Resumo

Many of the decisions business leaders face are intricate to an extent that can put the future of a company at stake. Our rationality limitations and the innumerous variables, inaccurate information, difficulties to envision alternatives, constraints of time and costs can lead to highly undesirable results (Bazerman and Moore, 2012; Simon, 1955). This raises the question: how good are the leaders decisions in businesses environments?

The main objective of this study was to evaluate the decision-making competence of leaders working on different business sectors and to investigate some of the psychological limitations involved in this process. In a broader way, this study may help establish the basis for other researchers who wish to evaluate the decision-making competence of executives bringing out an understanding of the individuals differences.

Most of the research on decision making of leaders focuses on the style and not on the competence. This article adds to the research in leadership and decision making by focusing on the competence measurement on the business environment, areas not yet thoroughly explored. The test A-DMC (Bruine de Bruin, Parker and Fischhoff, 2007) was selected due to its ability to predict the performance of people in real life decisions as well as evidence showing a relationship with cognitive functions of the brain (del Missier, Mäntylä and Bruine de Bruin, 2012).

The A-DMC components chosen were selected based in previous studies with leaders (Resistance to Framing, Consistency in Risk Perception, Resistance to Sunk Costs and Under/overconfidence). We draw results from a sample of 49 experienced team and business leaders recruited through a Master of Business Administration (MBA) course (41%) and directly in the business market (59%) instead of a typical undergraduate student sample.

All participants presented some susceptibility to the known biases and judgment errors associated with decision making. No single participant achieved top scores in all components, however with different degrees of influence for each one. In mean terms, the performance of leaders in this study was better to what is reported in the literature for components Resistance to Framing and Under/Overconfidence. On the other hand, the performance of the sample was less expressive for Consistency in Risk Perception and Resistance to Sunk Costs.

This paper brings a different perspective by studying the decision-making competence and not the style, which is more typical in the literature. It also expands the use of the A-DMC outside of the English-speaking world, by being, to the extent of our knowledge, the first attempt of a translation to the Portuguese language. It complements previous studies from the United States, Slovakia, Sweden and Italy and adds diversity by analyzing business leaders in the private sector, whereas other studies focused on undergraduates, heterogeneous population samples and military leaders.

Bazerman, M. H. & Moore, D. A. (2012). Judgment in Managerial Decision Making (8th ed.). Hoboken, NJ: John Wiley & Sons. Bruine de Bruin, W., Parker, A. M. & Fischhoff, B. (2007). Individual differences in adult decision-making competence. Journal of Personality and Social Psychology, 92(5), 938–956. doi: 10.1037/0022-3514.92.5.938. del Missier, F., Mäntylä, T. & Bruine de Bruin, W. (2012). Decision making competence, executive functioning, and general cognitive abilities. Journal of Behavioral Decision Making, 25(4), 331–351. doi: 10.1002/bdm.731 Simon, H. A. (1955).