Heuristics-based decision-making in small and medium Canadian businesses

• Main Author: Frankl, Milan
• Other Authors: Wadge, W. W.
• Language: English; en
• Published: 2010
• Subjects: heuristics; decision-making; knowledge management; small and medium businesses; tacit knowledge; knowledge transfer; UVic Subject Index::Sciences and Engineering::Applied Sciences::Computer science; UVic Subject Index::Humanities and Social Sciences::Business::Management
• Online Access: http://hdl.handle.net/1828/2804

In this dissertation, I study the use of tacit and explicit business heuristics in decision-making in small and medium Canadian businesses. I confirm the use of heuristics in business decision-making, present some common business heuristics identified in the study, and propose methods of making the application of heuristics more useful for better decision-making in various business situations. Although business decision-making has been a subject of research in big corporations, investigating decision-making using tacit and implicit business heuristics remains limited in small and medium businesses. A method for organizing and compiling various forms of decision-making using these types of business heuristics can deliver significant benefits to small and medium businesses. I define a heuristic (sometimes referred to as rule of thumb) to be a description of an informal or formal problem-solving process, not necessarily 100% reliable. Some examples of business heuristics include "Apply 5 times sales for business valuation," and "Ensure the client is given a meaningful and prompt response." The first heuristic contains enough information for a competent business executive to make a business decision; I call this first type of heuristic an explicit business heuristic; the second heuristic requires additional knowledge to make a business decision; in particular, the decision-maker needs to know what "a meaningful and prompt response" entails in order to make the decision. I call this second type of heuristic a tacit business heuristic. My research involved a group of Vancouver Island executives participating in an online survey on the use of heuristics in business decision-making. Two main conclusions resulting from this research are that executives apply extensively various forms of business heuristics when solving business problems, and that the heuristics they use are both tacit and explicit. A review of heuristics scholarship and my 25-year business experience as a senior executive with small and medium Canadian companies support these results. I propose a set of what-how rules that can assist in converting tacit business heuristics into explicit ones by expanding their information content. Finally, I recommend follow-up research for the development of tacit knowledge transfer methods using business heuristics.