A Multi-Level Adaptation Model In Entrepreneurial Decision Making

With the fast pace of economic globalization, comprehensive social progress and diversified market needs, entrepreneurship has lent an impetus to our economic development. Researchers from different fields have offered diversified explanations in terms of different subjects of entrepreneurial study. Research from an organizational behavior perspective mainly focuses on the entrepreneurial behaviors both on the individual and organizational levels. The Behavioral Theory of the Firm (BTF) has been taken as a milestone in the theoretical developments of behavioral economics for its adopting a decision-making approach to understand organizational behaviors. The heart of the BTF is that a firm's behavior must be a process of short-run adaptive reaction so long as the environment of the firm is unstable.Based on the BTF and decision-making theory, the present paper focuses on the task characteristics in entrepreneurial decision processes which we think link the behavioral decision-making theory and entrepreneurial studies. More specifically, we intend to explore the adaptive change and mechanism of entrepreneurial behaviors using experimental simulation and test the multi-level adaptation model of entrepreneurial decision making so as to promote the development of both entrepreneurship and adaptation theory.In part I, the literature of the BTF and entrepreneurial theory was reviewed and concluded that firms' adaptive behaviors were mainly based on aspiration, rules and feedback and that the key task characteristics of entrepreneurial behaviors were task ambiguity, coordination and feedback specificity, etc. Based on the summarization of literature review, the research intends to understand explore the entrepreneurs' aspiration level dependent on their task experience, the adaptive change based on the task rule and explorative behaviors in different feedback conditions. By so doing, the paper developed the adaptive changes of both individual- and organizational-level of aspiration, the mechanism of adaptation, the adaptive changes of rule-searching behaviors, the individual level of searching behavior and the adaptive growth of task performance.The part II analyzed the adaptive changes of individual entrepreneur's aspiration level and the mechanism of its adaptation. Adopting an entrepreneurial resource allocation decision-making task, the experiments aimed to explore the adaptive changes of aspiration level and adaptation under different levels of task ambiguity and resource allocation patterns. The results showed that the changing process of aspiration level was adaptive and adjusted according to the past history experience. Also, the adaptation mechanism can be explained by both incremental adaptive model and difference achievement model. Moreover, under the condition of low task ambiguity and flexible resource allocation, aspiration level showed a tendency of rational expectation, showing that decision makers have learned the controlled rules based on their past experience.The third part of the present paper was about the adaptive changes of entrepreneurs' rule-searching behaviors when changing task rules and the adaptation mechanism of organization-level aspiration. By simulating entrepreneurial behavioral task adopting a resource coordination decision-making task, we aimed to analyze the organizational adaptive changes under different task coordination and social comparison patterns. This part included three sub-studies. The first sub-study focused on the adaptive changes based on rules and the result indicated that the entrepreneurs' rule-searching behaviors showed a tendency of rational expectation when there existed no social comparison while adaptive changes when there existed social comparison. Meanwhile, the functioning of the two cues of organizational past experience and social comparison depended on many boundary conditions in the process of aspiration level formation. The second sub-study analyzed the changes of adaptive rational perception by using the questionnaire survey data and the result showed that the phase changes of the procedural rationality and cognitive comprehensiveness correlated directly with task condition. The third sub-study drew a conclusion that when faced changed task rules, an organization either reconstructed its adaptiveness or fell into so-called "competence trap". The reason for the emergence of "competence trap" lie(?) in that the organization didn't construct its corresponding searching behaviors based on new rules.The fourth part studied the adaptive changes of task performance under different feedback patterns. By simulating entrepreneurial behavioral task using resource evaluation decision-making task, the study explored the changing curve of task performance under the condition of different feedback patterns and multiple-cued reference. The result indicated that the less information support was given in the practice phase, the more adaptive changes of task performance occurred in both the practice and test phase. On the other hand, when more information support was given during the practice phase, the task performance in practice and test phase showed no adaptive changes. Further analysis concluded that the emergence of adaptive changes depended greatly on whether voluntary exploration behaviors happened in practice phase. The searching behavior is of great significance to a long-term balance of adaptive system.In part IV, the main conclusions from the three foregoing experimental studies were summarized into the following three theoretical developments: First, the adaptive changes of entrepreneurial decision behaviors are a short-term reaction process adjusted according to the past experience, task rules and feedback. Second, the "boundary" condition of the adaptation mechanism of organizational aspiration level is based on the cues from itself and social comparison. Third, searching is the core of adaptation theory and insufficient searching behavior and exploration behavior can explain the failure of adaptive behaviors due to "competence trap" and "overdependence on feedback information support".In the end of the present paper, both theoretical and practical implications were elaborated and the research limitation and future directions were also discussed.