Effective and optimized decision-making is crucial for organizations. Especially when they seek to enter new markets. Decisions regarding new market entry involve typically risks and uncertainties. These two factors force decision-makers to rely more extensively on heuristics and biases, causing systematic errors and incomplete decisions. Therefore, companies need to acknowledge and understand cognitive biases that influence managerial decision-making.
The data collection was conducted through semi-structured interviews supported by theoretical concepts and frameworks from existing literature. The interviews were conducted in cooperation with the case company, Beely, with four interviewees from various executive positions.
Through semi-structured interviews conducted with the case company, the research identifies several biases influencing their decision-making such as action bias, overconfidence, and egocentric bias. Additionally, the interviews illustrated the influence of prior experience on decision-making for new market entry and business development.
This research explored the influence of cognitive biases in managerial decision-making with a particular focus on the new market entry. Key findings highlight 1) the presence of action bias and its importance in an early stage of a company to ensure continuous development 2) the threat of discouraging diverse opinions to retain harmony through overly strong organizational culture 3) prior experience to both foster development through pre-existing networks and navigate under uncertainty, and hinder it by anchoring too heavily on past experiences, assumption and expectations 4) the importance of proper education and training to recognize biases and mitigate their influence in decision-making 5) the coexistence of biases indicates biases shouldn’t be studied only individually but also collectively to understand the broader influences and causalities of biases.
