The rhythm of effective entrepreneurs' decision-making process. The pathways of alertness scanning and search and cognitive style. A mediation model

The paper addresses how entrepreneurs can make effective decisions and examines the link between entrepreneurial alertness—particularly the scanning and searching dimension—and decision-making effectiveness. Prior work ties opportunity discovery to information, prior experiences, personal disposition, and alertness. Alertness comprises scanning and searching, association and connection, and evaluation and judgment; scanning/search is considered foundational as it occurs across opportunity recognition, development, evaluation, and exploitation. Through scanning/search, entrepreneurs organize and interpret information to build knowledge structures that underpin decisions, connecting alertness to decision-making processes. Despite strong evidence linking alertness to entrepreneurial success and innovativeness, the pathway from alertness to effective decision making has received limited attention. The study proposes that scanning/search enhances decision-making effectiveness and that cognitive style (rational vs. intuitive) may be a key mechanism in this relationship. It tests a mediation model using data from 98 entrepreneurs of small and medium manufacturing firms in Tuscany, Italy.

Theoretical background integrates entrepreneurial cognition, alertness, and decision making. Entrepreneurial cognition emphasizes knowledge structures and decision processes in shaping opportunity-related judgments. Entrepreneurial alertness, rooted in Kirzner’s work, is a cognitive capability enabling recognition of overlooked opportunities and is decomposed into scanning/search, association/connection, and evaluation/judgment. Scanning/search accumulates domain-relevant information, informing knowledge structures for decision making. Cognitive style literature distinguishes dual-process systems: intuitive (System 1; fast, automatic, associative) and rational (System 2; deliberate, analytical, rule-based). Entrepreneurs employ both, but their roles and interplay in producing decision effectiveness remain underexplored. The paper develops hypotheses: H1—scanning/search positively affects decision-making effectiveness; H2a/H2b—scanning/search positively relates to rational and intuitive styles; H3a/H3b—rational and intuitive styles positively affect decision-making effectiveness; H4a/H4b—rational and intuitive styles mediate the relationship between scanning/search and decision-making effectiveness.

Design: Cross-sectional survey of entrepreneurs in Tuscan SMEs (manufacturing: fashion and mechanical). Sampling frame: 3,734 SMEs (2,320 fashion; 1,414 mechanical) from the Florence Chamber of Commerce. Systematic sampling ensured proportional representation by industry, province, and size. Contacted 1,261 firms via web survey (March 2017) with initial invitation and three weekly reminders; obtained 98 complete responses. Sample: 77.55% male; 60.20% fashion, 39.80% mechanical; average firm tenure ≈35 years; 82.65% small (10–49 employees), 17.35% medium (50–250). Nonresponse bias check: no significant differences between early and late respondents. Measures: 5-point Likert scales (1=strongly disagree to 5=strongly agree) unless noted. Scanning/search (independent variable): Tang et al. (2012) 6-item scale, α=0.85. Cognitive style mediators: Rational style—Betsch & Kunz (2008) 6 items, α=0.90; Intuitive style—5 items combining Covin et al. (2001) and Khatri & Ng (2000), emphasizing experience-based intuition, α=0.81. Decision-making effectiveness (dependent variable): four items from Jansen et al. (2013) on contributions of innovation/internationalization decisions to turnover, profits, satisfaction, and expected results; 3-point scale (1=a few to 3=a great deal); summed index. Common method variance: ex-ante procedural remedies (anonymity, separation of scales, clear wording); ex-post Harman’s one-factor test indicated first factor explained 35% (<50%). Measurement model: CFA (LISREL 8.80) showed good fit (IFI=0.98, TLI=0.98, CFI=0.98, RMSEA=0.04). Convergent validity: AVE ≥0.50 for most constructs (intuition AVE=0.47) with CR>0.70 supporting adequacy; discriminant validity met (AVE > MSV). Analysis: SPSS v26 for regression tests; mediation tested using PROCESS Model 4 with 5,000 bootstrap samples to estimate indirect effects and 95% bias-corrected confidence intervals.

- H1 supported: Scanning/search positively predicts decision-making effectiveness (β=0.631, p=0.011). - H2a supported: Scanning/search positively related to rational style (β=0.569, p<0.001). - H2b not supported: Scanning/search not significantly related to intuitive style (β≈−0.055, p=0.614). - H3a supported: Rational style positively associated with decision-making effectiveness (β=0.941, p<0.001). - H3b supported: Intuitive style positively associated with decision-making effectiveness (β=0.490, p=0.027), though weaker than rationality. - Mediation: Indirect effect via rational style significant (95% CI did not include zero; e.g., Boot LLCI≈0.110, ULCI≈0.879), supporting H4a. Indirect effect via intuition not significant (95% CI includes zero; e.g., Boot LLCI≈−0.161, ULCI≈0.080), not supporting H4b. Overall, scanning/search enhances decision effectiveness primarily through a rational cognitive pathway; intuition contributes directly to effectiveness but does not mediate the alertness–effectiveness link.

Findings address the central question of how alertness translates into effective entrepreneurial decisions. Demonstrating that scanning/search improves decision-making effectiveness confirms the foundational role of information scanning in building knowledge structures for choice. Crucially, the effect operates through a rational cognitive style, clarifying the pathway linking alertness to effective decisions and highlighting the dominance of systematic, deliberate processing in converting accumulated information into outcomes. While both rational and intuitive styles relate positively to effectiveness, rationality exerts a stronger influence. The study thus reconciles dual-process perspectives in entrepreneurship by showing complementary roles, with rational processing as the key mechanism through which alertness leads to better decisions. Practically, entrepreneurs should pair heightened alertness with structured, analytical processing to turn detected signals into robust strategic choices; entrepreneurship education should therefore cultivate both alert scanning and rational evaluation.

The study advances entrepreneurial cognition research by: (1) evidencing that the scanning/search dimension of alertness directly enhances decision-making effectiveness; (2) identifying rational cognitive style as the mediating mechanism linking alertness to effectiveness; and (3) showing that both rational and intuitive styles contribute to effective decisions, with rationality having a stronger effect. These insights integrate knowledge structures and decision processes within entrepreneurial cognition and inform practice and education by emphasizing systematic processing of scanned information. Future research should incorporate the other alertness dimensions (association/connection; evaluation/judgment), test additional cognitive mechanisms (e.g., metacognition, social cognition, counterfactual thinking), and employ longitudinal or qualitative designs to strengthen causal inference and unpack dynamic pathways.

- Focus limited to the scanning/search dimension of alertness; association/connection and evaluation/judgment were not examined. - Cognitive mechanism restricted to cognitive style (rational and intuitive); other cognitive constructs (e.g., metacognition, social cognition, counterfactual thinking) were not tested. - Cross-sectional survey design limits causal inference; longitudinal and qualitative approaches are suggested. - No significant link found between scanning/search and intuition; this may reflect the dimensional focus and warrants testing with other alertness components. - Sample size (n=98) and regional/industry context (Tuscan manufacturing SMEs) may affect generalizability.