Two decades of cognitive bias research in entrepreneurship: What do we know and where do we go from here?

That’s why they didn’t let it go: exploring the roots of women entrepreneurs’ escalation of commitment

“…Moreover, by directly influencing many entrepreneurial decisions, decision-making biases play decisive roles in the fate of entrepreneurial enterprises. On the other hand, faced with impending losses, entrepreneurs become more susceptible to take risks and escalate on their decisions (Markovitch et al, 2014), becoming prone to the escalation of commitment, which is one of the most important entrepreneurial decision-making biases (Baron, 1998) that has received little attention from scholars in the field of entrepreneurship (Thomas, 2018). Furthermore, previous studies share two limitations by emphasizing the consequences of escalation while paying little attention to its antecedents as well as neglecting the role of gender in this regard by ignoring the genesis of escalation among women entrepreneurs.…”

“…In general, decision-making biases are fundamental parts of entrepreneurial decision-making by influencing entrepreneurs' risk-perception (Busenitz, 1999), new venture creation decisions (Simon et al, 2000), opportunity evaluation (Keh et al, 2002), prediction of competition and demand (Simon and Houghton, 2002) and even the fate of start-ups (Kuntze and Matulich, 2016). In short, although the body of knowledge on entrepreneurs' biases has been increasing (Thomas, 2018), it still suffers from shortcomings like not only definitional discrepancies but also vague relationships (Zhang and Cueto, 2017).…”

“…While previous studies have made substantial contributions in scrutinizing entrepreneurial decision-making biases as a whole, there are some persisting research gaps in this area, especially with regard to the escalation of commitment. On the one hand, while escalation is influential in entrepreneurial (Baron, 1998), managerial (Bazerman and Moore, 2013), as well as marketing decisions ; surprisingly, it is one of the least-researched biases in the context of entrepreneurship (Thomas, 2018). On the other hand, although numerous factors have been studied as the antecedents of escalation of commitment in general, still little is known about its major contributors (Sleesman et al, 2012), especially regarding entrepreneurs, given that most of the empirical studies on entrepreneurial escalation have focused on its consequences rather than its antecedents (Thomas, 2018).…”

Do female and male entrepreneurs differ in their proneness to heuristics and biases?

“…Moreover, biases influence entrepreneurial risk perception by making entrepreneurs less likely to perceive the risks when assessing various business situations (Simon et al, 2000), impact the process of entrepreneurial opportunity evaluation (Keh et al, 2002), lead to underestimating Proneness to heuristics and biases competition and overestimating demand (Simon and Houghton, 2002), and may even result in start-up failure (Kuntze and Matulich, 2016). In short, while the body of research on entrepreneurs' decision-making biases has been growing (Thomas, 2018), it still suffers from definitional discrepancies as well as equivocal relationships (Zhang and Cueto, 2017).…”

“…Being one of the most-researched biases in entrepreneurship (Thomas, 2018), overconfidence exists either as overestimating the probability that one's favoured outcome will happen (optimistic overconfidence) or the overestimation of one's own knowledge (De kort and Vermeulen, 2010). Entrepreneurial overconfidence is one of the main causes of the introduction of risky products (Simon and Houghton, 2003), new venture creation despite the large numbers of failed ventures (Hayward et al, 2006), entry decisions and high failure rates (Koellinger et al, 2007), new business creation (Hogarth and Karelaia, 2012) and bold forecasts leading to firm failure (Invernizzi et al, 2017).…”