Abstract:
This paper reports on decision-making cognitions just before and
during the start-up decision within the entrepreneurial process. It uses
empirical results based on responses collected through questionnaires
from entrepreneurs, managers, employees and students as respondents.
The importance of entrepreneurial cognitions is reported, and
the possible implications during the decision-making process are
explored.
Using a case design required respondents to read a case and decide
whether they would start the venture or not. First viability thoughts
about the venture happened as early as reading 12% into the case, and
81% of the respondents had their first thought about the viability of the
venture before reading 36% of the case. As all the financial information
was attached at the end, viability was judged to a large extent without
reading financial information. This confirms that respondents appear to
have used heuristics (shortcuts) and biases to make the start-up
decision.
Correlation and inter-correlation strengths and directions between
business risk perception, misconceptions, self-efficacy and illusion of
control bias with the start-up decision and viability thoughts were
established. Highly significant differences between those that supported
the start-up and those that did not were observed for business
risk perception and misconceptions, and significant differences for
illusion of control bias, but none for self-efficacy.
The paper recognises the importance of cognitions in entrepreneurial
thinking and the tendency to make judgements without complete
information. This may lead to decisions that can contribute to failure, or
may alternatively be the reason why some entrepreneurs are successful.
