Abstract
Article history: Received March 26, 2012 Accepted 15 June 2012 Available online June 18 2012 Entrepreneurs are the driving force behind the prospect and growth of the societies. Sound and wise decisions pave the way for them to carry out these highly important functions. Entrepreneurs are to discover and exploit opportunities. Therefore, they must gather sufficient and pertinent information. Entrepreneurs, like most human beings face complex and ambiguous decision-making situations, not to mention their lack of time and source to gather and process the data. Under these circumstances, entrepreneurs are prone making biases decisions. There are many reasons identified for this entrepreneurial decision making biases, such as the high cost of rational decision making, limitations in information processing, differences in their styles and procedures, or information overload, environmental complexity, environmental uncertainty. These biases are neither totally harmful nor completely useful and have to be seen as natural human characteristics. What makes entrepreneurial decision-making biases important is their effects on the decisions and thus the outcome of the enterprises. Entrepreneurial decision-making biases, deliberate or unintentional can seal the fate of the enterprises, therefore studying them meticulously is crucial. Literature has shown that experience could be an effective factor in decision-making biases. In this paper, we try to find out the impact of experience in Iranian high tech entrepreneurs’ major decision-making biases by a qualitative approach. Finally, it was concluded that experience is influential in shaping overconfidence bias. © 2012 Growing Science Ltd. All rights reserved.
Highlights
Entrepreneurs show cognitive biases in their decision-making by not totally following rational decision-making models; they use mental and cognitive shortcuts (Baron, 1998)
There are many reasons identified for this entrepreneurial decision making biases, such as the high cost of rational decision making, limitations in information processing, differences in their styles and procedures, or information overload, environmental complexity, environmental uncertainty
Entrepreneurs are overly optimistic about their own chances of success (Cooper et al, 1988) and their over optimism sometimes leads to overconfidence bias
Summary
Entrepreneurs show cognitive biases in their decision-making by not totally following rational decision-making models; they use mental and cognitive shortcuts (Baron, 1998). High costs of decision-making efforts (Simon et al, 1999), information-processing limits of decision makers (Abelson & Levi, 1985), differences in the values of decision makers and a lot of reasons are the causes of the deviations from rational decision-making models. Opportunities are another factors resulting in possible decision-making biases. They become susceptible to biases in their decisions (Busenitz & Barney, 1997; Forbes, 2005)
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