Selective Cognitive Biases and SMES Growth in a Fragile Economy: Evidence from Cameroon

This paper investigates whether entrepreneurial cognitive biases affect the growth of small and medium-sized enterprises within a fragile economic environment. Drawing on behavioural finance and bounded rationality perspectives, the study tests five biases including overconfidence, anchoring, herding bias, loss aversion, and regret aversion using survey data from 304 enterprises in the South West Region of Cameroon. Ordinary Least Squares regression results show that overconfidence, anchoring, and regret aversion are positive and statistically significant predictors of the growth of Small and Medium Sized enterprises, while herding bias and loss aversion are statistically insignificant. Correlation analysis, multicollinearity assessment (Variance Inflator Factor) and the Breusch–Pagan/Cook–Weisberg test all contribute to the reliability of the estimates. The findings imply that in high-uncertainty settings, selected cognitive biases may function as adaptive heuristics that encourage decisive and calibrated entrepreneurial action.

Anchoring; Behavioural Finance; Cognitive Biases; Growth; Overconfidence; Regret Aversion; SMEs.

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