How do individuals, entrepreneurs, managers, leaders
make decisions? A decision is a choice, result or the action or process of resolving a
question, reaching a conclusion after consideration, and formal judgment.
Decision-making is central in
entrepreneurial activity (Beeka, 2015; Casson, 2003a, Casson, 2010; Cole, 1946;
Shane, 2003; Stauss, 1944). Our studies find entrepreneurs utilise two
key decision types throughout the entrepreneurship process. That is,
judgmental (rational) and heuristics (bias), with the latter more
noticeable during nascent stages, or when there is little information available
to make rational judgements.
The complete process of entrepreneurship involves exercising
judgment (Casson, 2003a, 2010), and Casson (2003a, p. 20)
acknowledges, “An entrepreneur is someone who specialises in making judgmental decisions
about the coordination of scarce resources. A judgemental decision is one
where different individual’s sharing the same objectives and acting under
similar circumstances, would make different decisions” (Casson, 2003a, p.
14). Thus, rational judgement is implicit and a timeless principle
which is tacit, a personal quality and part of social intelligence (Casson,
2010).
Simon et al. (2000), Beeka & Rimmington (2011a,
b), and Beeka (2015) support that during new venture creation heuristics leads to
low risk perception, and this overconfidence is due to cognitive biases, or
control illusions. Hence, resource-starved entrepreneurs construe meaning
rather than wait to gather all information before making decisions (Beeka & Rimmington 2011a, b; Beeka,
2015, 2017; Holcomb et al., 2009; Mitchell et al., 2007;
Tversky and Kahneman, 1973). The reality of decision-making is entrepreneurs
frequently neither have encompassing information nor thorough cost-benefit
analysis before making decisions. They possibly accept risk partially in
anticipation of escaping it (Low and Macmillan, 1988). 
Therefore, when entrepreneurs start ventures without formal knowledge of
business creation strategies (Mitchell et al., 2007; Wickham,
2004, 2006). It is argued the utility of biases and heuristics are one reason
why some struggle with management (Busenitz, 1999). However, Baron (2008)
supports although entrepreneurs ‘make it up as they go along’ past mistakes and
errors are taken into consideration when making opportunity decisions (Baron,
1998, 2012). The fact is, many entrepreneurs are adaptable and innovative when making decisions, being novel, original and/or creative.
Summarily, first, entrepreneurs
make innovative judgmental decisions to recombine scarce resources, and these are rational,
calculated and deliberate (Casson, 2003a, 2010). Secondly, innovative heuristic
decisions involve making decisions on ones feet given incomplete information
consistent to these authors (Baron, 2012; Beeka and Rimmington, 2011a, b, 2015;
Holcomb et al., 2009 Mitchell et al., 2007;
Tversky and Kahneman, 1973; Schwartz et al., 2010; Wickham,
2004, 2006).
The entrepreneurs' reality is often uncertainty, information
gaps, scarce resources and a harsh unplanned environment, and the heuristic
trial and error method becomes 'rule of thumb' decisions. Therefore,
during the complete lifecycle of venturing, heuristics enable confidence in
assessing and perceiving low risk (Beeka 2015, 2017; Simon et al., 2000; Tversky
and Kahneman, 2000).
Ultimately, innovative judgemental
and heuristic decision-making are fundamental in adjusting to
political, economic, social, technological, legal and environmental business
forces.
SHEFFIELD DOCTORAL CONFERENCE: WON BEST PAPER
1. Beeka, B. (2011) Entrepreneurship as a career choice: Opportunity
recognition model from an emerging economy. In Lee, B and Palmer,
N.J (Eds) Sheffield Doctoral Conference Proceedings, pp. 19-36.
Sheffield: The University of Sheffield Management School Research Office.
DOCTORATE THESIS
2. Beeka, B. H (2015)
Entrepreneurship as a Viable Career Choice for Nigerian Youth. Sheffield
Business School, Sheffield Hallam University Doctor of Philosophy Thesis.
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2. How to Start Your Own Business: Entrepreneurship Career Edition 2 (Entrepreneurship Career Startup Edition Book 1)
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4. The Entrepreneurs Tool kit. The African Business Roundtable (ABR).
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6. Effective Ways to Know, Manage or Motivate your Team to Attain High Profitability.
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