Cognitive biases as impediments to enhancing supply chain entrepreneurial embeddedness

Abstract

The recently introduced concept of supply chain entrepreneurial embeddedness (SCEE) refers to the extent to which large firms integrate entrepreneurial capabilities into their supply chains. Achieving a higher degree of SCEE can involve assimilating entrepreneurial practices by copying entrepreneurial firms’ behavior, allying with entrepreneurial firms to gain access to and learn from them, and acquiring entrepreneurial firms to bring their practices inside the firm. Because SCEE appears to be a pathway to enhanced firm performance, enhancing SCEE should be attractive. However, our thesis is that efforts to do so may be undermined by cognitive biases—heuristics used by the human mind to simplify complex situations that result in distorted thinking. We explore the possible problems arising due to 11 cognitive biases discussed by Schwenk (Strategic Management Journal, 1984, 5(2), 111). We offer two brief case examples of companies that are seeking to make their supply chains more entrepreneurial; each illustrates several of the biases in action. We also consider whether supply chain complexity and entrepreneurial orientation can mitigate or strengthen cognitive biases’ harmful effects on SCEE. In doing so, we construct an important interface across entrepreneurship and supply chain management.