Rational Choice Theory: Decision Making


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Entrepreneurs are often described as rational decision makers. For example, there is a continuing interest in examining the risk preferences of entrepreneurs and non-entrepreneurs. The evidence may not be exhaustive, but the activity of the initiative is usually analyzed using variables such as probabilities, results, and utility functions . Risk taking and risk aversion can be the result of cognitive processes characterized by rationality and the desire to maximize profits. Recent evidence suggests that entrepreneurial motivation may be more complex and multidimensional than the argument for maximizing profit, and that the traditional representation of the entrepreneur is influenced by the ideas of economic agents derived from the strategy, evaluation model and optimization .

According to this description, entrepreneurs can be seen as facilitators to obtain more money or non-monetary rewards, including autonomy and identification . Despite these criticisms, entrepreneurs were mainly studied as part of a rational analysis. Corporate mindset refers to a state of mind that emphasizes and builds on the benefits of insecurity. In a rational situation, the company mentality refers to rational analysis and decision-making processes. According to, the mental processes associated with planning are serial, systematic, and articulate. In this planning trend, this situation tends to occur within an objective timeframe.

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Decisions are made positively according to official plans and schedules. The activities mentioned by Mintzberg were associated with the left brain. This way of thinking corresponds to the vision of the organization developed by rational leaders (). The corporate culture and corporate mentality refer to the system of shared values ​​and beliefs that generates norms of behavior (corporate culture) and has the ability to influence others strategically by focusing on resources to highlight opportunities and behaviors (). In a rational view, organizations can be understood as technical entities distinguished by their precision and attention to facts and details.


Organizational leaders may prefer a rational approach to strategic entrepreneurship. As mentioned in the previous sections, you can reactivate your business through searches and management of specific resources (through careful analysis and mature decisions step by step). But sometimes the entrepreneurial spirit has a different logic. Intuitive companies, therefore, tend to act ‘out of time’ in times of volatility, when the individual is so busy with their work that it is lost over time. The intuition follows in this way the internal logic of the contractor and not according to the logic of the calendar.

Terms or education emphasize the importance of intuition in business decisions. Intuition refers to a type of deep knowledge, the ability to group capabilities or information that has never been relevant. Intuition is an unconscious, complex, rapid and fundamental process for quick decision making . In resource management, easy-to-use entrepreneurship may require reinventing resources. Existing resources can be used or merged in an innovative way to solve problems that have not been noticed before. The same resource can be reinvented in several ways.

For example, a product or service can be reinvented by changing the perception of buyers. The discovery that algae can be sold as food in the United States does not mean any change in the algae itself, but requires reinventing the perception. Intuitive decisions can be more conducive to disruptive innovation than logical decisions. In fact, this implies implicitly knowledge or interdisciplinary knowledge or transforms business processes into new alternatives instead of developing existing alternatives .

Intuition can lead to solutions that deviate and do not conform to current processes. In fact, the synthesis of intuitive ideas can lead to solutions that were previously not conceivable. Market leaders who want to improve their current benefits may not be interested in developing solutions that undermine them. However, pilot companies may be interested in exploring different / disruptive solutions. They can introduce new business concepts that lead to significant changes in competitive dynamics.


The recent interest of management and management researchers in improvisation shows that free work can be facilitated by improvised skills. Organizational improvisation can be defined as the concept of work that develops in an organizational context, using the available physical, cognitive, emotional and social resources . It is an individual or collective exercise that takes place in the context of concrete, relevant and transient circumstances. The psychological and personal perception of temporal pressure is a determining factor of improvisation. People are reluctant to solve practical problems arising from specific and unforeseen business conditions and opportunities .

Promoting the business climate as highly competitive, fast and rapidly changing, academics’ interest in processes that can ensure survival and benefits in markets that require more than mechanical routines and emphasize rationality and efficiency. Effectiveness Research has shown that improvised skills can play an important role in the decision-making process . Entrepreneurship in this sense can sometimes be the result of ‘entrepreneurial tendencies’ and individual planning, but also the will to act. In this case, the entrepreneurs will be distinguished by their professional orientation, even without plans, forecasts and commercial analyses. Improvised entrepreneurs do not look for ways to explore or use them. They are there when the opportunity arises .

Stated that in some cases, the unexpected discovery of an opportunity leads to entrepreneurship rather than the other way around. research and his peers make a significant contribution by showing that a business answer does not always lie in the person, but mainly in a context where opportunities arise. Despite their interactive and opportunistic nature, improvisation is not without value for entrepreneurs. The opportunity to take advantage of opportunities can be beneficial in high-speed environments where slots are usually short. As a result, organizations with deep hierarchies and multiple performance levels may not be slow enough to take advantage of these fast-paced opportunities.

The research on entrepreneurship addresses three key issues: creating the opportunities and characteristics of those who discover these opportunities and ways of thinking and working related to exploiting those opportunities. Interestingly, these three major problems reflect the three types of decisions considered. Creating opportunities reflects a rational cognitive orientation. The second problem, the distinctive characteristics of entrepreneurs, reflects the intuitive approach to decision-making. The last topic, the modus operandi, finally refers to the way improvisation makes a decision.

This article examines the business process in the sense that all three approaches are rational, intuitive and improvised. Some details are discussed and their effects are taken on the work. This is done by referring to the four different dimensions of the organization considered by . These dimensions are entrepreneurship, corporate culture, business leadership and business resources. The business operation process may or may not create a competitive advantage

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