Entrepreneurial decision-making perspectives in transition economies – tendencies towards risky/rational decision-making

This paper assesses the ways in which the characteristics of entrepreneurs from transition economies, and the extent to which they participate in making business decisions, affect their propensity to make rational/risky decisions in a work environment. A multicontextual analysis of entrepreneurial decision-making is provided, facilitating a better understanding and the further advancement of entrepreneurship in the transition countries of Montenegro and Serbia. Logistic regression and a Structural Equation Model (SEM) were used to assess data collected from a stratified random sample of 260 entrepreneurs. The results reveal that the demographic characteristics of entrepreneurs have a significant impact on their propensity to make rational/risky decisions. Elderly entrepreneurs with more years of service are more prone to make rational decisions in comparison to younger entrepreneurs, who lack business experience and thus rely on intuition, leading to risky decision-making. Additionally, the results show that the more involved entrepreneurs are in the decision-making process, the more risky decisions will be made; while more employee inclusion leads to business decisions based on rational thinking. The results also reveal that entrepreneurs in transition economies have formed attitudes towards the nature of entrepreneurial activity. Finally, these results reveal that entrepreneurs who consider levels of economic development, national culture, and intuition to be important when making business decisions are more prone to implement risky decisions. Considering the obtained results, this paper provides guidelines for the future research of this issue in transition countries and other developing economies.


Introduction
Intensive market changes and increasing competition have placed more focus on innovation, both in existing companies and when establishing innovative startups. These changes affect the economic environment of firms, their competitiveness, and their action capacity. Hence, these changes signify a certain level of risk, whether or not entrepreneurs will succeed in achieving their planned goals, and what the effects will be on their business (Cooper, 1988). Times of crisis and unstable economic conditions are inevitable and a reality. Entrepreneurs should minimize the influence of adverse impacts and look for solutions that will help them create a competitive advantage and establish a more stable position in the marketplace. Entrepreneurs must anticipate the changes of the business atmosphere and respond to them (Malecki, 2018). Given these changes, both entrepreneurs and their businesses need to adapt and achieve situational harmony (Shaikh & Shaikh, 2019, Richard et al., 2006. That is why entrepreneurial activity is recognized as a basis for creating and maintaining a competitive advantage in modern business conditions in developed and developing countries. Entrepreneurial activity as a basis of future economic development in transition countries has been debated in recent decades (Mugler, 2017). Small and medium sized enterprises are fundamental to economic activity in these countries. However, these firms have mostly emerged in a spirit of inherited formal practices and economic institutional constraints (DeBerry-Spence et al., 2008), which often limits their flexibility and their ability to take on new market opportunities in a competitive way. Thus, the context of a transition economy strongly affects established entrepreneurial activities (Dabić et al., 2012), facilitating better understandings and the improvement of the nature of entrepreneurial activity in these countries. This instigates further research into the main determinants that shape entrepreneurs' decisionmaking processes, laying the foundations for future economic policies seeking to foster entrepreneurship ventures (Alexandrova, 2004;George et al., 2016;Roundy & Fayard, 2019).
The entrepreneurship implies decision-making in times of great uncertainty, which makes risk taking an integral part of entrepreneurial activity (Shepherd et al., 2015). However, successful entrepreneurs take only calculated risks (Palanivelu & Manikandan, 2015), considering all available information from reliable sources, as well as relying on knowledge and previous experience when making business decisions. Experienced entrepreneurs usually rely on causal reasoning if "the stakes [are] high" i.e. if the decision might have a strong impact on the future existence of a company (Vershinina et al., 2017). They tend to analyze all potential consequences of available options and often look for additional information and advice from trusted 'others' before and after making their final decision (Sadler-Smith, 2016;Vershinina et al., 2017). Thus, risky decision-making is not always justified and does not always lead to the best possible outcome. That is why rational decision-making can be the key to the successful management of entrepreneurial companies.
Entrepreneurial decision-making can be defined as choice that entrepreneurs make when seeking to exploit identified chances for market success. Attempts to conceptualize decision-making try to identify different styles of cognitive processes stemming from entrepreneurs' tendencies towards certain ways of collecting, processing, and responding to information when making business decisions (Davidsson, 2015). This is based on an individual's cognitive style, personal characteristics, perception patterns, and the characteristics of their decision-making processes (Spicer & Sadler-Smith, 2005). Currently, a growing number of researchers is trying to explore the cognitive patterns of this phenomena (Boukamcha, 2015;Nicolás et al., 2018) in order to gain insights into the micromentality of perceptual mechanisms underpinning entrepreneurial behavior.
Unlike in developed countries, the entrepreneurial activity in transition countries is strongly driven by institutional changes that shift from a planned economy to a freer market. At the same time, this is slowed down by weak regulatory institutions, turbulent environments, lack of experience, and certain cognitive biases (Ahlstrom & Bruton, 2010). Thus, innovative and risk taking behavior, which is necessary for small firms do survive and develop, is often blocked or restricted (Alexandrova, 2004). Additionally, political instability and changes to legal frameworks increase uncertainty, making entrepreneurs avoid risk and assume a waiting position, anticipating more convenient conditions for larger investments that might generate a higher level of risk but a potentially bigger financial gain (Alexandrova, 2004;Estrin & Mickiewicz, 2011;Krasniqi & Desai, 2016). Besides the institutional support to entrepreneurship development that distinguishes these countries from developed ones, transition economies are also characterized by different attitudes regarding the nature and the scope of entrepreneurial activity. Considering the specific environment of transition countries, previous studies in the field have mostly investigated how the environmental factors of transition economies affect entrepreneurship development and growth, but it is still unclear how personal characteristics and perceptions of environmental factors affects entrepreneurial decision-making. In other words, research has sought to explain the main reasons behind commencing entrepreneurial activities depending on external factors (such as unemployment due to transition processes) and internal factors (such as autonomy and self-achievement) (Ratten et al., 2017;Borozan et al., 2017;Estrin & Mickiewicz, 2011;Chelariu et al., 2008;DeBerry-Spence et al., 2008). Based on the obtained results, further research has focused on examining the determinants of growth and the internationalization of entrepreneurial firms from transition economies (Alexandrova, 2004;Earle & Sakova, 2000;Ngo et al., 2016;Rialti et al., 2017;Tyszka et al., 2011), with few researchers investigating the importance of personal characteristics when starting and expanding entrepreneurial activities (Anna & Jolanta, 2020;Krasniqi, 2009) However, previous studies have failed to identify the most important determinants that shape the perception of entrepreneurs' regarding business environments in transition economies, consequently affecting the decision-making process. These countries are deficient in scientific research, which is an integral way of examining the impact that the personal characteristics of entrepreneurs and organizational processes have on peoples tendencies to make risky/rational decisions within a company, despite numerous governmental programs seeking to foster entrepreneurial activity in these countries (Ministry of Foreign Affairs of Montenegro, 2019; Ministry of Economy of Montenegro, 2017; UHY Serbia, 2020).
Taking into account the identified literature gap, this study investigates entrepreneurial decision-making perspectives in transition countries. The main focus is on the tendency towards risky and/or rational decision-making when examined with regards to the perceptions and personal characteristics of entrepreneurs and their attitudes, as well as the participation of entrepreneurs and other employees in the decision-making process. The tendency towards risk taking leads to business strategies that are significantly different compared to those obtained through rational thinking (Certo et al., 2008;Maani & Maharaj, 2004;Teece et al., 2016). Hence, the results of this study can provide significant insight into specificities of entrepreneurial decision-making process in transition countries, as turbulent and fastchanging environment of these countries affects risk perception and cognitive patterns of entrepreneurs, which makes it a very important factor that strongly shapes entrepreneurial activity in terms of starting and conducing a business in transition economy (Mathias & Williams, 2017;Stringa et al., 2009). This paper is broken down into six parts. After the introductory considerations, the key findings and conclusions of previous studies regarding entrepreneurial decision-making, which provided motivation for this research, are presented in the second section. Research questions regarding the development and the description of the contextual model of the research are also provided. The third part of the paper describes the research methodology applied, including questionnaire design, sampling procedure, and tools used for data analysis. Research results are presented in the fourth section, while the main implications are discussed in the fifth part of the paper. The sixth section contains concluding remarks, highlighting the theoretical and practical contributions of the study.

Theoretical background
In ambiguous business conditions, there are no standard procedures and rules. Previous patterns of entrepreneurial behavior cannot be applied and so it is necessary to conceptualize new models and ways of making decisions in companies in line with new business requirements in the modern world (Kraus et al., 2018;Schaper, 2016). The success and survival of the company (especially small and medium sized enterprises) strongly depends on the individual's decision-making effectiveness. This highlights the firm's need to establish proper entrepreneurial decision-making procedures within a company in order to maintain its market position in a turbulent business environment with strong competition (Caputo & Pellegrini, 2019;Rialti et al., 2017).
Entrepreneurs are either intuitive or rational when making these decisions (Chaiken & Trope, 1999;Hammond, 1996;Lieberman, 2007;Mitchell et al., 2004;Vershinina et al., 2017). This conclusion has led to a large number of discussions between the authors, who have explained the intuitive way of thinking and making decisions as: "automatic, low effort, experiential, heuristic, implicit, holistic, unconscious, domain specific, slow-learning/fast-operating" (Lieberman, 2007;Sadler-Smith, 2016) and affective (Epstein et al., 1996). Conversely, rational decision-making is described as "controlled, high effort, rational, systematic, explicit, analytic, conscious, domain general, fast-learning/slow-operating" (Lieberman, 2007;Vershinina et al., 2017) and logical (Epstein et al., 1996). Although risky decision-making somewhat relies on intuition, it is predominantly related to perceived levels of incertitude and whether the decisions made will result in positive or negative consequences. This includes conscious and unconscious patterns of thinking, as well as automatic and selective collection and the interpretation of available information (Kahneman, 2011;Lieberman, 2000;Stanovich & West, 2000). Thus, in an ambiguous situation, entrepreneurs prone to risky decisionmaking perceive the levels of risk to be lower in comparison to rational entrepreneurs, which is why they frame the given business problem in a faster and less detailed manner (Markowska, 2019). Intuition and intuitive reasoning in decision-making strongly affects the collection and organization of information, as well as the resulting drawing of conclusions. This works without cognitive control (Fatma & Ezzeddine, 2019;Fatma et al., 2020). Thus, intuitive entrepreneurs are often driven by preferences, which increases their degrees of risk acceptance (Betsch & Glöckner, 2010;Sjöberg, 2003). However, although intuition affects the way entrepreneurs receive and analyze external incentives, there is no evidence that they ignore available information when making business decisions due to strong intuition (La Pira, 2011).
Previous research in this field has tried to identify the main motives underpinning the propensity to make risky or rational decisions, but very few studies have been conducted in transition economies. Earlier studies have focused on examining whether the key demographic characteristics of decision-makers affecting their attitudes towards risky or rational behavior were mostly conducted in business environments within non-transition or developed countries (Gielnik et al., 2018;Fisher & Yao, 2017;Baù et al., 2017;Dawson & Henly, 2015;Farrell, 2014;Rolison et al. 2020;Dohmen et al., 2011). Previous studies investigating the importance of gender in decision-making have revealed that this process is more time-consuming for women, as they carefully analyze the environment and tend to collect a larger amount of data compared to men (Alsos & Ljunggren, 2017;Malmström et al., 2017). On the other hand, men tend to be dominant, self-confident, and realistic (de Acedo Lizarraga et al., 2009). Additionally, most previous studies have confirmed that the decision-making processes of women are affected by emotions, while men tend to make decisions based on reliable and objective information. The significance of gender in decision-making is also confirmed in the research of Rana et al. (2011), Nelson (2016, Dawson and Henly (2015), Emami (2017) and Farrell (2014), which revealed that women usually evaluate the same business circumstances as riskier than men do, which makes them more prone to risk avoidance. Thus, behavioral factors, such as self-confidence, optimism, and hopefulness to a greater extent influences more firms established by women than those launched by men (Fatma et al., 2020).
Previous studies identified age as an important determinant of strategic decisionmaking (Gielnik et al., 2018). It is expected that, with age, individuals tend to be less flexible and less prone to take risks, while their aversion to change increases as they get older (Baù et al., 2017;Gielnik et al., 2018). Additionally, Riaz et al. (2010) revealed that older managers make decisions in a fairly established manner due to their extensive previous experience in decision-making. Similarly, Chen and Sun (2003) confirmed this finding and pointed out that older managers are more likely to adopt intuitive decision-making styles compared to young ones. However, Rolison et al. (2012) and Goll and Rasheed (2006) obtained the opposite results, revealing that older managers tend to avoid risk in order to assure stable finances and protect their career and the position they hold within a company. Some of the authors who support the statement that elderly managers tend to avoid risk also claim that the link between age and risk taking is not linear (Farrell, 2014;Jianakoplos & Bernasek, 1998). They believe that, at first, risk taking increases with age and that it then reduces when managers reach a certain time of life. Goll and Rasheed (2006) showed that rational decision-making is positively influenced by the educational level of the decision-maker. Similarly, Hambrick and Mason (1984) consider levels of education to be good predictors of individuals' skills and their breadth of knowledge. Wiersema and Bantel (1992) further explained that levels of education can also be considered indicative of person's ability to effectively process a large amount of information, fostering managers' propensity to innovate, take risks, and implement significant changes within the overall business strategy of a company. These conclusions were also supported by a study of Radas et al. (2009), and Goll and Rasheed (2006). The influence of education is usually considered linear (Farrell, 2014). However, it should be noted that educational levels are mostly measured using the formal degrees, which do not necessarily reflect the real education of an entrepreneur. In addition to the given studies, the research of Gloss et al. (2017) revealed that the socioeconomic factors of an entrepreneur affect not only their psychological approach to risk taking, but also their ability to innovate and exhibit proactive behavior.
The results emerging from earlier studies regarding the influence of demographic characteristics on making business decisions were shown to be in contrast to a significant extent. Additionally, most of these studies did not consider the potential differences that existed between managers and entrepreneurs who, although they had the ability to do so, did not always manage their businesses. The research of Zeng and Ouyang (2020) revealed that tenacity, as a personal characteristic, is very important when it comes to predicting an individual's propensity to take risks, significantly affecting their commitment and resilience to a stress in ambiguous business circumstances. This study also highlighted the relationships that exist between risk perception and business performance, in that the worst performing entrepreneurs are those with low levels of risk perception and high risk propensity (Boermans, & Willebrands, 2017). The study of Alam et al. (2020) revealed that risk perception drives the speed of internationalization behavior. Similarly, the study demonstrates that innovative entrepreneurs are very optimistic and assertive, and that these characteristics enable them to make high-risk investments, impacting their propensity to make risky decisions.
Unlike in developed countries, most of the research regarding entrepreneurial decision-making conducted in transition economies has focused on the influence of specific business environment that transition process implies on entrepreneurial activity. (Van Doorn, 2017;Krasniqi & Desai, 2016;Tyzska et al., 2011;DeBeryy-Spence et al., 2008;Earle & Sakova, 2000;Alexandrova, 2004). Those research pointed out that entrepreneurial activity in transition countries was predominantly influenced by environmental factors, such as fast institutional changes, higher business risk, start-up costs etc. (Alexandrova, 2004;Estrin & Mickiewicz, 2011). This is why starting a business due to unemployment is characteristic of transition countries, while those entrepreneurs have different motivation and decision-making patterns compared to entrepreneurs who already had stable income when started running their own business (Karasniqi & Desai, 2016). This emphasizes higher level of heterogeneity of types of entrepreneurs from transition countries compared to nontransition ones (Karasniqi and Desai 2016; Earle & Sakova, 2000). Besides of that, due to pronounced market dynamism, factors such as perceived level of risk, control locus and organizational culture have more important role in shaping entrepreneurial activity in transition compared to developed economies (Karasniqi & Desai, 2016;Chelariu et al., 2008;Alexandrova, 2004;Earle & Sakova, 2000). This is why further investigation on decision-making process of entrepreneurs from transition countries becomes important question, which contributes to the significance of this study. At the same time, this arouses doubt with regards to results from developed countries examining the influence of the demographic characteristics of entrepreneurs and the ways personality impacts upon a person's tendency towards rational/ risky decision-making, as well as whether these conclusions could apply to transition economies.

Entrepreneurial decision-making in transition economies
Transition countries are characterized by significantly lower levels of entrepreneurship development in comparison to most non-transition countries, especially in the countries of the former Soviet Union (Estrin & Mickiewicz, 2011). Additionally, in transition economies, members of the older generation are far less entrepreneurial than their counterparts in other regions of the world. Due to the specific national culture and the very turbulent environment of some of the transition countries, many entrepreneurs are likely to be risk averters, which is why they tend to identify dynamism as the most influencing external factor of their business environment (Van Doorn, 2017;Alexandrova, 2004). These countries characterize starting a business as more risky compared to developed countries. Fast institutional changes, often combined with political instability and legal framework adjustments, increases risk aversion (Ahlstrom & Bruton, 2010;Alexandrova, 2004;Krasniqi & Desai, 2016). This is why entrepreneurs from these countries start their businesses in sectors where sunk costs are low (Krasniqi, 2009). Additionally, these entrepreneurs are less prone to take risks, even when this might bring about significant financial benefits, significantly slowing the growth of entrepreneurial firms (Alexandrova, 2004;DeBerry-Spence et al., 2008). However, the proactive orientation of entrepreneurs from transition countries enables them to use ad-hoc emerging opportunities to generate benefits in the short term (Ahlstrom & Bruton, 2010;Alexandrova, 2004;Krasniqi, 2009).
What separates transition economies from developed ones is their far greater percentage of entrepreneurs who have launched their own business due to unemployment (Tyzska et al., 2011;Ahlstrom & Bruton, 2010;Krasniqi & Desai, 2016;DeBeryy-Spence et al., 2008;Alexandrova, 2004). Unlike regular entrepreneurs that are motivated by independency, strong self-confidence, proactiveness, and prosperity (personal and prosperity of the company), those driven by unemployment are primarily motivated with regards to job security and their desire for more time for themselves and their family (Tyzska et al., 2011;DeBerry-Spence et al., 2008;Earle & Sakova, 2000). For them, self-prosperity through business is not of great importance (Tyzska et al., 2011). These entrepreneurs have lower levels of self-reliance and are more averse to risk (Earle & Sakova, 2000;Krasniqi, 2009).
Although research on the primary drivers of entrepreneurship in transition economies exists, to the best of the authors' knowledge, there are no studies investigating the propensity for risky/rational decision-making (Anna & Jolanta, 2020;Borozan et al., 2017;Krasniqi, 2009;Chelariu et al., 2008;DeBerry-Spence et al., 2008).
It is unclear what the role of the national culture is and whether entrepreneurs in these countries have formed attitudes towards the character and complexity of entrepreneurship. This research stresses the importance of understanding what drives a person's propensity to make risky or rational decisions, as the external factors and unpredictable market changes that characterize these countries require the ability to act quickly but in an innovative and carefully chosen way.

Conceptual framework and hypotheses development
Strengthening the entrepreneurial culture in countries in transition is one of the goals for the further economic development of these countries (OECD, 2018; Ministry of Foreign Affairs of Montenegro, 2019; Ministry of Economy of Montenegro, 2017; UHY Serbia, 2020). Hence, higher levels of knowledge regarding entrepreneurial decision-making is one of the most important factors when it comes to creating a more successful entrepreneurial environment. The authors reviewed the key findings of previous studies on the given issue, seeking to identify the most relevant determinants of entrepreneurial decision-making, especially in transition countries. Due to the scarce basis of research investigating entrepreneurial decision-making processes in transition economies, the authors also consulted studies on the topic that had been conducted in non-transition developing and developed countries. This facilitated the identification of the main factors that affect the behavior of entrepreneurs, which could form a basis for a more in-depth exploration of the given issue in light of the specificities of transition countries. Furthermore, risk perception and proactive behavior might change depending on previous experiences regarding starting and managing businesses. As such, the authors also consulted previous studies that included not only entrepreneurs, but students as well. This enabled them to understand the personal factors that determine individuals' tendencies towards engagement in entrepreneurial activities and whether the importance of personal factors changes depending on previous experience. Some of the most important research studies in this area are listed in 31, which is presented below.
A conceptual model based on three research questions was created. Previous research initially sought to uncover whether there was a relationship between the  (2019), as well as a study by Nelson (2016), pointed out the impact of gender on a person's propensity to take a risk, stating that men have a stronger tendency to make risky decisions than women do. Similarly, the research of Farell (2014) and Hallahan et al. (2003) revealed that the age of an individual changes their perception of risk, which is why elderly entrepreneurs are less inclined to make risky decisions. In contrast, Kim and Hasher (2005) revealed that older entrepreneurs are more prone to rely on intuition when making business decisions, while younger ones prefer rational decision-making. The importance of demographic factors in the decision-making process was also discussed by other authors, such as Sajilan et al. (2015), Chaudhary (2017), and Gedik et al. (2015). Therefore, our first research question is:

RQ1:
To what extent do the demographic characteristics of the entrepreneurs in transition economies influence their tendency to make rational or risky decisions?
Previous academic literature suggests that rational and risky decision-making depends on the involvement of entrepreneurs in the process (Deligianni et al., 2016;Shepherd et al., 2015). It is well known that entrepreneurs may act as owners, but also as managers (Velu & Jacob, 2016) and that there are a large number of cases in which these roles are separated or combined. The research of Newman et al. (2018), Breugst et al. (2012), and Covin et al. (2006) revealed that the extent to which entrepreneurs are involved in decision-making processes strongly affects the company's orientation to innovation and its use of new market opportunities. Unlike the different forms of participative management, the greater involvement of an entrepreneur as a leader encourages employees to assume a more active role in identifying and using new market opportunities. This motivates employees to behave innovatively and strengthens their willingness to take responsibility when making independent business decisions, fostering their orientation towards innovative behaviour (Liao et al., 2017;Park et al., 2016). Contrary to this, participative decision-making lowers the creative self-efficacy of employees and their innovative behaviour, as evidenced by a study by Newman et al. (2018) and Szczepańska-Woszczyna (2015). Similar conclusions have been drawn from a study by Forbes (2005), suggesting that higher levels of decentralization positively affect entrepreneurial self-efficacy within a company. These findings identify the effects of decision-making procedures, as well as the level of involvement of entrepreneurs and their employees in their company's proactivity and orientation towards innovation. However, it is still unclear whether and how these factors affect tendencies toward risky or rational decisionmaking (Chittoor et al., 2019;De Winnaar & Scholtz, 2019). Additionally, previous research has demonstrated the importance of risk taking in order to run a business in a turbulent environment, such as a transition economy (Ahlstrom & Bruton, 2010;Krasniqi & Desai, 2016). Hence, considering the conclusions of these aforementioned studies, our second research question is: RQ2: Does the degree of participation of entrepreneurs in the decisionmaking process have a significant impact on the tendency to make rational or risky decisions?
The studies of Taştan and Davoudi (2017) and Kreiser et al. (2010) pointed out the influence that national culture has on the proactiveness of a company and its ability to identify and use new market opportunities. On the other hand, Szczepańska-Woszczyna (2015) and Awang et al. (2009) emphasized the role that organizational culture has in fostering entrepreneurial orientation, innovativeness, and the proactive behaviour of employees. The core of entrepreneurial organizational culture is reflected in leaders' attitudes and their ability to motivate employees to innovate and adopt entrepreneurial practices when completing their tasks, which further positively reflects on the company's growth (Gürbüz, & Aykol, 2009). On the other hand, Kock and Georg Gemünden (2016), Rossberger et al. (2015), and Awang et al. (2009) claimed that managerial practices and entrepreneurial orientations are significantly influenced by environmental factors, such as turbulence, market dynamism, competition, and public policies, which are especially expressed in transition countries. However, previous research has still not revealed whether the entrepreneurs are aware of the importance of thee given factors or whether they believe that these factors have an influence on their tendency towards making risky or rational business decisions. Answering these questions is of great importance when it comes to understanding how entrepreneurs make decisions in transition economies and whether they are able to handle these factors in an appropriate way in order to minimize the potentially negative effects of risk taking and the entrepreneurial orientation of their companies, which operate in turbulent environments with strong competition. Hence, the third research question is:

RQ3:
What are the attitudes of entrepreneurs in transition economies regarding rational and risky decision-making?
The conceptual model developed for the purposes of this study is presented in Fig. 1.
Based on our research questions, the given conceptual model forges links between the demographic characteristics of entrepreneurs (age, gender, profession, level of education, years of service, position in the company, the company's activity, and the country in which it operates), the extent to which they are involved in the decisionmaking process, and their attitudes towards decision-making on the one hand, and their propensity towards risky or rational decision-making on the other hand. Risky decisions are related to the entrepreneurs that link risk with possibilities and financial risk, viewing both as a chance for significant financial success. They are very likely to explore new opportunities and business challenges and they are able to give quick responses to obstacles. Rational decision-making is related to the entrepreneurs that are precise, are willing to invest much time in order to analyze a given problem, and tend to inspect issues from different points of view.
Seeking to provide reliable answers to our research questions, a multivariate analysis was used for data processing. For each of these factors, using logistic regression and the Structural Equation Model (SEM), the significance and degree of influence on rational/risky decision-making were analyzed.

Materials and methods
Empirical research refers to the analysis of characteristics that determine the tendency towards rational/risky decision-making. This is based on data collected through online surveys of entrepreneurial companies operating in Montenegro and Serbia. The reasons behind these choices are multiple. First of all, these countries have not yet completed their transition processes, which poses a number of challenges for entrepreneurs and determines their decisions. Furthermore, these are open economies, which emphasizes the need to strengthen the competitiveness of domestic companies -entrepreneurs. This is especially important when we consider the fact that there is an insufficient number of export-oriented companies. Thus, the strengthening of competitiveness is imposed as a necessary condition for the further survival and development of the entrepreneurial companies in the analyzed markets (European Commission, 2020; Government of Montenegro, 2019; World Bank Group, 2014).
The authors have developed a questionnaire for the purpose of this study. Its initial form was tested through a pilot survey. It included a sample of 22 managers (10 from Montenegro and 12 from Serbia). The questionnaire was modified according to their comments and its final form was created. It comprised 30 questions divided into four groups. The first group included multiple choice questions related to the demographic characteristics of entrepreneurs and their country of origin. These questions were used to test the first hypothesis (H1). The second set included questions used to describe the tendency towards risky or rational decision-making. It consisted of questions related to the entrepreneur's perception of risk taking and challenging business issues and his ability to react quickly and assess the problem from different points of view. It also included questions related to an entrepreneur's tendency to collect and analyze a wide range of data and carefully evaluate all of the potential outcomes of different business decisions. The third set included questions related to the decision-making procedures within a company, such as the level of decentralization, the participation of employees, and sharing and taking responsibility and consequences for decisions that have been made. These were included in the questionnaire in order to test the second hypothesis (H2). Finally, the last group of questions was used to reveal entrepreneurs' perceptions of the importance of national culture, countries of origin, the stage in a firm's growth, and intuition in decision-making process. It was used to test the third hypothesis (H3). All of the questions from the second, third, and fourth groups were evaluated using 5-point Likert scale, where grade 1 meant that the respondent completely disagreed, while grade 5 meant that the respondent completely agreed with the given statement. The questionnaire was prepared in Montenegrin, Serbian, and English. It was pilot-tested and standard translation/back-translation procedures for each country's survey questionnaire were used (Brislin, 1970). Thanks to the cooperation of the Chambers of Commerce in both countries, the sample is a stratified random sample. The questionnaire was sent to 711 corporate e-mail addresses of entrepreneurial companies in Montenegro and Serbia. The sample involved companies operating in all three regions in both countries (the North, the Centre, and the South). The survey was undertaken in the second quarter of 2020 and lasted 30 days. Respondents returned 260 fully-completed polls (106 from Montenegro and 154 from Serbia), giving an answer rate of 36.57%, which reflects the high levels of interest in this research topic. Detailed information regarding the characteristics of the companies within the sample are presented in Table 2. Data analysis was conducted using Structural Equation Modeling (SEM) and logistic regression. Research questions were answered using SEM analysis. SEM is a multivariate analysis tool used to identify and measure complex and interdependent relationships among various dependent and independent variables. It includes measurement and structural model calculation. The measurement model is a part of SEM, facilitating the measuring of the level of influence of latent, i.e. independent variables, on dependent ones. The structural model is used to identify and measure complex interrelations that exist between latent variables, enabling them to be grouped into main factors, i.e. constructs of research (Hooper et al., 2008). On the other hand, the existence of interrelations between certain demographic characteristics of entrepreneurs and the ways in which they make business decisions was examined through the application of logistic regression. This paper evaluates only the logistic regression, which defines risky business decision-making, because evaluation of the additional logistic regression for rational business decision-making would generate the same conclusions. Before the data analysis was conducted, the reliability of the research was examined using Cronbach's alpha. The obtained value of this coefficient was 0.893, which is above its minimum acceptable value (0.6), confirming the reliability of the survey (Tabachnick et al., 2007;Hair et al., 1998). The data was further processed using the SPSS program (Statistics 20). When conducting the SEM, the IBM AMOS program was applied. The results obtained are presented in the following section.

Tendency towards risk taking, measured by means of logistic regression
The analysis of data collected through the research in the first step was conducted by applying logistic regression. This analysis enabled us to determine if the demographic characteristics of the respondents significantly influenced their tendency to make risky or rational business decisions. Logistic regression was applied to test for a potential link between a given characteristic of the respondent and their way of making a decision. It is the "most commonly used method to rank the relative importance of independent variables and to quantify the effect of their interaction" (David et al., 2015). In order to examine which groups of entrepreneurs have a pronounced tendency to make risky business decisions, an item that best represents such business decision-making was singled out from the questionnaire: whether the respondent was willing to take significant financial risks if they might lead to significant income. A positive answer to this question indicated a tendency to make risky business decisions, while a negative answer would indicate entrepreneurs with an aversion to risk. Gender, age, and length of service were selected from the group of demographic characteristics as independent variables in logistic regression. However, further analysis of the model was preceded by examining its reliability, i.e. by testing the null hypothesis, which claimed that the dependent and independent variables in the model were not connected. This was examined by comparing the results of the logarithm without independent variables (whose obtained value is 234.419) with the model in which independent variable was included (and whose result was 167.748). With 32 degrees of freedom, the value of χ2 is 66,670. This is significant at a level of 0.000. These results suggested that the null hypothesis should be rejected-that the logistic regression model could be considered reliable.
The results of the logistic regression model with regards to risky decision-making are presented in Table 3.
The results show that the chance that the entrepreneur was not ready to take a significant financial risk for the sake of higher income, under condition that he is male, was 38% lower compared to female entrepreneurs. In other words, if the entrepreneur is male, he has a 62% higher chance of taking a bigger financial risk compared to female entrepreneurs.
The claim that the length of service has an influence on a person's tendency to make risky or rational decisions is also supported by the conclusions stemming from this analysis. Namely, if an entrepreneur had up to 10 years' worth of experience in service, there was a 94.5% higher chance that they would make a risky business decision, observed in relation to an entrepreneur with 30 to 40 years' worth of service. Also, the entrepreneurs who had between 10 and 20 years' worth of service had a 93% higher chance of making a risky business decision, compared to those with the longest length of service (30-40 years). Finally, the entrepreneurs with between 20 and 30 years' worth of service will, in 46.5% of cases, more often choose a risky decision compared to respondents with between 30 and 40 years' worth of service.

Factors determining tendencies towards risky/rational decision-making calculated by SEM estimation
In order to further examine the relative intensity of the impact of the observed characteristics of entrepreneurs on the process of making risky/rational business decisions, and to identify the most important ones, the obtained data was analyzed using SEM. SEM is a multivariate analysis method used to identify and measure the relationships between the main constructs of research. In the first step, we examined whether the identified latent, i.e. independent variables, statistically fit into the hypothesized factors using confirmatory factor analysis (CFA). After that, in the second step, structural paths between the main constructs of the research were drawn in order to measure the influence that the hypothesized factors, i.e. independent variables, had on the dependent variables. The obtained results of SEM calculated the impact of the demographic characteristics of entrepreneurs on their tendency to make risky/rational business decisions. These are presented in Fig. 2. The path diagram of Fig. 2 presents the relationship between the variables that describe the factor of the characteristics of the respondents and the factors that represent their tendency towards risky or rational decision-making. All of the factors are presented in an ellipsoidal shape. The rectangular shapes denote the latent variables, whose influence on the formation of dependent variables is measured. If the value of the standardized regression coefficients for the independent variables is high, i.e. statistically significant, these can be considered good indicators of a certain factor. The SEM analysis also involves a random error, marked with "e", and this error shows the variance of dependent factors that cannot be explained by the latent variables covered in the research. The obtained values of standardized coefficients and random error, as well as the reliability indicators of the evaluated SEM model, are given in Table 4, which can be found in Appendix A of this paper.
The obtained value of the regression parameters in SEM reveal that the variable (factor) Age has the biggest influence on the formation of factor "Characteristics  (18.184). This also indicates that the age of the respondent has the strongest influence on their propensity for risky/rational decision-making. The variable that has the smallest influence is the gender of respondents, with a regression coefficient value of 0.045. Here, it is worth noting that the results of the logistic regression indicate which group of respondents within the gender characteristic has a higher chance of making a risky business decision. Unlike logistic regression, the SEM analyzes the influence of the gender of respondents in comparison with their other characteristics. Hence, the results of SEM indicate that gender does not have a decisive influence on the formation of the factor "Characteristics of respondents" in cases when the characteristics are intended to examine a respondent's propensity for risky/rational decision-making. More precisely, in terms of making business decisions, from the viewpoint of taking business risk, the age of the entrepreneur has a greater influence than the gender of the entrepreneur. Thus, there is a greater difference in making risky compared to rational business decisions in entrepreneurs of different ages compared to the difference that occurs in entrepreneurs of different gender.
The results of SEM estimation also indicate that the characteristics of respondents, as a factor, have a greater impact on the decision-making of entrepreneurs who have more of a tendency to take risks, compared to entrepreneurs who make rational decisions. Namely, the value of the regression coefficient that measures the effects of the demographic characteristics of entrepreneurs on risky decision-making (1.084) is higher than the value of the regression coefficient that reveals the impact of the demographic characteristics of entrepreneurs on rational decision-making (Value 1). These results lead to the conclusion that a greater difference is evident among entrepreneurs who are prone to making risky decisions depending on their demographic characteristics compared to entrepreneurs who are prone to rational decision-making.
The validity of the specified SEM model may be tested in many ways. The most frequently used testing methods are related to the model validity indices. The results of these indices for the specified SEM model are shown in Table 5, given in Appendix B of this paper. The obtained value for these indices are within the referent limits, which reveals that the results of SEM evaluation may be considered reliable.
Considering the results of previous research, which reveals that the decision-making process in a firm depends on whether or not the entrepreneurs are included in that process, further analysis was conducted in order to test the influence of the participation of entrepreneurs in the decision-making process in terms of risky/rational decision-making. The given influence is measured using SEM. The obtained results are presented in Table 6, which can be found in Appendix C. Table 6 also reveals that all regression parameters are statistically significant, which is evidenced by their corresponding probability values. The obtained values of the regression coefficients are also graphically presented in the path diagram, given below in Fig. 3.
The diagram of the path in Fig. 3 presents the relationship between three factorsthe factor that represents the degree of participation of entrepreneurs in making business decisions and the factors that describe the tendency to make risky or rational business decisions. On the side of the factor that describes the degree of participation of entrepreneurs in decision-making, there are seven independent variables forming the given factor. Independent variables with a greater influence on the formation of this factor also have a greater influence on a person's propensity to make risky/rational decisions. The highest value of the regression coefficient for the factor 'Degree of participation' have the variables 'Independence in making business decisions' (4.985), 'Consequences for the decision being made ' (3.987), and the variable that shows whether political situations affect business decision-making (1.508). The least significant variable is the one that shows whether all employees in the company participate in business decision-making (0.589). Thus, when the factor 'Degree of participation' of entrepreneurs in making business decisions is formed, in order to examine their influence on the way of making business decisions. Additionally, significant differences were noticed among entrepreneurs who significant differences were noticed among entrepreneurs who could make decisions independently. and where they were certain consequences for the decisions being made, as well as in companies where there was a different political environment. On the other hand, there is not much difference in the way business decisions are made by entrepreneurs employed in companies where the degree of participation of all employees in business decision-making is different. In addition, the results of the evaluated SEM model show that the factor 'Degree of participation' has a stronger impact on the factor representing risky decision-making (5.105) than on the factor representing propensity to make rational decisions (3.389). This means that entrepreneurs who have a higher degree of participation in business decision-making are expected to make risky decisions more often in comparison to those with lower degrees of participation in business decision-making, which tend to apply rational decision-making styles.
The validity of the second specified SEM model is also tested using model validity indices. These results are given in Table 7, which can be found in Appendix D of this paper. The obtained values of these indices are within referent range, which leads to the conclusion that the results of the SEM model designed to answer the second research question can be taken as valid.
Finally, based on the third research question, this paper tried to assess the attitudes of entrepreneurs in transition countries towards risky/rational decision-making. In attitudes have a stronger impact on their propensity for risky or rational decisionmaking. The obtained results can be found in Table 8, which is placed in Appendix E of this paper. The values of the regression coefficients are also graphically presented in the path diagram, given below in Fig. 4. As presented in Fig. 3, the factor "Entrepreneurs attitudes" towards risky/rational decision-making is formed through the joint effects of four variables: The 'Level of development of the country', 'National culture', 'Stage in the entrepreneurial venture development', and the importance of rationality and intuition when making decisions. The obtained values of the regression coefficient in the SEM (1.0) indicate that variable 'Level of the development of the country' has the strongest impact on forming entrepreneurs' attitudes towards risky/rational decision-making processes. The smallest value of regression coefficient is obtained for the variables 'Rationality and intuition' (0.199) and 'National culture' (0.194) which revealed that entrepreneurs consider these factors of less importance for the propensity to risky/rational decision-making. The obtained value of the regression coefficient that measures the impact of entrepreneurs' attitudes to risky decision-making is bigger compared to the value of the regression factor that measures the impact of the entrepreneurs' attitudes towards rational decision-making. These results reveal that entrepreneurs who consider the given four variables of greater importance have more of a tendency to make risky business decisions than those who do not consider the given variables to be of great importance.
The validity of the third specified SEM model is tested using model validity indices. These results are given in Table 9, which can be found in Appendix F. Considering the fact that the obtained values of the model validity indices belong to the referent range of values, the results of specified SEM are considered valid.

Discussion
Previous results have provided some important implications in relation to the establishment of new entrepreneurial start-ups in transition countries and the way they are managed. The logistic regression analysis revealed that there is a difference in tendencies towards risky or rational decision-making, depending on the gender of an entrepreneur, indicating that in transition economies women have a lower propensity to risk compared to men. These results are quite expected, as previous research in the field confirmed that, under the same circumstances, women tend to perceive given business situation riskier compared to men (Malmström et al., 2017;Alsos & Ljunggren, 2017;Rana et al., 2011). Women tend to pay more attention to the analysis of available information, time that implementation of decision takes, as well as consequences it might have for themselves and for other people (de Acedo Lizárraga et al. 2007). The results of this study were also supported by a research of Emami (2017), Nelson (2016) and Dawson and Henly (2015). The obtained findings are quite understandable in light of different social roles that men and women have, which puts greater social pressure on women and imposes greater need for them to make balance between family and business life (Malmström et al., 2017;Alsos & Ljunggren, 2017;de Acedo Lizárraga et al., 2007). However, these findings are of great importance for creating programs aimed at fostering entrepreneurship, which are a current practice in many transition economies, including Montenegro and Serbia. As women entrepreneurship is at a low level of development, even in developed countries (Birkner et al., 2018;Faisal et al., 2017), special attention should be paid to reducing perceived risks in order to encourage women entrepreneurs. In this sense, reducing financial risks (through loans under favourable terms) is especially important. Perceived risks can also be reduced through training and courses aimed at strengthening women's self-confidence in their own business skills. However, as transition economies are often characterized as very dynamic environments with strong foreign competition, it is very important to inform potential entrepreneurs about all the changes planned that might be tangled with the economic or legal framework of a country in order to make the business environment as stable as possible.
The availability of this information could also be of great importance for elderly entrepreneurs with many years of service, as logistic regression analysis and SEM confirmed that age and more years of service leverage the tendency towards rational decision-making. The same conclusions were also obtained in the research of Berger et al. (2014), Riaz et al., 2010 andGoll andRasheed (2006), suggesting that elderly managers with longer years of service tend to make decisions on a fairly established manner relaying on their previous experience and knowledge accumulated over the years. However, this can lead to a wrong decisions, as pronounced market dynamism of transition countries can cause previously good business decisions provide negative consequences in fast changing environment. Besides of that, the obtained results are also understandable in light of usually higher position that elderly managers with longer years of service cover in the hierarchy of the organization. This position puts greater level of responsibility and pressure, which foster managers to be more cautious and rational when making decisions, as wrong business decisions might have very negative consequences for the company as a whole, as well as for personal position and reputation of managers itself (Goll & Rasheed, 2006;Rolison et al., 2012). On the other hand, younger managers are often pursued by their personal ambitions, which fosters them to take riskier decisions if it can potentially results in higher yields (Berger et al., 2014;Farrell, 2014;Jianakoplos & Bernasek, 1998). These findings confirm that the same instruments of support will not have the same influence on all entrepreneurs. While more experienced ones need a stable market and available information regarding expected changes to the economic and legal framework of the country, the young ones, who are considering starting their own company, rely more on intuition and beliefs about entrepreneurship and business that are rooted in national culture. These entrepreneurs believe that the high level of economic development is a consequence of intensive entrepreneurial activity, which is non-breakable and linked to risk taking (Alam et al., 2020). Thus, they are more willing to search for new business ideas and might benefit more from training and seminars regarding new business opportunities, innovation, the ways in which technology and know-how can be transferred and shared, and events that might enable them to make new business contacts and expand their business network.
Another important implication of this research is related to authority for decision-making in existing companies. The results of the SEM model revealed that the strengthening of entrepreneurship and innovation development in existing firms is significantly influenced by the extent to which entrepreneurs are included in decision-making, as this leads to more risky-but potentially more cost-efficient-decisions. This finding is especially relevant for developing intrapreneurship in medium and large companies. They suggest that proactive people require assistance and the possibility to make certain important decisions independently in order to be motivated for development of new business ideas within a company. This conclusion is not surprising, considering that, in giving them a greater degree of independency in decision-making, entrepreneurs are encouraged to actually achieve better business results by taking greater risks, leading the company towards new business opportunities. On the other hand, in a situation where entrepreneurs have limited decision-making power and were other employees have strong impact on decisions being made, intrapreneurs are forced not to lose their position in the company by taking risks in making decisions whose consequences cannot be seen or measured immediately, despite the possibility for taking new and profitable opportunities (Goll & Rasheed, 2006;Rolison et al., 2012). In addition, previous studies in this area confirm that a higher degree of participation of all employees usually results in more rational decisions, which was also supported in this research (Bratteteig & Wagner, 2014).

Theoretical and practical implications of the research
Although entrepreneurial activity is linked to risk taking, decision-making based on relevant information, knowledge, and previous experience, i.e. rational thinking, might sometimes be the key to the successful management of entrepreneurial businesses (Deligianni et al., 2016;La Pira, 2011). Fostering entrepreneurial activity can be viewed as one of the cornerstones of the future economic development of transition countries. However, there are very few scientific studies conducted in these countries that investigate the nature and process of the decision-making of entrepreneurs. Hence, this research sought to identify the key determinants of the propensity of entrepreneurs to make risky or rational decisions. The data obtained through a survey of 260 entrepreneurs from Serbia and Montenegro (as two transition economies) was analyzed using logistic regression and SEM. The obtained results of the logistic regression revealed that elderly entrepreneurs with more experience and many years of service are more prone to make rational decisions compared to young entrepreneurs that lack business knowledge and working experience. These conclusions were also confirmed by the results of the SEM, which identified the age of entrepreneurs and the length of their service as the variables that have the largest effect on their propensity to make rational or risky decisions. Additionally, the SEM estimation also pointed out that entrepreneurs included in the decision-making process that have large level of independency and are responsible for the consequences of their decisions are more prone to risky decision-making. Hence, decision-making practices that include the participation of other employees can be viewed as a certain barrier to uncalculated risk taking, which fosters rational decision-making based on relevant information and previous business experience. Finally, the results also revealed that entrepreneurs who consider the level of national economy development, the national culture, and intuition as important factors to take into account are more prone to risky decision-making compared to entrepreneurs that do not consider these variables to be of great importance. This paper offers a comprehensive framework for understanding various factors that affect entrepreneurial decision-making through inclusion of personal characteristics of entrepreneurs', as well as characteristics of decision-making policies incorporated into the managerial style of the company. Hence, it provides a basis for understanding which factors are supposed to be effectively managed in order to foster risk taking and increase entrepreneurial activity within the dynamic markets of transition economies, highlighting the indirect theoretical contributions of this study. Through analysis of demographic characteristics and the attitudes of entrepreneurs, this study offers more precise insights as to how these factors affect the cognitive process of decision-making. Additionally, through investigating how the propensity to make risky or rational decisions changes depending on the level of participation of entrepreneurs and other employees, it contributes to the existing base of knowledge regarding different organizational processes and their influences on strengthening entrepreneurial orientation and risk taking within a company. Finally, to the best of authors' knowledge, this is the first scientific study carried out in Serbia and Montenegro, which is an integral way to examine the impact that the personal characteristics of entrepreneurs and organizational processes have on tendencies towards risky-rational decision-making within a company.
Besides its theoretical contributions, this study provides significant practical recommendations for managers and other decision-makers at state level. Namely, fostering risk taking is very important when strengthening entrepreneurial activity in transition economies. Younger entrepreneurs are more prone to take risks, which is why policy-makers should focus their attention on organizing different training sessions and seminars regarding new business opportunities, innovation, the ways in which technology and know-how can be transferred and shared, as well as organizing events that might enable younger entrepreneurs to make new business contacts and expand their business networks. Older, more experienced entrepreneurs and women entrepreneurs tend to make rational decisions, which is the reason why policy makers should pay attention to organizing different training sessions aiming to strengthen the skills needed for the successful running of a business. Also, they should make all of the important information regarding expected changes to the economic and legal framework of the country available, as this might contribute to reducing the perceived risk of doing business in a dynamic market, such as a transition economy. Managers, as policy makers within the company, should strengthen decentralization, provide employees with greater degrees of independence in decision-making, and nurture the culture of taking consequences for decisions that are made. This way, employees will be encouraged to actually achieve better business results by taking on greater risks, leading the company towards new business opportunities. Implementation of all of the previously mentioned guidelines can indirectly contribute to the prosperity and growth of entrepreneurial companies in transition economies, which can be viewed as one of the key conditions for the further development of transition countries. Although the research was conducted in transition economies, the conclusions provided by this research can be used to design future research in non-transition economies as well. Namely economies that lack a competitive advantage in domestic firms in the globalized market.

Limitations of the research
This research was conducted in only two transition countries, which is its main limitation. Hence, future research should investigate the existence of differences related to the propensity for rational/risky decision-making based on entrepreneurs' characteristics in other transition economies. Additionally, this study only considers the impact of the characteristics of entrepreneurs on decision-making. It would be useful to make a comparison between decision-making processes in developed and transition countries in order to transfer useful business practices from developed countries to economies in which entrepreneurs still lack the experience and knowledge to face all of the challenges that modern business conditions impose. Table 4 The results of estimation of SEM using maximum likelihood method for first research question *means that the parameters are statistically significant with a risk of error of 10%. DM -decision-making **means that the parameters are statistically significant with a risk of error of 5% ***means that the parameters are statistically significant with a risk of error of 1%     Table 8 The results of estimation of SEM using maximum likelihood method for the third research question *means that the parameters are statistically significant with a risk of error of 10%. DM -decision-making **means that the parameters are statistically significant with a risk of error of 5% *** means that the parameters are statistically significant with a risk of error of 1%