Too Early to execute the strategic scenario planning: hyperbolic discounting and psychological biases of Indonesian SMEs' managers

Brahmana, Rayenda and Siregar, Widyana Verawaty and Hsb, Amawan (2013) Too Early to execute the strategic scenario planning: hyperbolic discounting and psychological biases of Indonesian SMEs' managers. Business Strategy Series, 14 (2/3). pp. 50-59. ISSN 1751-5637

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Purpose – Using the hyperbolic discounting approach in qualitative manner, the purpose of this paper is to explore the linkage of the time preference bias towards the too early execution of strategic focused planning. The paper also investigates the role of psychological bias in explaining the early execution. Design/methodology/approach – This research use qualitative methods to explore the role of hyperbolic discounting in driving the psychological bias towards too early strategic scenario planning, and its rationalization. The authors conducted a face‐to‐face survey going door‐to‐door of the small to medium‐sized enterprises (SMEs). The samples in this research are Indonesian SMEs from the northern part of Sumatra. Findings – This research found most of the SMEs' managers are time preference biased due to hyperbolic discounting. This hyperbolic discounting awoke manager's psychological bias and resulted in too early decision making. This psychological bias might be due to prospect theory, or the representative effect, or framing bias, or the adaptive bias. Research limitations/implications – The sample is only taken from Northern part of Indonesia. To have a robust generalization, the research should be conducted in the whole of Indonesia. Practical implications – This paper can be used by practitioners to understand their behaviour towards strategic decision making. Further, practitioners will know if their time preference bias will not generate better result.

Item Type: Article
Uncontrolled Keywords: Small to medium‐sized enterprises, Indonesia, Business strategy, Business planning, Strategic planning, Decision making, Hyperbolic discounting, Psychological bias, Strategic focused planning, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education, undergraduate, Postgraduate, research, Universiti Malaysia Sarawak
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Faculties, Institutes, Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 12 Nov 2015 00:48
Last Modified: 12 Nov 2015 00:48

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