Cognitive Biases and Entrepreneurial Decision-Making in Equity Crowdfunding: Implications for Economic Growth and the Sustainable Development Goals (SDG 8)
Year: 2025
Type: article
Abstract: Objective: This study investigates the influence of cognitive biases on startup entrepreneurs' decision-making processes in equity crowdfunding (ECF), a rapidly growing funding mechanism. It explores how cognitive biases manifest among startup entrepreneurs during ECF campaigns and analyses the implications of these biases for funding decisions and long-term startup sustainability and contributions to the Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth). Theoretical Framework: Grounded in frameworks of Bounded Rationality, Prospect Theory, and Entrepreneurial Cognition, it examines the impact of six key biases: overconfidence, optimism, planning fallacy, anchoring, availability, and representativeness, on strategic decisions during ECF campaigns. Method: Utilising semi-structured interviews with 10 startup entrepreneurs across various industries, thematic analysis was employed to identify heuristic-driven behaviours and their implications. Results and Discussion: The study identifies six cognitive biases affecting ECF decisions. Overconfidence and optimism inflate targets and hinder adaptability while planning fallacy and anchoring cause misaligned strategies. Availability and representativeness biases lead to misapplied approaches, impacting campaign success and startup sustainability. These findings highlight the necessity for structured decision-making frameworks to reduce biases and improve entrepreneurs' roles in promoting sustainable economic growth (SDG 8). Research Implications: This study highlights the importance of systematic decision-making and evaluating investor feedback to reduce biases. It provides practical recommendations for equity crowdfunding platforms, policymakers, and entrepreneurs to improve financial decision-making and economic resilience, aligning with the SDGs. Originality/Value: This study examines cognitive biases in ECF decision-making through a behavioral finance perspective. It supports SDG 8 by promoting informed financial decisions and fostering startup success and sustainable economic growth.
Authors: Lim Ying Ying, Lee Mary Siew Cheng, Kwek Choon Ling
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4408661813