Decision-making in Small-Medium Enterprises: A Qualitative Research on the Scientific Method

Ilaria Marini

Student thesis: Master thesis

Abstract

Evidence-based management has highlighted the importance of grounding organizational decisions on objective and unbiased data. However, most of the theories developed in this field focus on large, established firms. This thesis focuses instead on small-medium enterprises (SME). The analysis aims at understanding whether a scientific approach to managerial decisions creates differences in the way SMEs approach decision-making and if it favours an increased ability to identify new opportunities.
The basis of this study is a randomised control trial conducted on 259 SMEs that tested the effects of the scientific method by comparing, over a period of eight months, the process followed by treatment and control group. This thesis focuses on a sample of 30 SMEs that performed a radical pivot. For each SME, it considers the baseline interviews and the interviews in which they mention the pivot.
The treated companies in this sample show the following four characteristics compared to the control group: Higher tendency to use surveys to test the entrepreneur's hypothesis; Greater ability to detect new features that improve the original value proposition; More frequent use of A/B testing to collect data regarding the performance of their solutions; Increased awareness of biases and factors that can reduce the quality of the data.
The main contribution of this study is to provide qualitative evidence on how the scientific approach changes the way in which decisions are made and on whether it contributes to the identification of new opportunities. The study also finds that, while the treated group exhibits these characteristics more frequently, there is heterogeneity in the behaviour of the two groups. In fact, not all the treated firms comply fully with the scientific method. Further research could focus on the factors that influence the absorption of the treatment.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages90
SupervisorsArisa Shollo