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

Abstract

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.

Real-time extended psychophysiological analysis of financial risk processing

“…Our analysis confirms that affect, as evidenced by the fluctuations of PP activation due to market fluctuations or financial transactions, plays a prominent role in the financial risk processing and decision making process for professional traders in their daily trading activities [ 18 ]. Our results provide contextual support for the growing literature of affective science investigating the relations between emotions and decision making [ 38 – 40 ] in the case of professional traders, whose profession requires them to make rational decisions under large uncertainties and maximize their payoffs.…”

Strategies of unicorn startups: how these positive deviants compare to early-stage and Fortune 500 ventures

“…We cannot make any conclusions about their evolution from our data but at the point they reach unicorn valuation, we provide conclusive evidence about how they behave. A recent systematic literature review answering the research question of how affect and cognition interact in managerial decision making found that there are alternative schools of thought on whether affective reasoning, cognitive reasoning, or a combination of these dominates managerial decisions (Cristofaro et al, 2022b). The authors conclude that the two systems work together, and that affective reasoning plays an initial role in driving the cognitive state in managerial decision-making.…”

Guest editorial: Behavioral strategy: (re-) affirming foundations

“…About the latter, the neurostrategy approach to management seeks to answer unexplored questions concerning the study of the human rationality of management decision-makers by finding connections between mental constructs with the activation of particular areas of the brain (Powell, 2011). Despite already recognized methodological drawbacks of neurostrategy research (Cristofaro, 2021; Cristofaro et al , 2022), the interconnection with behavioral strategy is needed, and giving this latter a driving role is even more important to orient neuroscience evidence toward a useful theory and practice.…”