Heuristics in entrepreneurial decisions: A review, an ecological rationality model, and a research agenda

The initial survival of the Unicorns: a behavioral perspective of Snapchat

Purpose

Unicorn companies, such as Facebook, Uber, and Airbnb, significantly impact our economies. This happens although they had a dramatic initial start – at least in terms of financial performance – that would have let any other “conventional” business close. In other words, Unicorns challenge the start-ups’ problems traditionally associated with early failure (liability of newness). This paper aims to understand what helps Unicorn firms initially survive despite huge losses.

Design/methodology/approach

By adopting a behavioral lens, this historical case study article focuses on key strategic decisions regarding the famous social media Unicorn Snapchat from 2011 to 2022. The case combines secondary data and a thematic analysis of Snapchat founders’ and investors’ interviews/comments to identify the behavioral antecedents leading to Snapchat’s honeymoon.

Findings

Snapchat network effect triggered cognitive biases of Snapchat founders’ and investors’ decisions, leading them to provide initial assets (i.e. beliefs/goodwill, trust, financial resources and psychological commitment) to the nascent Unicorn. Therefore, the network effect and biases resulted in significant antecedents for Snapchat’s honeymoon.

Originality/value

The authors propose a general, theoretical framework advancing the possible impact of biases on Unicorns’ initial survival. The authors argue that some biases of the Unicorns’ founders and investors can positively support a honeymoon period for these new ventures. This is one of the first case studies drawing on a behavioral approach in general and on biases in particular to investigate the liability of newness in the Unicorns’ context.

Foreign market entry decision-making and heuristics: a mapping of the literature and future avenues

Purpose

This paper aims to provide a wide picture of studies on heuristics for international decision-making with a focus on foreign market entry. This paper systematically reviews studies published in the international business and international marketing domain to examine heuristically based decisions for foreign market entry.

Design/methodology/approach

This paper proposes a systematic literature review and an in-depth analysis of 32 papers published between 1997 and 2021 dealing with foreign market entry and the use of heuristics for international decision-making.

Findings

Even if the marketing and management literature is in many ways permeable to the debate around heuristics developed in experimental psychology and cognitive science, international business and international marketing studies on the one hand recognize that international decision-making, especially when dealing with foreign market entry, is strongly characterized by uncertainty, on the other hand, there isn’t a developed and systematized literature about it. This paper shows key topics and areas fundamental to foreign market entry in which heuristics are applied by decision makers and their effectiveness.

Originality/value

A systematic review of the use of heuristics for foreign market entry decision-making can represent a useful step for a more organic development of knowledge about the more general use of heuristics for international decision-making. Understanding the decision-making process on the modes of entry in foreign markets is a key topic for international marketing and international business scholars and practitioners.

Study of CEO Narcissism and Corporate R&D Investment

Narcissism is a deep-rooted personality trait that is particularly common in corporate leaders, and narcissistic leaders have a noticeable influence on the R&D investment behavior of enterprises. This paper empirically examines the effect of CEO narcissism on R&D investment and the moderating effects of financing constraints, and the nature of corporate ownership based on the Upper Echelons Theory, using the CEO signature size as a measure of CEO narcissism for the 2007–2020 Chinese A-share listed companies. The results show that CEO narcissism has a significant negative effect on R&D investment; corporate financing constraints play a negative moderating role between CEO narcissism and R&D investment, and the negative effect of CEO narcissism on corporate R&D investment is more significant in non-state-owned firms than in state-owned firms. The study’s findings enrich and expand the theory related to CEO narcissism and have important practical implications for R&D investment decisions and the choice of corporate executives in China.

Affect and Cognition in Managerial Decision Making: A Systematic Literature Review of Neuroscience Evidence

How do affect and cognition interact in managerial decision making? Over the last decades, scholars have investigated how managers make decisions. However, what remains largely unknown is the interplay of affective states and cognition during the decision-making process. We offer a systematization of the contributions produced on the role of affect and cognition in managerial decision making by considering the recent cross-fertilization of management studies with the neuroscience domain. We implement a Systematic Literature Review of 23 selected contributions dealing with the role of affect and cognition in managerial decisions that adopted neuroscience techniques/points of view. Collected papers have been analyzed by considering the so-called reflexive (X-) and reflective (C-) systems in social cognitive neuroscience and the type of decisions investigated in the literature. Results obtained help to support an emerging "unified" mind processing theory for which the two systems of our mind are not in conflict and for which affective states have a driving role toward cognition. A research agenda for future studies is provided to scholars who are interested in advancing the investigation of affect and cognition in managerial decision making, also through neuroscience techniques - with the consideration that these works should be at the service of the behavioral strategy field.