Entrepreneurial strategic decision making

1. STRATEGIC ENTREPRENEURSHIP
TOPIC 6
DR ANIS AMIRA AB RAHMAN
SITI AFIQAH BINTI ZAINUDDIN
FACULTY OF ENTREPRENEURSHIP AND BUSINESS
UNIVERSITI MALAYSIA KELANTAN
anisamira@umk.edu.my
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2. ENTREPRENEURIAL STRATEGIC
DECISION-MAKING
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3. Strategic Entrepreneurship and Strategic Management
Source : Wheelen, T. L. and Hunger, J. D.
(2000 cited in Kuratko, D. F. & Hodgetts,
R. M., 2004: 521).
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4. What is Decision-Making?
 A human activity and is influenced by psycho-logical
effects and subject to cognitive limitations of the
human mind (Bouyssou et al., 2006).
 Decision making activity is driven by reasoning and
emotion (Bouyssou et al., 2006).
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5.  Decision making based on 3 hypotheses:
1-decision makers always know their
problems
2-such problem can always be formulated as
an effectiveness or efficiency problem
3-the information and the resources
necessary to find a solution are always
available
What is Decision-Making?
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6. What is Decision-Making?
 However, none of these hypotheses is true as in
reality:
1- decision makers never have a very precise
idea of their problem;
2- often their problems can be formulated as
the search for a ‘satisfying compromise;
3- solving problem is always constrained by
the available resources and time.
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7. Decision MakingProcess
Source: www.maths.tcd.ie/~nora/FT351-3/DSS.pdf

8. Strategic Decision Making
 Intentional choices or programmed responses about
issues that materially affect the survival prospects,
well-being and nature of the organization (Musso &
Francioni, 2012).
 They guide the organization into the future and shape
its development
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9. Strategic Decision Making
• Determined by comparing the organization’s inherent
capabilities with the opportunities and threats in its
external environment (Musso & Francioni, 2012).
• In addition, it involved in determining the objectives,
resources and policies of the organization.
• Strategic decision making process includes rationality/
comprehensiveness, formalization/standardization, and
centralization dimensions.

10. Rationality
 Actors have known and predetermined objectives
and evaluate all possible consequences of their
actions. Then, they gather all relevant information,
develop alternatives plans of action and finally select
the most optimal alternative.
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11. Formalization
 Formalization concerns the extent to which
organizational policies, rules, charts and plans are
expressed clearly and formally in strategic decision
making processes.
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12. Centralization
 It emphasizes the role of participation in decision making
process and refers to the concentration of authority or
decision making power in decision making process.
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13. Decision-making Theory (DMT)
 DMT can be regarded as the cognitive process
resulting in the selection of a belief or a course of
action among several alternative possibilities
(Edwards, 1954).
 Every decision-making process produces a final choice
that may or may not prompt action.
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14. Decision-making Theory (DMT)
 For instance,
An entrepreneur standing in front of a “highly risky but
profitable project” proposal costing RM 2 Million may
be considering two states. In state A, the entrepreneur
has RM2 Million and no profitable project. In state B the
entrepreneur has RM 1 Million and investing RM 1
Million to a Joint Venture with other company to grab
this highly risky and profitable project.
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15. Decision-making Theory (DMT)
These theories center on the notion of the:
1. subjective value, or
2. utility,
of the alternatives among which the decider must
choose. They assume that people behave rationally,
that is, that they have transitive preferences and
that they choose in such a way as to:
1. maximize utility or,
2. expected utility.
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16. Application of the entrepreneurial strategic
decision making in business organization
Objectives must first be
established
Objectives must be
classified and placed in
order of importance
Alternative actions
must be developed
The tentative decision
is evaluated for more
possible consequences
The alternative that is
able to achieve all the
objectives is the
tentative decision
The alternative must be
evaluated against all
the objectives
The decisive actions are
taken
Additional actions are
taken to prevent any
adverse consequences
from becoming
problems
If there problems, the
process should start all
over again
Source: Monahan, 2000.Dr Anis Amira Ab Rahman 14

17. Application of the entrepreneurial strategic
decision making in business organization
Frederick et al., 2000
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18. Application of the entrepreneurial strategic
decision making in business organization
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19. The Decision to Exploit or Not to Exploit the New Venture Creation
Opportunity
Source : Hisrich, R. D., Peters, 2009
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20. Factors That Influence the Decision to Enter
the Market Now or to Delay Entry
Source: Hisrich,R. D, Peters, 2009
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21. Critical Decisions for Marketing Mix
Source : Hisrich, R. D. Peters, 2009
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22. REFERENCES
 Kuechle, G., Boulu-Reshef, B., & Carr, S. (2014). Antecedents of
Entrepreneurial Decision-Making: Prediction and Control Oriented
Strategies. Available at SSRN 2431953.
 Maine, E., Soh, P. H., & Dos Santos, N. (2014). The role of entrepreneurial
decision-making in opportunity creation and recognition. Technovation.
 Pettigrew, A. M. (2014). The politics of organizational decision-making.
Routledge.
 Wood, M. S., & Williams, D. W. (2014). Opportunity Evaluation as
Rule‐Based Decision Making. Journal of Management Studies, 51(4), 573-
602.
 Shepherd, D. A. (2011). Multilevel entrepreneurship research:
Opportunities for studying entrepreneurial decision making. Journal of
Management, 37(2), 412-420.
 Kalinic, I. G. O. R., Sarasvathy, S. D., & Forza, C. I. P. R. I. A. N. O. (2013).
Internationalization and effectation explaining entrepreneurial decision–
making in uncertain international environment.
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23. REFERENCES
 Uru, F. O. et al., (2011). How much entrepreneurial characteristics
matter in strategic decision making? Procedia Social and Behavioral
Sciences, 538-563.
 Musso, F & Francioni, B. (2012). The influence of decision maker
characteristics on the international strategic decision making
process: An SME perspective. Procedia Social and Behavioral
Sciences, 279-288.
 Bouyssou, D. et al., (2006). Decision making process, concepts and
methods, Johns Wiley & Sons: USA.
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