Lecture 4

Question 1

What is the dual-process theory?

Answer 1

Different ways of thinking put into two types.

Type 1:
consists of implicit (automatic), unconscious processes

Usually fast, impulse and not-biased decisionmaking

Type 2:
consists of explicit (controlled), conscious processes

Usually a well thought out decision might be based on biased thinking

Question 2

What is entrepreneurial decision-making?

Answer 2

Needs to develop mental models and heuristics to describe and solve new problem situations

Do not tend to be more willing to take
risks, but perceive risks differently –
estimate low probability of risk
combined with overoptimism and
overconfidence

Question 3

In organizational structure, what is formalized organization?

Answer 3

• Planning
• Decomposition of problems
• Development of routines (from type 2 to type 1 processing)
• Decision-making based on type 2 processing when medium sized competence gap

Question 4

In organizational structure, what is entrepreneurial organization?

Answer 4

• Improvisation
• No decomposition of
  problems
• Decision-making primarily
  based on type 1 processing
• Large gap between competencies and uncertainty and complexity of the decision situations leads to greater use of type 1 processing