That's the finding of new research from the University of Cincinnati that will be presented both nationally and internationally – first on May 6-8 at the Family Enterprise Research Conference in Grand Rapids, Mich., and again on June 15-18 at the International Council of Small Business Conference in Stockholm, Sweden.
The research was conducted by one-time entrepreneur Jeremy Woods, currently a doctoral student in UC's College of Business. With this research, Woods has set out to integrate his hands-on business experience with evidence-based studies. His interest in small business decision-making mistakes stems from his activities as the owner of a licensing business in the international music industry, a time when he made serious errors related to product design and pricing.
Because he is all too familiar with the pitfalls of decision making in small business, Woods is researching escalation of commitment, a phenomenon where business owners justify increased investment in a course of action based on the cumulative prior investment, even if the cumulative cost of continuing with the original course of action outweighs the expected benefits.
"In other words, small business owners continue to pursue failing ventures simply to prove that they were right," says Woods, " We've all had the 'I'm going to make this work' feeling, but sometimes the best decision is to walk away – an action that doesn't come easy for driven and determined entrepreneurs."
Fortunately, according to Woods' research, the escalation of commitment phenomenon can be avoided by systematically seeking the input of respected colleagues.
"Consultation with outside advisors can bring more information and fresh perspectives into the decision-making process and convince business owners to pursue alternative options," says Woods, who based his research on the Panel Study of Entrepreneurial Dynamics, a national questionnaire sponsored by business professors studying entrepreneurship. The questionnaire surveys more than 1,200 start-up business owners across the country. Woods mined that data and discovered a significant correlation between consulting with outside advisors and achieving revenues sooner.
Woods will now take his research further. Starting in May, he will work with more than 400 research participants, including small business owners and graduate business students, presenting each with a business scenario involving pursuit of a sluggish sales prospect and experimental manipulations for consultation with outside advisors. After reading the scenario, research participants will answer questions about the decision-making process, including their confidence level and their perception of the value of the course of action they are pursuing.
"This is when the real fun begins," says Woods, who looks forward to conducting in-depth interviews this summer with small business owners. "Not only do we have the opportunity to give small business consultants some concrete, empirical findings to justify the value of their suggestions. We also have the opportunity to work together with small business owners to identify practical ways to choose between alternative courses of action."
M.B. Reilly | EurekAlert!
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik
Staphylococcus aureus is a feared pathogen (MRSA, multi-resistant S. aureus) due to frequent resistances against many antibiotics, especially in hospital infections. Researchers at the Paul-Ehrlich-Institut have identified immunological processes that prevent a successful immune response directed against the pathogenic agent. The delivery of bacterial proteins with RNA adjuvant or messenger RNA (mRNA) into immune cells allows the re-direction of the immune response towards an active defense against S. aureus. This could be of significant importance for the development of an effective vaccine. PLOS Pathogens has published these research results online on 25 May 2017.
Staphylococcus aureus (S. aureus) is a bacterium that colonizes by far more than half of the skin and the mucosa of adults, usually without causing infections....
Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.
The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....
An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.
We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...
Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.
Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...
An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...
24.05.2017 | Event News
23.05.2017 | Event News
22.05.2017 | Event News
26.05.2017 | Life Sciences
26.05.2017 | Life Sciences
26.05.2017 | Physics and Astronomy