagement. The Fuzzy DEMATEL analysis reveals causal relationships between these challenges and their impact on organizational stability. The study involved 56 respondents, including CEOs, founders, and HR managers of IT startups in Chennai. The findings emphasize the need for entrepreneurial leaders to balance innovation and risk-taking with stable HR practices to enhance talent acquisition and retention. The study offers practical recommendations for addressing these challenges, helping entrepreneurial leaders create a supportive work environment that fosters long-term employee commitment and it contributes valuable insights to the field of entrepreneurial leadership and talent management in startup contexts.
... Thus, research on cognition has contributed a great deal to our knowledge of entrepreneurship (for reviews, see Grégoire et al., 2011;2015;Shepherd et al., 2015;Zhang & Cueto, 2017). ...
Article
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This review of the entrepreneurial metacognition literature systematizes the existing literature. Metacognition is vital for entrepreneurs to sense, act, and mobilize cognitive resources under uncertainty. Despite the rapidly growing stream of metacognitive research in entrepreneurship, indicating that the topic is promising and emerging, these bits of knowledge still need to be brought together to provide a big picture of where we have been to explore where we can go. Our review addresses this need by analyzing the literature on entrepreneurial metacognition. We define entrepreneurial metacognition as the mental activities of generating self-awareness and monitoring and controlling one’s cognition about identifying potential opportunities, creating a new venture, and/or managing a new venture. The inductive results reveal five attributes that reflect the essence of entrepreneurial metacognition: (1) adaptive cognition, (2) metaheuristics, (3) self-regulated cognition, (4) cultural adaptation, and (5) metacompetencies. We address definitional issues and empirical patterns, synthesize the attributes of entrepreneurial metacognition and present a model that links entrepreneurial metacognition’s antecedents and outcomes to advance future research.
... of scholarship has examined why individuals pursue entrepreneurial opportunities instead of other career options (Markman & Baron, 2003;Nikolaev et al., 2020;Stephan et al., 2015). At a general level, this research has found that decisions to pursue and persist with entrepreneurial opportunities are shaped by environmental and individual factors (Carsrud & Johnson, 1989;McKelvey, 2004; for a review, see Shepherd et al., 2015). Thus far, we have argued that awe disrupts how individuals view the surrounding environment, opportunities (or threats), and potential resources for venturing. ...
Article
Full-text available
Recent psychology research has uncovered the transformative power of awe in spurring change. Awe emotional experiences induce change through two functions: the feeling of being in the presence of something vast that challenges existing worldviews and a sense of needing to adjust one's mental framework to accommodate the vastness. This paper introduces a theoretical framework exploring how awe impacts processes of pursuing transformational opportunities-namely, opportunities that are radical, fulfill dual goals (social and economic), or have a broad scope for scaling. This paper theorizes that entrepreneurial venturing offers a structured way for individuals to process stimuli from an awe episode to identify and validate a transformational opportunity. Our theorizing builds on psychology theories of self-transcendent emotions (generally) and awe (specifically) and extends those theories to mainstream entrepreneurship and management research. We contribute to research on entrepreneurship and management by demonstrating how awe episodes can impact individuals and other stakeholders in pursuing transformational opportunities.
... -Independence and Decision-Making: These qualities are perceived in the literature as the ability to make decisions independently and to direct actions and initiatives autonomously. Furthermore, they support the process of independently creating or recognizing opportunities and capitalizing on them (Sarasvathy, 2001;Busenitz & Barney, 1997;Shepherd, Williams, & Patzelt, 2015). -Communication and Relationships: The key aspects of these traits include the ability to develop effective social networks and business relationships. ...
Article
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Background: : This article aligns with contemporary approaches to defining entrepreneurship by examining not only its core essence but also the entrepreneurial potential, personality traits, and behavioral dynamics necessary to identify an individual as entrepreneurial. Research objectives: By examining the entrepreneurial landscape among students at the University of Information Technology and Management in Rzeszow (UITM), the article explores the connections between academic specialization, field of study, and entrepreneurial aspirations, focusing on both the potential and intention to initiate business ventures. Based on data from a survey of 1,526 students, representing 29.8% of UITM's total student population, the study offers a representative and comparable research sample encompassing various educational paths in both Polish and English programs. Results: The research findings reveal how students' entrepreneurial potential is distributed across various academic disciplines, emphasizing the correlations between their chosen field of study and entrepreneurial potential. Additionally, the article examines the relationships between the urge to start a business and factors such as employment status, language of study, and field of study. It also summarizes the impact of academic programs in specific specializations, as well as support mechanisms, on entrepreneurship development. Conclusions: The study validates two research hypotheses: first, that the chosen field of study affects entrepreneurial potential and the likelihood of starting a business; and second, that the language of study influences the intention to launch one's own business in the near future.
... This necessitates immediate consideration of facts and then deciding. Also, failure being an inevitable part of entrepreneurship prompts both sense-making and negative emotions that affect motivation and decision-making (Shepherd et al., 2015). In their study, entrepreneurs tend to rely on heuristics (and have a bias) more than managers of established companies. ...
Article
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Purpose/Problem – The study explores the agripreneurial characteristics of agricultural sciences and business students in Indian universities. This manuscript investigates agripreneurship concerning innovation, opportunity-seeking abilities, risk-taking propensity, and decision-making abilities by comparing agripreneurially inclined and not-inclined students and considering their implications for agriculture development efforts in the Indian context. Design/methodology/approach – A convenient sampling method was employed to collect data from university students using a seven-point Likert scale based on an 18-item self-administered questionnaire. For data collection, Google forms were sent through LinkedIn, WhatsApp, Instagram, Telegram and email. Students were asked, "Have you ever seriously considered becoming an agripreneurs" and "What career option will you choose after completing your degree?" to understand the agripreneurial inclination. Findings- Through the application of a t-test, it was found that agripreneurial characteristics are more prevalent among agripreneurially inclined students than non inclined ones. Thus, agripreneurially keen students have higher risk taking propensity, innovativeness, opportunity-seeking abilities, and decision-making abilities. Research limitations/implications – The study is bound to undergraduate and postgraduation students from agricultural backgrounds from Aligarh Muslim University; randomly selected university students were included in the pilot survey. The sample size is somewhat limited, making it challenging to comprehend the agripreneurial characteristics among students. Conclusion – The country's economic performance can be impacted by agripreneurship since the agricultural sector creates job opportunities for its workforce, which makes up roughly 60% of the total population. This study will contribute to the existing literature. It may help policymakers and universities to enhance the quality of agripreneurial education and training to cultivate the creativity of agripreneurs. Originality/value – The study offers to comprehend variations between agripreneurially inclined and non-inclined students. The manuscript includes four agripreneurial characteristics; risk-taking abilities and innovativeness are extensively used in the existing literature. On the other hand, opportunity-seeking and decision making abilities are scarcely ever used to describe the agripreneurial characteristics of university students Keywords: Agripreneurship, Entrepreneurship, Agripreneurially inclined, agripreneurial characteristics, agricultural Students
... The globalization of financial markets, coupled with increasing complexity and volatility, has significantly reshaped the financial sector (Shepherd, Williams, & Patzelt, 2015). Behavioral finance, rooted in psychological theory, acknowledges that market participants' characteristics and the structure of available information greatly impact investment outcomes (Benjamin, Brown, & Shapiro, 2013). ...
Article
Full-text available
This study explores how overconfidence bias influences investment decisions within the framework of behavioral finance. Overconfidence often leads investors to trade excessively, misjudge market risks, and overestimate their decision-making capabilities. By employing statistical tools such as ANOVA and regression analysis, this research explores the influence of demographic factors on overconfidence and its impact on trading frequency, risk tolerance, and portfolio performance. Findings reveal significant relationships and highlight the need for mitigation strategies. This research enhances the understanding of cognitive biases in financial markets.
... In this stream of the literature, mentoring in incubation is considered as a way of mitigating biases and heuristic procedures in decisional processes, and of encouraging analogical reasoning and rational approaches (York & Danes, 2014). The Decision Making and Aiding perspectives can both be considered relevant, since entrepreneurial decisions are unique, instantiable (Dew et al., 2009;Packard et al., 2017;Townsend et al., 2018) and affected by uncertainty and/or complexity (Shepherd et al., 2015). ...
Article
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Purpose Incubators have long been relevant actors in the development of start-ups. This paper proposes studying mentoring in incubators as a decision aiding process that aids a specific design process, namely the activities of a start-up during incubation. Design/methodology/approach Methodologically, this paper assumes a parallelism between mentoring and decision aiding, as well as between business modelling and a design process. According to this approach, mentors are viewed as decision aiding actors who operate within Contexts of Action and adopt more or less appropriate tools to aid business modelling design activities. A protocol analysis was carried out on 86 mentoring sessions with 53 entrepreneurial teams at the I3P Incubator of the Politecnico di Torino. Findings The study allowed us to obtain a deep understanding of the mentoring activities and the appropriateness of the tools used in each phase of the incubation process. Originality This paper introduces five elements of novelty. First, it looks at business mentoring as a decision aiding process of a design process, specifically the incubation process; second, this has allowed us to refer to a framework provided by the Decision Aiding literature; third, it adopts an alternative research approach to surveys, questionnaires and interviews; fourth, it provides an abstract/standardised unit of analysis to describe the situational nature of mentoring. Finally, it identifies the building blocks of mentoring and how the activities are methodologically conducted.
... Short et al. (2010), for example, made a notable contribution by examining the antecedents, outcomes, and moderators of entrepreneurial opportunities, but their insights are not directly integrated with the framework proposed by Shane and Venkataraman (2000). Other reviews have focused on alternative conceptualizations (Davidsson 2015;Shepherd et al. 2019) or specific aspects of the entrepreneurial opportunity concept (Canavati et al. 2021;Shepherd et al. 2015). Acknowledging their great work and contribution, however, these reviews are either not directly tied to the core concept of entrepreneurial opportunities or focus only on parts of it. ...
Article
Full-text available
Shane and Venkataraman's (2000) seminal work reshaped the landscape of entre-preneurship research by introducing the concept of entrepreneurial opportunities. Their groundbreaking article sparked a wave of scholarly interest that spawned a wealth of literature and propelled entrepreneurship research forward. However, over time, a large number of studies have been published, delving into various facets and sometimes detached determinants of the concept of entrepreneurial opportunities. Now, more than two decades after the pivotal contribution of Shane and Venkata-raman (2000), it is imperative to reflect on the breadth of accumulated knowledge and identify overlooked areas within the field of entrepreneurial opportunities. This study aims to conduct a comprehensive examination of entrepreneurial opportunities and their associated underlying processes. Using a systematic literature review, we highlight key findings from previous studies and identify research gaps that provide promising directions that future research needs to address in order to further enhance this field of research.
... Exceptions have focused on understanding backer motivations (see Table 2 for a summary of these studies) but have not allowed us to understand how distinct types of cues are processed by certain backers. By illustrating individuals' cognitive styles and how they may influence the contrast effects of different types of cues, this article sheds light on the nexus between investors and entrepreneurs (for example, Shepherd et al., 2015). Specifically, our findings illustrate the complex interplay between the processing preferences of individual backers and the types of cues created by entrepreneurs. ...
Article
Most entrepreneurial finance studies have treated funders as a monolithic group and ignored individual differences in tastes. This overlook is complicated by prior studies demonstrating how entrepreneurs would utilize either costly to be acquired cues (e.g. patents) that signal venture quality or costless cues that are easily fabricated (e.g. company name fluency) in their pitches to influence investors. We thus investigate how cognitive styles influence heterogeneous crowdfunding backers’ evaluations of pitches in the presence of costly and costless cues. Based on Cognitive-Experiential Self-Theory, we illustrate that a rational thinking style moderate the contrast effect, i.e. costly cues overpowering costless cues, on pitch evaluations and performance predictions for crowdfunded ventures, while an experiential thinking style will attenuate such contrast effect. Findings from two experiments support the moderating effect of a rational thinking style. We demonstrate backers are not monolithic and call for future studies to understand how heterogeneous backers make decisions.
... The globalization of financial markets, coupled with increasing complexity and volatility, has significantly reshaped the financial sector (Shepherd, Williams, & Patzelt, 2015). Behavioral finance, rooted in psychological theory, acknowledges that market participants' characteristics and the structure of available information greatly impact investment outcomes (Benjamin, Brown, & Shapiro, 2013). ...
... Entrepreneurs in emerging markets also face challenges related to information asymmetry (Akerlof, 1978). Information acquired from the choice context informs decisions (Shepherd et al., 2015). When entrepreneurs face risks regarding the quality of information they are receiving, they may be especially attuned to potential incongruences. ...
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It is becoming increasingly crucial to understand how institutional logics influence entrepreneurial behaviors and decisions as they impact job creation and startups globally. This research hypothesizes how two different logics—family and market—will influence entrepreneurial decision-making and action. To test our hypotheses, we conducted a two-wave study using an experimental approach to gather data from 326 aspiring entrepreneurs in India who made 630 opportunity evaluation decisions. We analyzed this dataset using subgroup regression analyses. We find significant effects of institutional logics on entrepreneurial decision-making. Particularly, we find that in contrast to extant theory from developed contexts, in emerging economies such as India, the family logic has a stronger influence on willingness to invest in entrepreneurial opportunities as compared to the market logic. We also identify critical boundary conditions of the decision context that make the effect of institutional logic more or less salient. Our findings highlight that financial stakes and support from close associates strengthen the relationship between the family logic and willingness to invest. However, reputational stakes were found to significantly weaken the relationship between the family logic and willingness to invest. Thus, our research contributes to the literature on entrepreneurship by exploring microprocesses of institutional logics and the impact of the family logic on entrepreneurial decisions in emerging markets. Moreover, we extend the institutional logics literature by highlighting that the logics act not only as a “lens” but also as a “mirror,” helping entrepreneurs predict how certain stakeholders will interpret and react to their decisions and actions.
... EM has been defined as the skills to quickly identify, act, and move in highly uncertain circumstances [34]. EM is the ability to respond and decide on an opportunity when uncertainty exists [35]. McMullen and Kier, 2016 [36], explained EM as the ability to spot and use opportunities for using available resources. ...
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Entrepreneurial education is an established phenomenon that enhances entrepreneurship, which is critical for economic sustainability. The study investigated converting entrepreneurial education into entrepreneurial intentions in graduating university students. It was expected that entrepreneurial mindset and entrepreneurial alertness play a significant role in this process. A questionnaire was developed, and data was collected from students either graduating or in their last year of undergraduate studies. Regression analysis using AMOS was conducted to test the relationships among study variables. Results indicate that entrepreneurial mindset and entrepreneurial alertness have mediating roles in the process separately. Entrepreneurial alertness is the most significant mediator in converting the effect of entrepreneurship education into entrepreneurial intentions. Entrepreneurial mindset also partially mediates the effect of entrepreneurship education on entrepreneurial intentions. The findings of this study are essential for educational planners and organizations in the entrepreneurial ecosystem to evaluate the effectiveness of entrepreneurial education in training programs. Future studies may consider replicating this study in different physical and cultural settings.
... Entrepreneurship means to undertake, to solve a problem or complicated situation. Entrepreneurship involves making decisions in times of great uncertainty, which makes risk-taking an integral part of entrepreneurial activity (Shepherd et al., 2015). Entrepreneurs' decision-making occurs in multiple domains of entrepreneurial activity such as exploring opportunities, strategic positioning, or planning the organizational and financial structure of the firm. ...
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Entrepreneurs’ decision-making in sustainable open innovation practices holds significant relevance in fostering environmentally conscious and socially responsible business strategies. Sustainable decision-making not only aligns with ethical principles but also addresses pressing global challenges such as climate change and resource depletion. This study aims to characterize the decision-making role played by entrepreneurs in the context of the open innovation paradigm and to understand the factors that influence entrepreneurial performance. A quantitative methodology supported by Partial Least Squares Structural Equation Modeling was adopted, considering a sample of 407 startups incubated in science and technology parks. After that, a mixed-methods approach was employed to explore the differences between sectors of activity, in which 4 ventures were involved. The results confirm that of the 9 hypotheses formulated in the relationship between the constructs, only innovation novelty is not significant for sustainable open innovation management processes, unlike innovation openness. This study offers theoretical and practical implications for startups that intend to use open innovation networks to integrate environmental and social considerations into the core of business strategies.
... Second, in new ventures, the allocation of attention to activities, such as those that promote listening to stakeholders, is often influenced by the key players in these organizations, such as the entrepreneurs or entrepreneurial team members. These individuals' decisions and actions significantly impact the functions and orientations of venture members (for a review, see Shepherd, Williams, & Patzelt, 2015). They can influence the allocation of people to roles, such as stakeholder liaison to listen for new information (e.g., Carmody & Prideaux, 2010), product development with an orientation toward co-constructing opportunities (e.g., Autio et al., 2013;Seyb et al., 2019), and the allocation of venture members to different stakeholder groups to listen to diverse information (e.g., Ballejos & Montagna, 2008). ...
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While we understand the importance of entrepreneurs listening to stakeholders, we lack a sufficient theory-driven understanding of why some entrepreneurs and their ventures can listen to their stakeholders more effectively than others. We offer a listening model of venture growth based on listening theories and the literatures on new ventures and capability development. Listening is initially facilitated by entrepreneurs’ cognitive and behavioral processes, but continued venture growth creates a paradox for entrepreneurs. Listening to stakeholders may also deplete entrepreneurs’ personal resources, diminishing their listening capacity. This paradox can be overcome by generating their ventures’ listening capability—behavioral routines and attention structures for listening—enabling them to acquire and interpret quality information from stakeholders more effectively to build or adapt the capabilities necessary for venture growth. The ventures’ listening capability acts as a dynamic capability, which itself can be dynamic. This listening model of venture growth contributes to the entrepreneurship literature on stakeholders, entrepreneurs’ abilities, and ventures’ capabilities and dynamic capabilities.
... Future research can also draw from other research traditions with respect to decision-making to encourage fruitful cross-fertilization. For instance, entrepreneurship literature (e.g., Shepherd et al., 2015) has shown that entrepreneurs tend to demonstrate more status quo bias; that is, they use previously chosen solutions more often than non-entrepreneurs. This specific mechanism may explain the low level of learning activity observed in some cases. ...
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Subsidiary general manager (GM) succession selection is a critical process in multinational enterprises (MNEs). Previous research, grounded in organizational learning and routines, has suggested that GM succession dynamics typically follow either an acceleration or a deceleration momentum. However, as we investigated succession decision-making heuristics through interviews with MNE managers, we observed neither acceleration nor deceleration. Instead, we found some consistent succession dynamics. Within this consistency, we found variations in decision-making models among subsidiaries—some adopting a rule-based approach with a short succession dynamic, some adopting a goal-based approach with a moderate succession dynamic, and others adopting a people-based approach with a long succession dynamic. Underlying these models were bounded rationality, bounded reliability, and their unexpected interactions. Our study sheds light on the critical role of managers in subsidiary management, enriches international business theorizing on the subsidiary GM succession process, and refines the boundary conditions of organizational learning. The central message is that looking solely at GM succession dynamics through an organizational learning lens may risk overlooking relevant causal mechanisms. To make the theorizing on the dynamics of subsidiary management more fertile, the behavioral model should account for the idiosyncrasies of decision-making as well as the heuristics of decision-makers.
... It encompasses an individual's practical skills and fundamental understanding, which enable them to undertake entrepreneurial activities. In addition, it reflects the skills and knowledge acquired that empower an aspiring entrepreneur to transition from the initial stages of conceptualising a business idea to taking concrete steps towards establishing a new venture (Shepherd et al., 2015). Gieure et al. (2020) argue that realising oneself capable of carrying out entrepreneurial activities or even considering taking entrepreneurial actions relates to one's expressing the ability to act upon intentions and perform entrepreneurial actions. ...
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Purpose By adopting the theory of planned behaviour, this study aims to provide insights into how entrepreneurial education (EE) contributes to the entrepreneurial process, especially entrepreneurial behaviour (EB). Design/methodology/approach The research used a sample of 2,566 students from 16 universities in Vietnam. The conceptual framework’s coefficient paths underwent testing using structural equation modeling, and the mediation effects were determined using the PROCESS bootstrapping method. Findings The study revealed that EE directly influences EB in Vietnam, despite having no direct effect on entrepreneurial intention (EI). In addition, EE indirectly influences EI and EB through enhancing attitude towards entrepreneurship and perceived behavioural control. Practical implications These findings suggest that policymakers should consider the value of investing in EE programmes as a means of promoting EB. Offering students opportunities to engage in real-life entrepreneurial activities, such as business plan competitions, internships with local start-ups and access to mentorship from established entrepreneurs, can play a pivotal role in their translating knowledge into action. This practical approach can significantly contribute to the development of an entrepreneurial ecosystem in Vietnam. Originality/value While many studies have investigated the influence of EE on EIs, there is a lack of research on the behavioural outcomes of such education. Furthermore, the findings regarding the EE–EI relationship are inconsistent. Therefore, this study provides valuable insights into how EE can foster the intention and behaviour to engage in entrepreneurship.
... High level of cognitive will facilitate an understanding of opportunity recognition (Gaglio, 2004) and decision making (Shepherd, Williams, & Patzelt, 2014), which are important for any stage of resource allocation. Several aspects of cognition such as attention, perception, problem-solving, and reasoning will be dominant during structuring activities, while communication will be dominant in bundling and leveraging activities (Helfat & Peteraf, 2015). ...
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The increasing importance of capability that drives business model change has triggered many firms to revisit the way they manage their resources. Cognitive levels of firm’s manager have been acknowledged as the basis of capability building for business model change, however the benefit of utilizing firm’s knowledge management effectively for improving cognitive capability is not yet explored especially when the business is knowledge-intensive. This research focuses on literature review of knowledge management, cognitive aspect, resource orchestration, and business model change. Furthermore, with the context of Indonesian oil and gas industry, this research investigates the role of knowledge management to resource orchestration which in turn affects capability to change business model. This research demonstrates the effect is fully mediated by cognitive capability. Finally, this research suggested firms shall develop systematic knowledge management and using manager’s cognitive effectively to orchestrate their resource and be ready to change their business model.
... Entrepreneurs also differ in terms of perceptions about environmental conditions, including uncertainty; consequently, they also differ in terms of decision-making related to entrepreneurial opportunities (Shepherd et al., 2015). If the risk is predictable, entrepreneurs tend to rely on decision heuristics, whereby decision-making centres on selecting between alternative outcomes (Packard et al., 2017;Gilbert-Saad et al., 2018). ...
... Due to the limited number of studies that have attempted to understand whether the decisions of entrepreneurs are rational or intuitive, we are far from reaching a definitive conclusion on this matter, and we still need further research into various entrepreneurial decisions, including entrepreneurial opportunities, to understand the way entrepreneurial decisions are made (Shepherd et al., 2015). ...
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This paper aims to study the extent to which the entrepreneurial opportunity process is rational. We use a methodology that links directly between the proxy of the psychological biases of entrepreneurs and the opportunity identification and pursuit. Our sample consists of 180 Tunisian entrepreneurs and we apply an ordinary least square analysis. Our results highlight that entrepreneurs' psychology is for interest, and it influences both the opportunity identification and pursuit. In summary, the psychological biases can help entrepreneurs to identify new opportunities, but also these biases generally have a negative effect on opportunity pursuit. As policy implications, Tunisian Government is invited to give a special attention to the effect of entrepreneurs' psychology on the success of new ventures. In fact, it seems that a high level of some well documented such as overconfidence, optimism among others, can negatively affect the new venture into different levels of the entrepreneurial process.
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Focusing on a specific form of entrepreneurship education, entrepreneurial mentoring, we take a relational mentoring perspective and develop a model of entrepreneurs’ assessments of potential mentors. We theorize that if mentees perceive their business-related values to be similar to a potential mentor’s values, they are more likely to choose this mentor, and that this relationship is moderated by different types of the potential mentor’s experiences (i.e., entrepreneurial experience, industry experience, and mentoring experience). We test our hypotheses using a metric conjoint experiment and 2,240 assessments of potential mentors by 140 entrepreneurs. Our findings reveal that mentees' perception of business-related value similarity with a potential mentor increases the likelihood of choosing this mentor. Further, higher levels of mentors’ experiences strengthen this relationship. We discuss the implications of our study for research on entrepreneurial mentoring and relational learning in the entrepreneurial context, and we provide practical insights on how the matching process in mentoring programs may be facilitated.
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I introduce variability in decision-making (VDM) as a construct that covers the extent to which entrepreneurs switch between analytic and intuitive decision-making over time. Drawing from self-regulation theories, I developed a model that explains how VDM is negatively related to taking charge behavior (TCB) and is driven by entrepreneurs’ regulatory focus strategies. This model is tested using a dataset covering 438 daily observations from 53 entrepreneurs and matched data from non-entrepreneurs. The results show that VDM leads to decreased TCB via decreased self-efficacy and optimism. Prevention but not promotion focus predicted VDM. These associations emerged for entrepreneurs but not for non-entrepreneurs.
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Research Summary This paper identifies a critical gap in foundational assumptions between traditional International Business (IB) theories (e.g., internalization theory and Uppsala model) and empirical individual‐level research. Traditional theories, rooted in assumptions of bounded rationality, tend to overlook the influence of affective cognition in shaping managerial decisions. In contrast, our systematic review of individual‐level IB research reveals that empirical studies recognize the influence of affective cognition in decision‐making but have only extended mainstream theories in fragmented ways, leaving room for a comprehensive theoretical revision. We propose an affect‐enacted model of internationalization decision‐making, showing how affective cognition critically shapes IB decisions. Our findings have important implications for IB theorization, advocating for the integration of both affective and non‐affective cognition into a unified framework. Managerial Summary Managers assess risks as part of their decision‐making process for firm internationalization. Traditional theories suggest that managers, as boundedly rational actors, are imperfect agents influenced primarily by analytical considerations. However, our systematic review of over two decades of empirical research reveals instead that managers are complex agents that rely on both affective and non‐affective processes to inform their judgments. We present an affect‐enacted model of internationalization decisions, showing how these processes combine to shape knowledge, experience, attitudes, and risk evaluations, ultimately guiding their internationalization decisions. Contrary to the traditional view, our findings suggest that internationalization decisions are deeply influenced by affective cognition reflecting a complex interplay of intra‐ and interpersonal dynamics.
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Article Info ABSTRACT Article type: Research Article Decision-making is considered the core and essence of entrepreneurial activities , as the growth and progress of businesses depend on the decisions made by entrepreneurs. This research initially identifies the factors influencing en-trepreneurial decision-making, then evaluates the impact of each factor on their choices, and finally examines the bidirectional relationships among the variables. The study population consists of entrepreneurs active in small and medium enterprises (SMEs) in Zahedan City, with a sample randomly selected from these entrepreneurs. Library resources and existing research in this area were utilized to identify the influential factors on entrepreneurial decision-making, ultimately categorizing these factors into four groups: individual characteristics, organizational characteristics, environmental characteristics, and specific decision characteristics. Data collection in the field was conducted using a questionnaire to assess the impact of these factors. Data analysis was performed using SPSS26 and Amos18 software. The findings indicate that individual and organizational factors significantly influence the specific characteristics of a decision, playing a crucial role in entrepreneurial decision-making. Additionally, there is a bidirectional relationship between individual and organizational characteristics, directly influencing each other's decision-making processes. Based on the results, it is recommended that training sessions be organized for entrepreneurs to enhance their skills and reduce errors in selecting the right options, improve interpretation and analytical abilities, enhance instantaneous decision-making capacity, and optimize environmental analysis and information processing.
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Selamat datang dalam buku "Dinamika Kewirausahaan: Menggali Potensi Dunia Usaha". Buku ini merupakan landasan bagi para pengusaha dan calon pengusaha untuk memahami betapa pentingnya menggali serta mengoptimalkan potensi yang ada dalam dunia bisnis. Melalui pemahaman mendalam tentang dinamika kewirausahaan, diharapkan para pembaca dapat mengembangkan visi yang jelas dan strategi yang tepat untuk meraih kesuksesan dalam dunia usaha yang kompetitif. Dalam setiap halaman buku ini, pembaca akan dibawa untuk menyelami berbagai aspek krusial yang memengaruhi kinerja dan pertumbuhan bisnis. Mulai dari strategi pemasaran yang inovatif hingga manajemen risiko yang cerdas, buku ini dirancang untuk memberikan wawasan yang mendalam dan inspiratif. Dengan memadukan teori dan praktik terkini, diharapkan pembaca dapat mengaplikasikan konsep-konsep yang terdapat dalam buku ini secara langsung dalam konteks bisnis mereka.
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ABSTRACT Previous research indicates that entrepreneurs are generally high in dispositional optimism—the tendency to expect positive outcomes,even when such expectations are not rationally justified. The present research investigates the effects of such optimism and finds that in general, there is a negative relationship between entrepreneurs’ optimism and the performance (i.e., revenue and employment growth) of their new ventures. These effects, however, are moderated by past experience in creating new ventures and industry dynamism, such that the negative relationship between entrepreneurs’ optimism,and new venture performance,is stronger for experienced than inexperienced entrepreneurs, and stronger in dynamic than in stable environments. These findings indicate that the effects of entrepreneurs’ optimism on new venture performance,are contingent on key behavioral and environmental variables. In this
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Theories of social cognition, information processing, and expertise provided the foundation for a cross-cultural model of venture creation. Using data from seven countries, we found support for the cognitive model. In particular, arrangements, willingness, and ability scripts were found to be associated with the venture creation decision; some two-way interactions involving arrangements scripts were significant; and individualism and power distance were associated with willingness and ability scripts and with the venture creation decision, through interaction with arrangements scripts. Results support and extend theory and provide preliminary evidence of consistency in cognitive scripts across cultures.
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We examine the upside potential of privatization of both publicly traded firms and state-owned enterprises through the lens of agency and entrepreneurial cognition theory. In addition to managerial incentives, we argue that significant entrepreneur-ial progress is made through a cognitive shift from a managerial to an entrepreneurial mindset. The two perspectives provide a framework for understanding buyouts and how managerial incentives and individual cognition, considered in tandem, effec-tively expand managerial discretion and thereby stimulate upside growth. In most academic treatments of buyouts, re-searchers have focused on agency-based expla-nations that limit managerial discretion to cre-ate gains through a focus on efficiency (Jensen, 1989). Although applications of managerial and behavioral perspectives have been limited (see Fox & Marcus, 1992, for an exception), we use an entrepreneurial cognition perspective in this ar-ticle to explain how managerial discretion can lead to upside growth in buyouts. Buyouts cover a variety of closely related or-ganizational forms, in which a group of individ-uals or investors (as opposed to publicly owned entities) attains significant equity ownership in an enterprise. The sale of state and local government-owned enterprises, ultimately based on disappointment with their perfor-mance (Megginson, Nash, & van Randenborgh, 1994), is representative of a growing trend to-ward privatization buyouts and also represents an increasingly common conduit for change and entrepreneurial pursuits (Filatotchev, Wright, Buck, & Zhukov, 1999). We argue that buyout enterprises, restricted by political and other or-ganizational constraints, may generate perfor-mance improvements in three main ways: by enhancing efficiency, by catching up with in-dustry-wide innovations, and by exploiting new and radical innovations. These three rationales are inherent in the model that we develop in Table 1 and in the arguments that follow.
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This is an excerpt from the 4-volume dictionary of economics, a reference book which aims to define the subject of economics today. 1300 subject entries in the complete work cover the broad themes of economic theory. This extract concentrates on money.
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Presents a framework that highlights the differences among entrepreneurs and among their ventures. Building on the work of others, four dimensions are identified for this framework describing new venture creation. These are: individuals, environment, organization, and process. This is the first framework to combine all four of these dimensions. The individual dimension should consider not only the psychological characteristics of the entrepreneur such as need for achievement and locus of control, but must also consider the entrepreneur's background, experience, and attitudes. The process dimension should be viewed in light of six different behaviors including the location of a business opportunity and the accumulation of resources. Twelve factors are identified for the environmental dimension. These twelve factors were chosen based on the review of 17 research papers focused on environmental variables which affect new venture creation. The organization dimension is composed of three generic competitive advantage strategies and 14 competitive entry wedges. This framework allows for the examination and comparison of very different new ventures. Conflicting results in prior research studies may be explained by considering the dimensions used in that work. (SRD)
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'This ambitious book draws upon a wide variety of literature in developing a comprehensive theory of entrepreneurship, ranging from the discovery of entrepreneurial activities, to industry differences in entrepreneurial activity, to the organizing process. It represents a major contribution to the field.' - Arnold C. Cooper, Purdue University, US. 'Professor Scott Shane provides a deep and comprehensive discussion of the individual-opportunity nexus in entrepreneurship. Eschewing the usual approaches of either focusing exclusively on the individuals and their motivations and actions or focusing exclusively, almost always ex-post, on the economic potential of opportunities, Scott Shane fixes his gaze squarely on the nexus of the individual and the opportunity. It is this nexus that I believe is the building block for a better understanding of the entrepreneurial phenomenon.' - From the foreword by Sankaran Venkataraman. In the first exhaustive treatment of the field in 20 years, Scott Shane extends the analysis of entrepreneurship by offering an overarching conceptual framework that explains the different parts of the entrepreneurial process - the opportunities, the people who pursue them, the skills and strategies used to organize and exploit opportunities, and the environmental conditions favorable to them - in a coherent way.
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This study compares the internal decision-making styles of Mexican-American versus Anglo-American small business entrepreneurs in evaluating potential business ventures. The purpose of the study is to provide insight into the decision-making strategies and styles of Mexican-American small business entrepreneurs in comparison to Anglo-American entrepreneurs. Results indicate that Mexican-American small business entrepreneurs are twice as likely not to attend to traditionally formulated decision-making criteria than their Anglo-American counterparts. More Mexican-American entrepreneurs who lacked formulated decision-making policies had sole proprietorship businesses and less involvement of family members in their businesses than Mexican-American entrepreneurs with established policies. For both ethnic groups who had established, identifiable decision-making criteria for evaluating a business venture, similar decision-making policies were exhibited with family support being more important to the Anglo-American entrepreneurs.
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Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
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Some managers and entrepreneurs decide to act in ways that result in harm to the natural environment, despite the fact that such actions violate their own values. Building on moral self-regulation theory (Bandura, 1991), we propose that entrepreneurs' assessments of the attractiveness of opportunities that harm the natural environment depend on the simultaneous impact of values and personal agency. By cognitively disengaging their pro-environmental values, decision makers (i.e., entrepreneurs) can (under certain circumstances) perceive opportunities that harm the environment as highly attractive and thus suitable for exploitation. The results of a judgment task that generated 1,264 opportunity assessments nested within 83 business founders offered support for this general prediction and indicated that the extent of founders' disengagement of their pro-environmental values was stronger when they had high, rather than low, entrepreneurial self-efficacy, and stronger when industry munificence was perceived as low rather than high. We discuss our new measure of moral disengagement in a decision-making context and the implications of the study's findings for extant literatures on moral disengagement and sustainable entrepreneurship.
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Opportunity exploitation is a necessary step in creating a successful business in the entrepreneurial process, yet there has been little conceptual and empirical development of this issue in the literature. This study examines the decisions of entrepreneurs to begin exploiting business opportunities from a resource-based view. Our analysis of a sample of entrepreneurs whose businesses are located in incubators suggests that entrepreneurs are more likely to exploit opportunities when they perceive more knowledge of customer demand for the new product, more fully developed necessary technologies, greater managerial capability, and greater stakeholder support. Moreover, the findings of this study shed a light on a less emphasized aspect of the resource-based view: the new product's anticipated lead time acts as an enhancing moderator in entrepreneurs' exploitation decision policies. Implications for future research on opportunity exploitation are discussed.
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How do entrepreneurs identify opportunities for new business ventures? One possibility, suggested by research on human cognition, is that they do so by using cognitive frameworks they have acquired through experience to perceive connections between seemingly unrelated events or trends in the external world. In other words, they use cognitive frameworks they possess to "connect the dots" between changes in technology, demographics, markets, government policies, and other factors. The patterns they then perceive in these events or trends suggest ideas for new products or services-ideas that can potentially serve as the basis for new ventures. This pattern recognition perspective on opportunity identification is useful in several respects. First, it helps integrate into one basic framework three factors that have been found to play an important role in opportunity recognition: engaging in an active search for opportunities; alertness to them; and prior knowledge of an industry or market. In addition, it also helps explain interrelations between these factors (e.g., the fact that active search may not be required when alertness is very high). Second, a pattern recognition perspective helps explain why some persons, but not others, identify specific opportunities. Third, a pattern recognition framework suggests specific ways in which current or would-be entrepreneurs can be trained to be better at recognizing opportunities. Future directions for research on a pattern recognition perspective are described, and its practical implications for entrepreneurship education are examined.
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New business startups with venture capital backing depend on mutual cooperation between entrepreneurs and venture capitalists, but little is known about what makes these relationships work. The present article considers the implicit similarities between entrepreneurventure capitalist relationships and the Prisoner's Dilemma framework, using this paradigm to develop a conceptual model of entrepreneurs' and venture capitalists' decisions to cooperate. The model is used to generate a number of testable propositions concerning long-term cooperation between entrepreneurs and venture capitalists. Implications of the model for researchers, entrepreneurs, and venture capitalists are discussed, and the paper concludes by examining implications of the entrepreneur-venture capitalist context for the traditional Prisoner's Dilemma framework.
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Our study explores the structuring decisions made by intermediaries seeking to alleviate poverty by connecting base-of-the-pyramid markets with more developed markets. Using intermediation theory to ground our study, we collected qualitative data on 29 social intermediation projects located within Latin America, Africa, and Asia. Our findings suggest that ‘socializing’ intermediation theory to more accurately explain and predict structural outcomes across more diverse contexts requires three key modifications: (1) the attenuation of opportunism, which creates an internalizing social force; (2) the accommodation of non-monetary objectives, which creates an externalizing social force; and (3) the perception of transaction capabilities as tractable, which serves as a guidepost for reconciling these two opposing social forces.
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The transition between the founding of firms and their first steps toward growth represents a critical juncture in the life cycle of new firms. An experimental study was conducted among a sample of 103 owner-operators of independent hardware stores, in order to examine the effects of their competency and their store's prior performance on their decisions to grow their business under changing market conditions.The results of the study indicate that prompt and vigorous actions to grow the business in response to market changes are more likely under the following conditions: A high level of competence in the firm combined with poor prior performanceA low level of competence in the firm, combined with good prior performanceThese findings attest to the critical importance of competency building in new and small firms, as competency appears to facilitate responsive behavior to changing market conditions when the firm's performance has not been favorable. Such competencies may go beyond technical competencies and may include the ability of firms to build relationships with current and prospective customers, which may help the firm anticipate and better understand customer needs.The results also indicate that the folklore about the vigorous responsiveness of entrepreneurs across all kinds of situations, and in the face of all sorts of adversity, may be misplaced or inaccurate. The varying patterns of responsiveness found in our study should provide food for thought, particularly for entrepreneurs who are fortunate to find themselves in positions in which the firm's competencies are high and its prior performance good. Under such circumstances, our results show that a “fat cat” syndrome is likely to set in and undermine the responsiveness of the firm to changing market conditions.For public policy-makers, our results suggest that programs which support competence-building among entrepreneurs whose firms are struggling may play an important role in assisting them to respond to the changes they so frequently face in today's markets. Such programs, which may enhance survival rates of firms already in existence as well as encourage them to grow, may aid in job creation and in maintaining a robust economic environment.
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We explore the strategic implications of firm compensation dispersion on the heterogeneous turnover outcomes of employee mobility and entrepreneur ship. We theorize that individuals' turnover decisions are affected by the interaction of individual performance with the firm's compensation dispersion relative to its competitors. We test our theory using linked employeremployee data from the legal services industry. We find that individuals with extreme high performance are less likely to leave firms that offer higher compensation dispersion than competitors, however, if they do leave these employers, they are more likely to create new ventures. In contrast, employees with extreme low performance are more likely to leave firms with more compensation dispersion than competitors, and these individuals are less likely to engage in new venture creation.
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In strategic opportunity pursuit, decision incongruence (the gap between the decision-making rationale that an individual conveys to others and the rationale that informs his/her actual decisions) can lead to difficulties achieving the commitment necessary to grow a venture. To understand why some individuals have greater decision incongruence in strategic opportunity pursuit than others, we conducted a field experiment to test how a configuration of theoretically-based capability-building mechanisms—codification, general human capital, and specific human capital—affected 127 CEOs' decision incongruence. The results indicate that codification decreases decision incongruence the most for CEOs with low general but high specific human capital. Copyright © 2012 Strategic Management Society.
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This article argues that resource-based logic can be extended by conceptualizing the firm in resource-investment terms. It establishes that investing in resources is essentially a bilateral process involving managers and the owners of capital and that all resource-investments are necessarily made within an institutional superstructure. As a result, the capital invested into the firm is necessarily highly structured. These ideas are developed in this article from a payments perspective because this perspective allows scholars to explore the ex ante investment decisions that allow firms to grow, and to focus on firms’ resource payments, which can be considered a proxy for firms’ ex post resource-investments. The article concludes with a discussion of the implications of these ideas, including the implications for performance, theory of the firm, and endogenous growth research.
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In this paper I use the psychological literature on grief to explore the emotion oi business failure, suggesting that the loss of a business from failure can cause the self-employed to feel grief—a negative emotional response interfering with the ability to leam from the events surrounding that loss. I discuss how a dual process of grief recovery maximizes the leaming from business failure.
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To date, the phenomenon of entrepreneurship has lacked a conceptual framework. In this note we draw upon previous research conducted in the different social science disciplines and applied fields of business to create a conceptual framework for the field. With this framework we explain a set of empirical phenomena and predict a set of outcomes not explained or predicted by conceptual frameworks already in existence in other fields.
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A fundamental theme in comparative crosscountry research is the convergence of organizational forms in diverse national settings. In this paper we examine a special instance of this theme: the pattern of diversification across industries. A common argument is that technical and market forces compel firms to adopt “coherent” strategies of diversification. This thesis implies that there should be a convergence in the patterns of interindustry diversification in all market-based economies. An institutional approach offers an alternative view. From this perspective, when diversification across industries is seen as subject to nation-specific governance and resource constraints, countries should vary widely in their interindustry diversification patterns. To test these alternative views, we analyze the diversification patterns of large corporations from five countries: France, Germany, Japan, the United Kingdom, and the United States. Our results do not support the hypothesis of a common pattern of diversification across countries, and thus reject the technological thesis. By comparing two case studies in which entrepreneurs attempted to diversify by acquisition in France and the United States, we examine how institutions and agents interact to permit different diversification patterns to arise in diverse national environments. The statistical results and case studies imply that, given the fixity of certain institutions, even if countries are subject to globalization, convergence in diversification patterns is not necessary. The results cast doubt upon the merits of stylizing the debate as a choice between technical and institutional theories of organizational choice. Rather, the study points to the importance of two theoretical statements. The first is to inquire under what conditions there is likely to be consensus on a given “means-end” rationality for a specific managerial decision (e.g., diversification). The second is to understand the structural opportunities available to entrepreneurs for diversifying through acquisitions. Iterating between these cognitive and structural considerations shifts the focus from the false debate between technological and institutional arguments to the study of entrepreneurship situated in historically given national environments.
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Entrepreneurship is a domain of research that can be investigated from different disciplines, functions, and contexts. As a result, there are ample opportunities for multilevel research. In this article, the author acknowledges a foundation of multilevel research on decision making in the entrepreneurial context and explores future research opportunities to build on it. This exploration is organized conceptually as a hierarchy of levels below and above that of the individual, and the author uses conjoint analysis as a methodological framework to keep these ideas anchored in what is empirically possible. Specifically, this article explores (a) multilevel research on decisions to explain how a sample of individuals makes a decision on an entrepreneurial task, (b) additional possibilities for cross-level research that explains variance in decision policies based on individual differences, and (c) research opportunities that bridge the levels of the decision, the individuals, and the contexts in which they are embedded. The hope is that this article stimulates multilevel research on entrepreneurial decision making and other multilevel and cross-level issues in the entrepreneurship domain.
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This article presents a dynamic utility-maximizing model of career choice between self-employment and employment that takes into consideration the differences among people in terms of their initial attitudes toward job attributes and the likely changes to those attitudes as they mature. These differences between people affect the choice of career that maximizes their utility (there are at least five optimal career paths). This dynamic utility-maximizing model helps increase our understanding not only of why some people become self-employed but also of why and when some self-employed people switch to employment.
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Non-metropolitan areas have been attracting the attention of entrepreneurs due to the low cost of doing business and advances in telecommunications. In metropolitan settings, the entrepreneur typically employs a network of professionals and has access to expertise that can easily be consulted to help remedy problems facing the organization. In a rural location, entrepreneurs must develop a means to augment the expertise assembled in the firm and in the local area. Information becomes the critical variable in strengthening the competitiveness of rural entrepreneurs.The evidence strongly supports the view that critical success factors exist for entrepreneurial ventures, that information systems impact many of these critical success factors, and that rural ventures can benefit greatly from an effective expert information system. This paper examines the issues associated with improving the gathering and processing of information to enhance the structure, resources, and decision-making capabilities of rural entrepreneurs. Several concepts are presented that should provide assistance for examining the issues. These concepts are then integrated into the model, the entrepreneurial virtual megafirm (EVM), designed to provide infrastructure to enhance the effectiveness of rural entrepreneurs.
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We studied 623 nascent entrepreneurs during a six‐year period, examining how their planning decisions impact venture‐level performance. Our study is unique in that we tracked nascent ventures, examining their planning behavior, including changes to plans. Relying on the theory of legitimacy, this paper adds to the scholarly debate over the merits of business planning by examining, longitudinally, the impact of planning during a six‐year period, accounting for both pre‐emergent nascent activity and post‐emergent success factors. We found that neither formal planning nor changes in the business plan increased venture‐level performance over the six‐year study period.
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Optimistic overconfidence (OO), that is, being certain of success only to end up disappointed, represents a potentially catastrophic error. However, few studies have identified which entrepreneurial actions are associated with it. To explore this issue, we examined 55 small companies and found that OO of product success was positively related to introducing products that required more resources and were more pioneering. Furthermore, satisfaction with company performance had a curvilinear (U-shaped) relationship with overconfidence. Both high and low levels of satisfaction were associated with greater OO in product introductions. In addition, the bias was positively correlated with entering hostile environments; that is, environments that are characterized by intense competition that threatens a firm and its introductions. Contrary to expectations, however, OO was negatively associated with environmental dynamism; defined as environments that embody frequent and large changes. The research also compared general knowledge overconfidence to OO, concluding that each represents a distinct bias with distinct effects.
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This article introduces managers' personal risk considerations into the relationship between organizational decline and innovation. The agency-based perspective is used to complement threat rigidity theory and prospect theory in examining how managerial ownership and slack resources affect managers' innovation decisions when firms experience poor performance. The findings indicate that more managerial ownership decelerates innovation spending. The availability of slack resources also reduces the rate of innovation investments. Firms with more slack resources and higher levels of managerial ownership jointly reduce innovation under circumstances of decline. Last, poorly performing firms that continue investments in innovation exhibit a lower probability of survival.
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To sense and adapt to uncertainty by leveraging prior entrepreneurial knowledge is a critical ability. However, for many individuals, prior entrepreneurial knowledge is absent or underdeveloped. We investigate the ability of individuals without prior entrepreneurial knowledge to effectively adapt decision policies in response to feedback, while performing an entrepreneurial task. We model 10,000 “entrepreneurial decisions” nested within 217 individuals, to demonstrate how differences in metacognitive ability and feedback type promote (or alternatively impede) cognitive adaptability. Our findings suggest insights into the interplay between knowledge, learning, and cognition that are generalizable to activities and actions central to the entrepreneurial process.
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This research was set in the People's Republic of China. As former socialist China moves from central planning toward a more market-driven economy, improved knowledge about the new environment and firm decisions within such an environment has significant implications. For organizational researchers, such a transition represents a genuine shift of paradigm, and thus offers a unique opportunity to test existing organizational theories and develop new ones. For multinational businesses seeking business opportunities, they have to compete or cooperate with these Chinese firms, whether state-owned or privately owned.Motivated by a deep curiosity in, using the language of Williamson (1996), “What is going on there” behind the “bamboo curtain,” and underpinned by a strong conviction that organizational researchers have much to gain as well as to offer by focusing on transitional economies, I undertook this study to examine characteristics of a regulatory environment and the impact on innovation and risk-taking among Chinese managers and entrepreneurs. I collected original primary data that represents managers from large state-owned enterprises (SOEs) and entrepreneurs from small privately-owned enterprises (POEs) through personal interviews and a survey. Significant differences were found between managers and entrepreneurs in their reported environmental characteristics, strategic orientations, size, and firm performance, indicating that managers are not as innovative and are less willing to make risky decisions than entrepreneurs. Being smaller and faster than SOEs, entrepreneurial firms have adopted some strategies that distinguish them from their larger and more established competitors. Speed, stealth, and sound execution allow entrepreneurs to harvest first-mover advantages and thus increase their chances for survival in a turbulent environment.
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Research findings indicate that the feelings and moods individuals experience (i.e., their affect) influence many aspects of cognition and behavior. Extending these findings to entrepreneurship, I suggest that affect influences several aspects of en- trepreneurs' cognition and, hence, important elements of the entrepreneurial process. I propose a theoretical framework for understanding the role of affect in key aspects of entrepreneurship (e.g., opportunity recognition, resource acquisition).
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This multiple case study of eight entrepreneurial narratives of failed businesses examines how narratives that express different emotional states (folks) reflect different efforts to make sense of failure experiences (strokes). Our comparisons of the narratives’ emotional content (describing emotional states at the time of business failure and presently) revealed some new insights. First, high negative emotions motivate making sense of a loss, while high positive emotions provide cognitive resources to facilitate and motivate making sense of the failure event. Second, emotion-focused coping helped deal with negative emotions. Finally, sensemaking was also facilitated by cognitive strategies that focused attention on the failure event and promoted self-reflection.
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The study of cognition in organizations has burgeoned in recent years. Top-down information processing theory suggests that individuals create knowledge structures to help them process information and make decisions. While the benefits of employing such knowledge structures are widely noted, there is a growing concern that they can limit decision makers’ abilities to understand their information environments and thus, compromise their decision making. This issue has captured the imagination of managerial and organizational cognition researchers. To date, their inquiry has been eclectic in focus and method. To order and advance this work, the author reviews extant research on the developmental origins and decision consequences of both the content and structure of knowledge structures at multiple levels of analysis. A host of research challenges are identified to help develop a better understanding of knowledge structure representation, development, and use in organizations.