Making Rational Decision Is Good for Performance
Small and medium-sized enterprises (SMEs) are a vital part of the United Kingdom economy, and beyond. The sub-group of micro-enterprises (up to 9 employees) represents 96% of all businesses, but it only account for 33% of turnover. The British government has therefore solicited research ideas aimed at improving productivity in SMEs. Arnaldo Camuffo, Alfonso Gambardella, Chiara Spina, Elena Novelli (Bocconi alumna and academic at Cass Business School) and Teppo Felin (University of Oxford) submitted a project that focuses on decision making.
"The lack of systematic approaches to decision making in micro-enterprises is a barrier to productivity", Chiara Spina says. A course was made available to small classes of entrepreneurs, whose work in SMEs has a direct effect on performance. They were taught a systematic approach to decision making: definition of objectives, systematic testing, rigorous evaluation of results. Classes were held in early 2019. Entrepreneurs were trained in operational and strategic efficiency over seven sessions of three hours each. The program involved about 250 companies of all kinds, from a jewelry store to a fintech startup.
"We already have some preliminary results. After reflecting on these issues, 35% of entrepreneurs have changed their behavior. Many have learned to focus on new issues, for instance shifting attention from increasing revenue to understanding customer needs". Experience has shown that these courses are useful, but in the long run subjects return to making decisions based on old habits. Researchers are therefore offering individual mentoring sessions.
Read more about this topic:
Nicola Gennaioli. The naive illusion of human rationality
The Influence of Others on University Study Choices
Anger Can Hurt Us and Others
Thinking About It Beats Repeating It
Other Peoples' Choices Make Organizations Similar
How the Axes of Political Belonging Change
Political Corruption Scars Young Voters Forever