How to allocate resources (e.g., time and/or money) is an important decision when starting an entrepreneurial venture (Gunia, Sivanathan, & Galinsky, 2009) and developing new projects (Sandri et al., 2010). Because many entrepreneurs face resource scarcity, decisions on when and how to allocate scarce resources become crucial (Burmeister & Schade, 2007). Ownership of the venture/project and the sense of control make entrepreneurs more responsible for their business (Zhu, Hsu, Burmeister-Lamp & Fan, 2018), but at the same time may reduce the likelihood of their making inefficient/suboptimal resource allocation decisions (Baron, Tang, & Hmieleski, 2011). An example of such a decision is allocating resources into a failed or already tried course of action instead of experimenting a new, potentially more rewarding, decision (Staw, 1976). In the literature, entrepreneurs have been found to be prone to make such decisions (McCarthy, Schoorman, & Cooper, 1993), which might be explained by an inability to admit having made mistakes (Wu, Matthews, & Dagher, 2007) or fear of appearing foolish to their peers (McCarthy, Schoorman, & Cooper, 1993). Prior entrepreneurship research has examined such irrational decision-making generally (see Holland & Shepherd, 2013), yet they have not specifically tested biases in which entrepreneurs allocate resources (Zhang & Cueto, 2017). Alongside the current notions of uncertainty and entrepreneurs’ biases (e.g. Gilbert-Saad, Siedlok, & McNaughton, 2018), this project develops understanding of the resource allocation and entrepreneurs’ biased decision-making.
The project calls for proposals on the following sub-topics of (i.e., explanations for) entrepreneurs’ decision-making biases: escalated commitment, status quo bias, risk-taking, psychological ownership, cognitive capabilities, cognitive flexibility/inflexibility, emotions, emotional intelligence, and mental disorders (e.g., ADHD, anxiety, depression etc.). Also, comparative analyses comparing country/culture differences in terms of entrepreneurial decision-making as well as conjoint analyses comparing decision-making biases of different entrepreneur types (e.g., freelancers, owner-managers of SMEs, serial entrepreneurs, portfolio entrepreneurs, hybrid entrepreneurs, young entrepreneurs, male/female entrepreneurs) and non-entrepreneurs, students, managers and/or bankers are of interest..
The current research addresses the bias related to decisions because most entrepreneurs deal with intangible resources (Dew et al., 2009) (such as those sub-topics mentioned above). This is the reason why the topic of this research project is particularly timely and attractive for a person who wants to develop a successful researcher career. In fact, although resources are important for any business, entrepreneurs’ decisions can be highly biased, and we know relatively little about the details of this topic. For example, although this bias can cause harmful outcomes, such as delaying a failure (Shepherd, 2003), many entrepreneurial actions would never be taken in the absence of biases (Busenitz & Barney, 1997). Understanding bias and how its various forms relate to entrepreneurs’ decision-making contributes to understanding individual decision makers and entrepreneurial behavior. Existing research has compared entrepreneurs and managers (e.g. Busenitz & Barney, 1997), expert and novice entrepreneurs (e.g. Baron & Ensley, 2006; Dew et al., 2009), owner-managers of small and large companies (e.g. Smith et al., 1988) , entrepreneurs and non-entrepreneurs (e.g. Sandri et al., 2010) and entrepreneurs, bankers, and students (e.g. Burmeister & Schade, 2007). Such research concludes that experience of entrepreneurship and of their sector (Dew et al., 2009), feeling a psychological ownership of a business (Zhu et al., 2018), and risk-taking tendency (Busenitz & Barney, 1997) might make entrepreneurs fall in love with their business (Cardon et al., 2005), and therefore entrepreneurs tend to be more biased than the general population (McCarthy, Schoorman, & Cooper, 1993).
In this research, the above mentioned notions are developed further in a team of highly experienced and productive researchers. This project is suitable for a person who holds a master’s degree in entrepreneurship and who has a strong capability in quantitative research methods and experimental settings, in particular.