engleski

The role of gut feelings in financial decision-making process in small and medium-sized companies

Choosing between alternatives is commonly used as the definition for the decision-making process that every owner/manager in small and medium-sized companies (SMEs) experiences in everyday business operations. The decision-making process depends upon many variables and it is closely connected with the nature of the decision in the company. Financial decision-making that presupposes financial literacy and financial planning is extremely hard for every owner/manager. In the time of financial crisis, when financial sources is even harder to obtain, owners/mangers of SMEs tend to rely more on networking, experiences and guts in their decision-making processes. The main goal of this paper is to check whether owner/managers of SMEs in Croatia use strategic approach in financial decision-making processes, or they rely heavily on past experiences and information from other entrepreneurs, which can be defined as gut feelings. The research has been conducted on 108 small and medium-sized companies in Croatia that operate more than 1 year and have more than 1 employees. Results showed that the successful owners/mangers of SMEs can not exclude gut feelings from their decision-making process but use also other tools in order to choose the best possible alternative. Results of the research can help in creating better financial products in the financial institutions for SMEs, but also for creating better politics and regulations on the local, regional and national government levels.

decision-making process, financial decisions, small and medium-sized companies, financial crisis, gut feelings

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