Abstract

This study looks at how decisions are made during early-stage innovation, specifically how managers, teams, or team leaders formulate problems on which to focus. Problem formulation processes put organisations on paths that incur sunk costs and influence subsequent problem solving and innovation outcomes. Varying human biases may impair these processes. Therefore, factors that have the potential to mitigate biases play a key role in determining problem formulation performance. This exploratory study looks at one of these factors by examining the role of awareness of bias. It offers theoretical insight into and examines empirically the relationships between bias awareness and bias intensity, as well as between bias intensity and problem formulation performance. Using the problem as the unit of analysis, and examining original survey datasets gathered from the US, China, and Finland, we find that two bias types are particularly prone to influence strategic problem formulation: Solution jumping as a cognitive bias and dominance as a motivational bias show negative relationships with problem formulation performance. We also find that unlike other biases, dominance bias appears unaffected by the degree of bias awareness. The insights from our study shed light on how formulating novel problems is subject to the influence of cognitive, motivational, and informational biases.