Financial Literacy's Moderating Effect on Project Selection with Heuristic-Driven Biases: SMEs’ Entrepreneurial Market Development in Pakistan

Abstract

Certain biases on various project stages influence projects. Based on the moderating influence of financial literacy, the effect of heuristic-driven biases on project selection is evaluated in this research. The study aimed to evaluate how heuristics-driven biases affected the project management environment. A questionnaire with a five-point Likert scale is used to gather quantitative data. The study's target demographic comprises project managers and other senior employees at Small and Medium Enterprises (SMEs) with more than five years of experience. This study involved 200 participants, but only 151 responses were deemed authentic. Convenience sampling is the study's methodology. SPSS and Smart PLS3 are used for data analysis. The findings show that three behavioural biases, availability, representativeness, and under-confidence, have a negligible influence on project selection, but two behavioural biases—overconfidence and anchoring have a favourable impact. The research asserts that individuals do not succumb to these biases in many SMEs. The findings indicate that financial literacy does not moderate the association between heuristic-driven biases and project selection. Entrepreneurs, managers, investors, and businesses will gain immensely. Business owners should detect heuristic-driven biases to make better judgements. Controlling heuristic biases helps entrepreneurs make better decisions and implement productive business strategies. This research will help business owners manage their heuristic biases and grab business opportunities without making costly mistakes. This study offers a unique opportunity and the potential to improve the knowledge of entrepreneurial managers about the impact of heuristic-driven biases in the context of project management.