The decision-making entrepreneur; Literature review

Abstract

This study provides a literature overview of the entrepreneurial decision-making process. The literature review is used as background information for a qualitative study, which investigates, by means of case studies, the decision-making process of small business enterpreneurs in The Netherlands (Gibcus and Van Hoesel, 2003). The literature overview is the starting point of a confrontation between the literature on decision-making and the empirical findings of the latter qualitive study. Firstly, this literature review gives an introduction to general decision theory. It discusses the classical rationality, the bounded rationality and the neoclassical rationality. The place of the entrepreneur in the general decision theory is also discussed. Next, an analytic framework of the strategic decision-making in SMEs is presented. The analytic framework consists of three elements: the entrepreneur, the environment and the strategic decision process. Each of these elements is critical. Finally, some earlier empirical findings on entrepreneurial strategic decision-making are discussed.