THE ROLE OF COGNITIVE BIASES, EMOTION AND PSYCHOLOGICAL MANAGEMENT DETERMINANTS ON INNOVATION DEVELOPMENT AND ENTREPRENEURIAL ORIENTATION: AN EVIDENCE OF SMALL AND MEDIUM MANUFACTURING ENTERPRISES

The importance of innovation is well acknowledged in the literature of management. Innovation not only brings competitive advantages to organizations but also, along with science and technology, is the essential assets of nations seeking to secure economic competitiveness with the entrepreneurship sphere. The purposes of this study were to examine and investigate the relationships between cognitive biases, emotions on innovation, share-practiced, trust-based relations, and norms in venture creation with innovation development and entrepreneurial orientation. Survey research was conducted. The study found that such variables as cognitive biases, emotions on innovation, share-practiced, trust-based relations, norms, and innovation development correlated positively with innovation development and entrepreneurial orientation. Results suggested cognitive biases and emotions on innovation as a mechanism that triggers innovation development and that this effect is stronger when they engage in opportunity-based entrepreneurship. Finally, pragmatic implications were discussed on how to utilize these factors to gain competitiveness and sustainability.