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The impact of cognitive biases on the decision making of strategic alliance managers

Turner, Simon (2021) The impact of cognitive biases on the decision making of strategic alliance managers. Masters thesis, Dublin, National College of Ireland.

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Heuristics and cognitive biases have a significant impact on the decision-making process in various spheres of life, including in business.

This research seeks to expand on current research in drawing on behavioural economic principles such as heuristics and cognitive biases to investigate their impact on the decision making of strategic alliance managers.

A sample of 38 strategic alliance managers was surveyed to assess the prevalence of anchoring and overconfidence and its interaction with how successful a partnership is in its first year and the experience of the strategic alliance manager. The survey included up to 49 questions on demographics, general knowledge questions and their sentiment on their confidence in providing answers to surface as performed in their study for analysing biases in management by Jordão et al. (2019).

Utilising statistical analysis, it was found that strategic alliance managers are influenced by overconfidence bias and anchoring bias which corroborates empirical evidence on heuristics and cognitive biases. Moreover, managers with less than 5 years’ experience present a higher susceptibility to anchoring, as do the partner managers with a lower percentage of successful partnerships. However, the percentage of partners and the years of experience do not have an effect on how overconfident the strategic alliance manager is in comparison to a more experienced or more successful group of alliance managers.

SAMs should be aware that cognitive biases may influence their initial projections when making the decision to pursue a partnership therefore look to disprove the initial projections rather than seek for information to justify it to counteract the susceptibility to set overconfident expectations and be reluctant to deviate from them, resulting in alliance failure. Agreeing on expected behaviours and then waiting to analyse the results of these behaviours before officially setting a target would allow for projections to be based on data rather than purely based on intuition is likely to produce better decision making.

Item Type: Thesis (Masters)
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
B Philosophy. Psychology. Religion > Psychology > Cognitive psychology
Divisions: School of Business > Master of Business Administration
Depositing User: Clara Chan
Date Deposited: 31 Jan 2022 14:32
Last Modified: 31 Jan 2022 14:32

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