Entrepreneurs’ Decisions in Perceived Environmental Uncertainty
| Published date | 01 April 2023 |
| Author | Rana Zayadin,Antonella Zucchella,Amitabh Anand,Paul Jones,Nisreen Ameen |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12612 |
British Journal of Management, Vol. 34, 831–848 (2023)
DOI: 10.1111/1467-8551.12612
Entrepreneurs’ Decisions in Perceived
Environmental Uncertainty
Rana Zayadin,1Antonella Zucchella,2Amitabh Anand,3Paul Jones4
and Nisreen Ameen5
1School of Business, University of Sussex, Brighton, BN1 9SL, UK, 2University of Pavia, Via S.Felice 5, Pavia,
27100, Italy, 3Excelia Business School, 17024 La RochelleCedex 1, France, 4School of Management, Swansea
University, Bay Campus, Fabian Way,Swansea, SA1 8EN, UK, and 5School of Management, RoyalHolloway,
University of London, Egham, TW20 0EX, UK
Corresponding author email: r.zayadin@sussex.ac.uk
This research advances the understanding of entrepreneurial decisions in the context of
perceived uncertainty related to regionalpolitical instability. Using qualitative data from
a sample of 29 entrepreneurs, we captured the entrepreneurs’ perceptions of uncertainty
and how these perceptions informed their judgement and led to condence in their deci-
sions. The perceptions of uncertainty that inuenced the entrepreneurs’ decision-making
were grouped into three main categories: efforts to understand changes in regional mar-
kets; efforts to understand changes in local markets; and identifying multiple and com-
pounded layers of uncertainty.The entrepreneurs’ decisions were informed by the interac-
tions between their perceptions of a dynamic and changing environment and their judge-
ments about mobilizing resources in response to that environment. The ndings of this
research extend the current understanding of how entrepreneurs use judgement to arrive
at decisions in contexts of uncertainty and highlight the dynamic relationship between
individuals and context. The research has theoretical and practical implications for de-
veloping and leveraging entrepreneurialdecision-making in uncertain environments.
Introduction
Environment uncertainty presents a key challenge
for entrepreneurs, and it plays a fundamental
role in their decision-making (de Vasconcelos
Gomes et al., 2018; Townsend et al., 2018). While
entrepreneurs perceive high levels of uncertainty
as part of their activity in relation to market and
industry, their perceptions change dynamically in
response to factors in their environment (Schmitt
et al., 2018). However, how the entrepreneurial
context of high uncertainty, ambiguity, time
pressure and emotional intensity affects decision-
making is still under-theorized (e.g. Hodgkinson
et al., 1999; Shepherd and Patzelt, 2017). In
addition, the research on how uncertainty af-
fects entrepreneurial behaviour and efcacy has
primarily been concerned with the effects on
markets and industries (Brinckmann, Grichnik
and Kapsa, 2010; Schmitt et al., 2018). The pre-
cise function of uncertainty in entrepreneurial
decision-making is still contested (Magnani
and Zucchella, 2018; McMullen and Shepherd,
2006). Furthermore, any investigation of how
entrepreneurs deal with uncertainty requires an
understanding of their ability to adapt their be-
haviour according to their changing perceptions
of self -efcacy (Markowska and Wiklund, 2020).
Previous research has applied Milliken’s (1987)
multi-dimensional constructs of state, effect and
response uncertainty, arguing that entrepreneurial
action depends more on response and effect
uncertainty than on state (environmental) uncer-
tainty (McKelvie, Haynie and Gustavson, 2011).
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of BritishAcademy
of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main
Street, Malden, MA, 02148, USA.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which
permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used
for commercial purposes.
832 Zayadin et al.
Milliken (1987, p. 135) proposes that conceptu-
alizations that treat uncertainty as an objective
and externally measurable construct are prob-
lematic, because there is ‘no clear evidence of a
relationship between objective characteristics of
the environment and perceptions of uncertainty’.
Therefore, treating uncertainty as something that
exists ‘outside’ the perceiver’s cognitions has led to
inconsistencies in the literature (McKelvie, Haynie
and Gustavson, 2011).
This raises critical questions about how en-
trepreneurs perceive uncertainty in the environ-
ment and how condent they are about reaching
decisions in environments perceived as uncertain.
These questions remain unanswered, despite the
continuing academic debate on entrepreneurs’
abilities to control uncertainty in their environ-
ment (Sarasvathy, 2001; Shane and Venkatara-
man, 2000). Some researchers have suggested that
perceived uncertainty may increase risk-taking by
forming an opportunity through a locus of control
(Sarasvathy, 2001). Others have presented uncer-
tainty as a starting point from which opportuni-
ties can be identied (Shane and Venkataraman,
2000). Furthermore, the literature in the eld of
psychology and entrepreneurship has presented
conicting results about the relationship between
uncertainty and behavioural processes (Schmitt
et al., 2018), including about how individuals’
judgements about uncertainty inuence their
decisions to act (McMullen and Shepherd, 2006).
In this research, we address the above gaps in
knowledge by conceptualizing the judgement-
based approach (Foss and Klein, 2012) as a
cognitive approach that can capture variations in
individuals’ ability and skill to use judgement to
support their decision-making in environments
perceived as uncertain. In our application of the
judgement-based approach, we adopt the idea
that uncertainty is situated within the individual
(Milliken, 1987) to examine different percep-
tions of the types of uncertainty experienced by
entrepreneurs.
To understand the conditions in which en-
trepreneurs makedecisions, we include the broader
context of regional instability as a key driver
of environmental uncertainty. This allows us to
explore the dynamic relationship among per-
ceived uncertainty, entrepreneurial efcacy, and
decision-making. Our empirical research was con-
ducted with 29 entrepreneurs who were operating
during a time of regional political instability in
the Middle East. The underpinning research ques-
tions were as follows: How do entrepreneurs per-
ceive environmental uncertainty? How condent
are they in reaching decisions under conditions of
uncertainty?
By attempting to answer these research ques-
tions, our research makes several contributions to
the literature on entrepreneurial decision-making
in the context of perceived uncertainty and the
role of self -efcacy in that process. First, we con-
ceptualize the judgement-based approach through
an in-depth qualitative study of entrepreneurs and
incorporate self-efcacy into the context of un-
certainty. The resulting theorization of perceived
uncertainty, judgement patterns and changing
perceptions of efcacy extends the current under-
standing of differences among entrepreneurs and
of how different entrepreneurs arrive at decisions
under conditions of perceived uncertainty (Foss,
Klein and Bjornskov, 2019). Ultimately, this high-
lights the continuous interplaybetween individuals
and their contexts. Second, we extend the current
theorization on entrepreneurs’ decision-making.
Although previous research has found that in en-
vironments perceived as uncertain, entrepreneurs
may reach decisions of avoidance (Hirsh, Mar and
Peterson, 2012; McMullen and Shepherd, 2006),
our ndings show that the interaction between
entrepreneurs’ judgement, the goals they wish
to achieve, and the perceived uncertainty in the
environment leads to several decision scenarios
towards market and client strategies. Third, the
literature has reported that high self-efcacy is
linked to condence in achieving a goal, while low
self-efcacy is linked to the inability to pursue
a goal (Markowska and Wiklund, 2020; Schmitt
et al., 2018). Our ndings go beyond ‘high versus
low’ self-efcacy to demonstrate that self-efcacy
inuences entrepreneurs’ condence in staying
in the market and that condence underpins a
variety of decision scenarios aimed at achiev-
ing objectives, particularly in light of changes
in clients’ enthusiasm and engagement with
entrepreneurs.
Our model therefore provides a nuanced pic-
ture of entrepreneurs’decision-making undercon-
ditions of perceived uncertainty. This model can
be applied in rapidly changing contexts and opens
avenues for future research on entrepreneurial
decision-making and perceived uncertainty.
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British
Academy of Management.
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