The relationship between biases and entrepreneurial Decision-Making. Evidence from Italian and Czech SMEs

The present article analyzes how heuristic-driven biases (Overconfidence, Availability, and Anchoring) affect Entrepreneurial Decision Making (EDM) and identifies the role of SMEs in these relationships. Furthermore, it highlights the influence of organizational and contextual factors, which have rarely been investigated in the past. Employing a survey distributed to 316 entrepreneurs from SMEs in Italy and the Czech Republic, three separate regression models were constructed. These models aimed to investigate the impact of cognitive distortions on EDM and the influence of SME characteristics, such as the size or age of the company, in an intercultural context. The study addresses a gap in current research by going beyond individual and psychological aspects of decision-making. By focusing on organizational and contextual factors, it offers a more complete understanding of the influences on entrepreneurial decisions. The intercultural perspective, examining SMEs in both Italy and the Czech Republic, adds significant value to the study. As shown in the results, Overconfidence and Anchoring biases are likely to affect EDM in both Italian and Czech SMEs. Nationality does not play a role in these relationships, indicating its insignificance. On the other hand, the size and age of SMEs mitigate the influence of both biases on decision-making. The findings offer an in-depth comprehension of cognitive biases’ dynamics within EDM in SMEs, emphasizing the importance for organizations to factor in structural characteristics alongside the biases themselves when planning and managing their decision-making processes.