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Mediating Role of Heuristics on the Relationship Between Emotion and Spending Decisions of Small and Medium Enterprises

Author

Listed:
  • Nurazleena Ismail

    (Faculty of Business and Management, Universiti Teknologi MARA, Malaysia)

  • Wan Zakiyatussariroh Wan Husin

    (College of Computing, Informatics and Media, Universiti Teknologi MARA, Malaysia)

  • Nik Maheran Nik Muhammad

    (Department of Academic Affairs, Universiti Malaysia Kelantan, Malaysia)

  • Aini Ismafairus Abd Hamid

    (Department of Neuro, Universiti Sains Malaysia, Malaysia)

Abstract

The study discusses the influence of emotional connection on entrepreneurs’ spending decisions. The study suggests that entrepreneurs may prioritize buying items that align with their values and goals; and that this emotional connection can be a significant factor in their spending decisions. The study also explores the role of heuristic behaviour as a moderator in this process. The field experiment is used to analyse the mediating effect of heuristics (behaviour factor) between emotion (neuro function) and spending decisions among entrepreneurs registered with “Pusat Usahawan MARA†(PUSMA) Kelantan. The data were analysed using analysis of variance (ANOVA) and general linear regression of multi-categorical factors. It found that heuristic behaviour mediates the effect of emotion on spending decisions in partial mediation. It also highlights the importance of understanding the emotional factors that influence entrepreneurs’ spending decisions and suggests that these factors may be more significant than previously thought. This study provides a useful reference for future researchers interested in exploring the relationship between emotional connection and spending decisions among entrepreneurs. It also provides a valuable contribution to the literature on entrepreneurship and decision-making and offers insights that may be useful for entrepreneurs and policymakers alike. Further research needs to be explored by testing the heuristics behaviour as a moderator to examine the emotional connection that can influence the entrepreneurs spending decisions.

Suggested Citation

  • Nurazleena Ismail & Wan Zakiyatussariroh Wan Husin & Nik Maheran Nik Muhammad & Aini Ismafairus Abd Hamid, 2024. "Mediating Role of Heuristics on the Relationship Between Emotion and Spending Decisions of Small and Medium Enterprises," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(11), pages 225-233, November.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:11:p:225-233
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    References listed on IDEAS

    as
    1. Jinesh Jain & Nidhi Walia & Himanshu Singla & Simarjeet Singh & Kiran Sood & Simon Grima, 2023. "Heuristic Biases as Mental Shortcuts to Investment Decision-Making: A Mediation Analysis of Risk Perception," Risks, MDPI, vol. 11(4), pages 1-22, April.
    2. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    3. Xiaohua Su & Shengmei Liu & Shujun Zhang & Lingling Liu, 2020. "To Be Happy: A Case Study of Entrepreneurial Motivation and Entrepreneurial Process from the Perspective of Positive Psychology," Sustainability, MDPI, vol. 12(2), pages 1-27, January.
    4. Tobias Thomas Prietzel, 2020. "The effect of emotion on risky decision making in the context of prospect theory: a comprehensive literature review," Management Review Quarterly, Springer, vol. 70(3), pages 313-353, August.
    5. Rupali Misra Nigam & Sumita Srivastava & Devinder Kumar Banwet, 2018. "Behavioral mediators of financial decision making – a state-of-art literature review," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 10(1), pages 2-41, March.
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