Meaning ● Behavioral Finance in SMBs focuses on the influence of psychological biases on the financial decisions within small and medium-sized businesses, impacting their strategic growth, automation adoption, and technology implementation. Exploring cognitive errors, this domain understands how owners’ and managers’ emotions can deviate from rational economic behavior in making financial choices.
Scope ● Considering factors like risk aversion and overconfidence, it examines capital budgeting decisions and their financial planning practices within SMBs. Automation strategies are especially vulnerable to cognitive biases, potentially hindering adoption, impacting decisions concerning investments in new technologies. Focusing on real-world conditions and their effects, implementing strategies and their financial decisions can lead to systematic errors that can affect long-term sustainability. The implications of behavioral finance extend to how SMBs manage financial risk. Understanding and mitigating these biases is essential for improving strategic outcomes, promoting sustainable growth, and ensuring effective technology adoption.
