Institutional influences on decision making: The case of bank lending to small businesses in the . and Vietnam. This research exp lores the question of how institutional factors influence busi-ness decision making. We conducted in-dep th interviews with twenty -six bankers in Vietnam and the . Our results suggest that the develop ment of market institutions has a strong influence on managers ’ requency use of rational versus subjective decision making app roaches. | Journal of Economics and Development Vol. 14, , August 2012, pp. 26 - 51 ISSN 1859 0020 Institutional Influences on Decision Making: The Case of Bank Lending to Small Businesses in the . and Vietnam Nguyen Van Thang National Economics University, Vietnam Email: nguyenvanthang@ Le Thi Bich Ngoc National Economics University, Vietnam Email: lbngoc@ Jerman Rose Washington State University, USA Email: rosej@ Abstract This research explores the question of how institutional factors influence business decision making. We conducted in-depth interviews with twenty-six bankers in Vietnam and the . Our results suggest that the development of market institutions has a strong influence on managers’ frequency use of rational versus subjective decision making approaches. In developed countries, the presence of a large data base and a reliable legal system facilitates bankers’ choice of rational decision making. In the absence of effective market institutions, bankers have no choice but to rely extensively on personal heuristics and biases to make loan decisions. In this situation, heuristics and biases were used intentionally and consciously in decision making process. Two strategies to minimize bias errors – controlling and learning strategies – were used extensively by Vietnamese bankers. Keywords: Decision making, bank financing, Vietnam Journal of Economics and Development 26 Vol. 14, , August 2012 1. Introduction scious judgmental modes, in comparison to rational models? How do managers, consciously using heuristics and biases, minimize judgmental errors? Answering these questions is important in understanding how and why people adopt a particular management approach. If decision making approaches (and management approaches in general) are influenced by national culture and individual cognition processes, as much of the current literature has argued (Hofstede and Bond, 1988; Keh, Foo, and Lim, 2002; Sarasvathy, .
