Academic journal article International Journal of Entrepreneurship

Heuristics and Biases in Entrepreneurial Marketing: Some New Insights

Academic journal article International Journal of Entrepreneurship

Heuristics and Biases in Entrepreneurial Marketing: Some New Insights

Article excerpt

INTRODUCTION

Decision making is one of the most crucial entrepreneurial tasks in starting and managing enterprises. Entrepreneurial decisions are sometimes irrational. Because of not having enough experience as well as sufficient staff and acting in mostly uncertain environments, entrepreneurial decisions, especially in the beginning phases of their activities, are prone to heuristics and biases (Busenitz & Barney, 1997). A lot of researchers have been trying to identify the main causes of entrepreneurial decision making biases. For example, Baron (1998) identified cognitive factors as the main drivers of some of the most important entrepreneurial heuristics as well as biases. Koellinger, Minniti and Schade (2007) studied overconfidence, another major decision bias in entrepreneurs. They introduced individual factors as the main causes of its genesis. Cognitive factors (Kaish and Gilad, 1991), heuristics (Manimala, 1992) as well as emotions and affect (Baron, 2008) are other main factors leading to entrepreneurial decision making biases. This is mostly true for novice entrepreneurs who make a large part of their decisions based on their intuition and emotions (Baron and Shane, 2007), which consequently could make them more susceptible to biases. Novice entrepreneurs, when engaging in marketing activities, are more prone to heuristics and biases, because on the one hand the influence of emotions, intuitions and personal cognitive characteristics is more apparent on their decisions and on the other hand, they do not have sufficient resources to gather and assess all the data and information needed to make sound decisions. This could be more obvious in the field of entrepreneurial marketing. According to Hills and Hultman (2011) entrepreneurial marketing is influenced by entrepreneurial thinking and decision making. Kilenthong et al. (2016) conclude that Entrepreneurial marketing behavior is determined by entrepreneurial thinking and decision-making as well as firm age and firm size. By considering that novice entrepreneurs do not have necessary expertise to gather and analyze information and their marketing activities are rooted in their thoughts and decisions, one could conclude that the genesis of heuristics and biases in novice entrepreneurs' marketing decisions is more probable. In general, though the bulk of work on entrepreneurial decision making biases seems adequate, there is still some ambiguity regarding another major areas affected by heuristics and biases. Relatively few studies have investigated the influence of heuristics and biases in entrepreneurial marketing. In order to fill this neglected gap, this paper tends to study some of the most common entrepreneurial heuristics and biases in the field of marketing. We argue that two heuristics (affect and availability) and three biases (overconfidence, escalation of commitment as well as planning fallacy) influence novice entrepreneurs' marketing decisions. In the following sections, we render our literature review, propositions and discussion and implications, respectively.

LITERATURE REVIEW

Entrepreneurial Marketing

Entrepreneurial marketing has been introduced and developed as a novel way of doing marketing, especially in small businesses. Gardner (1994) was one of the first scholars who studied the interface of marketing and entrepreneurship. According to Gardner, The interface of entrepreneurial behavior and marketing is that where Innovation is brought to the market. Marketing's role in innovation is to provide the concepts, tools and infrastructure to close the gap between innovation and market positioning to achieve sustainable competitive advantage. Hills, Hultman, Kraus and Schulte (2010) defined entrepreneurial marketing as a spirit, an orientation and a process of passionately pursuing opportunities and launching and growing ventures that create perceived customer value through relationships by employing innovativeness, creativity, selling, market immersion, networking and flexibility. …

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