A number of recent studies have explored links between entrepreneurial cognition and business performance, however little attention has been paid to the potential influence that cognition may have on internal business processes which, in turn, contribute toward business performance. This study explores the role of one particular internal business process, management accounting systems (MAS). Given that the effective use of MAS can positively contribute to business performance, we consider how an entrepreneur’s decision-making style and level of overconfidence influence MAS development. Analytic decision-making involves conscious reasoning and deliberate rational thought, whereas intuitive decision-making relies on gut-feeling derived from previous experience and learning (Mitchell, Friga et al. 2005). The cognitive bias of overconfidence, where individuals “overestimate the correctness of their initial estimates” (Forbes 2005), can increase the likelihood of venture initiation and start-up, however, it can also lead, subsequently, to inappropriate operational decisions and underperformance.
Bruce, David A. and Thorne, Helen
"HOW ENTREPRENEURS INFLUENCE THE EVOLUTION OF MANAGEMENT ACCOUNTING SYSTEMS: THE ROLE OF DECISION-MAKING STYLE AND OVERCONFIDENCE (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 27
, Article 23.
Available at: http://digitalknowledge.babson.edu/fer/vol27/iss6/23