Author(s): Rahul Gupta and Padmavathy Dhillon
Purpose: In the volatile, uncertain, complex and ambiguous (VUCA) world today, the decision-making process has become increasingly complex and challenging for the organizations. This complexity is further exacerbated when traits, characteristics and biases of the decision makers intermingle with the process. This study aims to highlight the managerial cognitive biases which influence the decisions, leading to suboptimal results for the firm. The study identifies how these biases impact the strategic options available with the firm and explores how the knowledge domain available in the subject. Design / methodology / approach: This research provides an in-depth systematic literature review (SLR) to understand the existing work in this area and guide the future scholars with further areas of research. Findings: This paper finds that overconfidence and discrimination are the key biases which often lead to suboptimal decisions. It is also found that the managers often suffer from regret or hindsight bias which influences their thinking and hence the decision-making process. Often CEOs or the seniormost leaders of the organization suffer from narcissism which tends to bring huge gains or colossal losses for the organizations. Implications: This study has implications for the practitioners and academicians alike. Where it makes the organizations and management cognizant of the cognitive biases which could impact their decision making, it provides guidance to the scholars for future research. This also aids the theorists to review the work done in this area and acknowledge and appreciate the human factors involved in decision-making.