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Making rational and undistorted corporate investment decisions is critically important to organisations. “Scientific” investment appraisal can play a central role, particularly setting the hurdle rate. Empirical research reveals that actual rates generally exceed organisations’ cost of capital – the so-called hurdle rate premium (HRP) puzzle. Allowing for bounded rationality of corporate decision-makers, the purpose of this paper is to mobilise the retrievability cognitive bias as one explanation of this paradox.

A systematic structuring and investigation of the legacy of eight scenarios, representing “correct” and “incorrect” decisions on “good” and “bad” proposals, is used to explain the inconsistency between normative capital investment theory and actual practice.

Decision makers’ cognitive processes based on informal perceptions, strengthened by the scope of formal post-audit routines, provide a plausible explanation why investment decision makers tend to systematically set hurdle rates too high.

The findings have still to be explored in more depth by fieldwork and experimental research.

The policy implications of this study are that corporate success could be enhanced by making executives aware of the HRP phenomenon and of its behavioural causes; also by including significant rejected investment proposals in the post-audit programme and communicating the opportunity cost of “false negative” decisions on proposals not adopted.

The paper provides a new explanation for a recognised phenomenon: Allowing for bounded rationality of corporate decision-makers, the paper applies research on a cognitive bias to the setting of the hurdle rate in investment appraisal.

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to economic and non-economic activities. Researchers have increasingly focused on the adoption and use of ICT by small and medium enterprises (SMEs) as the economic development of a country is largely dependent on them. Following the success of ICT utilisation in SMEs in developed countries, many developing countries are looking to utilise the potential of the technology to develop SMEs. Past studies have shown that the contribution of ICT to the performance of SMEs is not clear and certain. Thus, it is crucial to determine the effectiveness of ICT in generating firm performance since this has implications for SMEs’ expenditure on the technology. This research examines the diffusion of ICT among SMEs with respect to the typical stages from innovation adoption to post-adoption, by analysing the actual usage of ICT and value creation. The mediating effects of integration and utilisation on SME performance are also studied. Grounded in the innovation diffusion literature, institutional theory and resource-based theory, this study has developed a comprehensive integrated research model focused on the research objectives. Following a positivist research paradigm, this study employs a mixed-method research approach. A preliminary conceptual framework is developed through an extensive literature review and is refined by results from an in-depth field study. During the field study, a total of 11 SME owners or decision-makers were interviewed. The recorded interviews were transcribed and analysed using NVivo 10 to refine the model to develop the research hypotheses. The final research model is composed of 30 first-order and five higher-order constructs which involve both reflective and formative measures. Partial least squares-based structural equation modelling (PLS-SEM) is employed to test the theoretical model with a cross-sectional data set of 282 SMEs in Bangladesh. Survey data were collected using a structured questionnaire issued to SMEs selected by applying a stratified random sampling technique. The structural equation modelling utilises a two-step procedure of data analysis. Prior to estimating the structural model, the measurement model is examined for construct validity of the study variables (i.e. convergent and discriminant validity).

The estimates show cognitive evaluation as an important antecedent for expectation which is shaped primarily by the entrepreneurs’ beliefs (perception) and also influenced by the owners’ innovativeness and culture. Culture further influences expectation. The study finds that facilitating condition, environmental pressure and country readiness are important antecedents of expectation and ICT use. The results also reveal that integration and the degree of ICT utilisation significantly affect SMEs’ performance. Surprisingly, the findings do not reveal any significant impact of ICT usage on performance which apparently suggests the possibility of the ICT productivity paradox. However, the analysis finally proves the non-existence of the paradox by demonstrating the mediating role of ICT integration and degree of utilisation explain the influence of information technology (IT) usage on firm performance which is consistent with the resource-based theory. The results suggest that the use of ICT can enhance SMEs’ performance if the technology is integrated and properly utilised. SME owners or managers, interested stakeholders and policy makers may follow the study’s outcomes and focus on ICT integration and degree of utilisation with a view to attaining superior organisational performance.

This study urges concerned business enterprises and government to look at the environmental and cultural factors with a view to achieving ICT usage success in terms of enhanced firm performance. In particular, improving organisational practices and procedures by eliminating the traditional power distance inside organisations and implementing necessary rules and regulations are important actions for managing environmental and cultural uncertainties. The application of a Bengali user interface may help to ensure the productivity of ICT use by SMEs in Bangladesh. Establishing a favourable national technology infrastructure and legal environment may contribute positively to improving the overall situation. This study also suggests some changes and modifications in the country’s existing policies and strategies. The government and policy makers should undertake mass promotional programs to disseminate information about the various uses of computers and their contribution in developing better organisational performance. Organising specialised training programs for SME capacity building may succeed in attaining the motivation for SMEs to use ICT. Ensuring easy access to the technology by providing loans, grants and subsidies is important. Various stakeholders, partners and related organisations should come forward to support government policies and priorities in order to ensure the productive use of ICT among SMEs which finally will help to foster Bangladesh’s economic development.

The purpose of this article is to better understand the nature of the decision maker's cognitive‐affective information processing behavior in the context of strategic decision making.

Reviews of the psychological science, organizational behavior, and strategic management literatures serve as a foundation for the development of a model and a series of research propositions. Propositions and model development lead to a discussion regarding limitations of the current literature, as well as areas for future research that incorporates cognitive‐affective information processing issues in organizational research.

Organizational homogeneous and heterogeneous behaviors in the organizational adaptation process depend on a strategic decision maker's cognitive‐affective informational interpretation of both internal and external environmental stimuli.

The focus of this article is limited to the individual level of analysis. Further theoretical and empirical research should investigate how the framework could be applied at the team and organizational levels and how it holds under various industrial and/or environmental conditions.

This article informs practicing managers of how their decision‐making behavior is influenced by both cognition and affect when they scan and process their strategic informational environment and, furthermore, how these influence their choice of organizational forms and practices.

Extends theoretical understanding of cognitive‐affective informational processing and its influence on the organizational homogeneous‐heterogeneous adaptation process.

Decision making is inherently stressful since the decision maker must choose between potentially conflicting alternatives with unique hazards and uncertain outcomes. Whereas decision aids such as decision support systems (DSS) can be beneficial in stressful scenarios, decision makers sometimes misuse them during decision making, leading to suboptimal outcomes. The purpose of this paper is to investigate the relationship between stress, decision making and decision aid use.

The authors conduct an extensive multi-disciplinary review of decision making and DSS use through the lens of stress and examine how stress, as perceived by decision makers, impacts their use or misuse of DSS even when such aids can improve decision quality. Research questions examine underlying sources of stress in managerial decision making that influence decision quality, relationships between a decision maker’s perception of stress, DSS use/misuse, and decision quality, and implications for research and practice on DSS design and capabilities.

The study presents a conceptual model that provides an integrative behavioral view of the impact of a decision maker’s perceived stress on their use of a DSS and the quality of their decisions. The authors identify critical knowledge gaps and propose a research agenda to improve decision quality and use of DSS by considering a decision maker’s perceived stress.

This study provides a previously unexplored view of DSS use and misuse as shaped by the decision and job stress experienced by decision makers. Through the application of four theories, the review and its findings highlight key design principles that can mitigate the negative effects of stressors on DSS use.

Drawing on the upper echelons theory and resource-based view, the purpose of this paper is to investigate how SMEs' decision-makers can develop cultural intelligence to improve firms' adaptive capability and performance in foreign markets. The study addresses this need by using social cognitive theory as an appropriate tool to measure cultural intelligence development.

Using a sample of 244 Italian SMEs, data were collected through an online survey and analyzed with structural equation modeling techniques.

The results show that decision-makers of resource-constrained SMEs can rely on modeled behaviors to inform their decisions when dealing with diverse cultural contexts. The findings also reveal that the development of cultural intelligence can foster adaptive strategies and support SMEs in achieving superior performance outcomes in international markets.

Other variables can be taken into account to expand the model and recognize new determinants able to affect the link between the constructs. Other learning theories could provide additional interpretations of cultural intelligence development.

Social cognitive processes nurture cultural intelligence in helping SMEs' owner-managers become more flexible and adaptive in responding to the requests of local settings. When facing the uncertainties of foreign markets, decision-makers can effectively make inferences from the observation of successful modeled behaviors. This helps owner-managers better coordinate, recombine and allocate resources to address the needs of diverse cultural markets.

This study demonstrates that social cognitive theory is a relevant tool to measure cultural intelligence development in small business settings.

The purpose of this paper is to develop a conceptual model that uses dialectical inquiry (DI) to create cognitive conflict in strategic decision‐makers for the purpose of improving strategic decisions. Activation of the dialectical learning process using DI requires strategic decision‐makers to integrate conflicting information causing cognitive conflict. Cognitive conflict is the catalyst that stimulates the creation of new knowledge in strategic decision‐makers resulting in improved organizational performance.

A conceptual model is developed that explicitly links DI to the dialectical learning process of strategic decision‐makers. This model extends previous research on DI by identifying cognitive conflict as the critical component that links DI as a learning method to the process of dialectical learning in strategic decision‐making.

The major finding of the model of dialectical learning is that the model is an important resource that can be applied to create cognitive conflict in strategic decision‐makers for the purpose of expanding the strategic options of organizations.

Empirical research on DI that focuses on the role of cognitive conflict in the dialectical learning process is lacking. It is hoped that this conceptual paper will stimulate further interest on the topic and a greater appreciation of this method of learning. Strategic decision‐makers must consider alternative ways of generating new knowledge that is crucial for organizational performance.

It is important that the benefits of creating cognitive conflict in the dialectical learning process are understood by strategic decision‐makers. Training for participants in a DI learning intervention is essential to help minimize any dysfunctional behaviors that could result from affective conflict.

This conceptual model identifies the importance of cognitive conflict in the dialectical learning process of strategic decision‐makers and the critical role of cognitive conflict rather than affective conflict in the use of this learning method.

The traditional newsvendor model has focused on deriving the optimal order quantity that minimises the balance between stocking too much or too less number of products. However, the managers make inventory decisions based on intuitions and shortcuts, which may involve human errors and biases. The effect of cognitive biases and heuristics influencing the inventory ordering decisions in newsvendor settings is highlighted. The advancement of research associated to the newsvendor biases is reviewed to appreciate the behavioral aspects of the minds underlying this process.

The use of experimental and non-experimental methods to investigate the ordering behaviour of newsvendors is described and we present a framework of the existing literature and highlight the research gaps to point to future research possibilities and priorities.

The proposed framework gives a systematic approach to confirm the existence of a substantial scope of research opportunities and points to specific areas for further research. It synthesizes the existing results of behavioral newsvendor research and will act as a key reference paper. In addition, it will help the practitioners and software tool vendors to comprehend the behavioral perspective of newsvendor preferences and design strategies to mitigate this effect. The insights will be helpful for academicians, researchers and practitioners working in the areas of experimental economics, behavioral economics, behavioral operations, bounded rationality theory, newsvendor modelling and supply chain contracts.

A summary of literature in this evolving area of research is very scarce. Considering the impact of behavioral economics on managerial decisions in the contemporary world, it is highly important to have an educational summary which can act as a tool for the practitioners and researchers in the area of behavioral operations management.

In the managerial and organizational cognition (MOC) literature, cognition is often studied by considering the observable characteristics of decision-makers. However, these studies have largely neglected cognitive differences stemming from the cultural, national, ethnical, and geographical (CNEG) characteristics of decision-makers – ones that are commonly studied in the field of international business (IB) research. Despite the contributions of IB research within the domain, the advancements have not found their way to the broader literature on MOC. In order to remedy this deficiency, this chapter seeks to introduce the work conducted within the IB field on the cognitive differences and the resultant cognitive distance stemming from decision-makers’ CNEG characteristics. This work has generated original insights on: (1) cognitive distances; (2) cognitive structures; (3) the legacy of the home country; and (4) tolerance to cognitive differences. As a result, this chapter strengthens the foundations for cumulative knowledge building by providing an integrative understanding of cognitive research based on the characteristics of managers.

The purpose of this paper is to investigate cultural and individual differences in newsvendor decision making.

The online experiment, programmed in the PHP scripting language, had 107 participants: local managers of four large, well-known and supply chain–intensive firms in China (Lenovo, Shenhua, CMST and GM).

The authors find that, as compared with American subjects, Chinese subjects engage in more demand chasing, order quantities that are closer to the mean demand, have a lower expected profit and exhibit greater variance in order quantities. However, these observations may not hold when the cross-cultural comparison is conducted for each pair of ethnic subgroups whose members have the same cognitive reflection test score, a measure of individual differences. Moreover, cultural differences also affect how individual differences manifest in newsvendor decisions.

The authors findings have important implications for employee selection, training and management in any cross-cultural business environment.

Little attention has been paid, in the behavioural operations literature, to individual differences and how they interact with culture. This paper is the first to examine the interaction effects of cultural and individual differences in newsvendor decisions, and it highlights an important research area that is currently understudied in operations management.