Behavioral Biases Determining Investment Decisions in Moroccan SMEs
Keywords:
Behavioral biases, Investment decisions, Moroccan SMEs, Overconfidence, Optimism, Risk aversion, Herding, IntuitionAbstract
This study aims to explore how behavioral biases determine investment decisions among small and medium-sized enterprises in Morocco. The study addresses the problem that SME owners and managers often make investment decisions under uncertainty, limited information, financing constraints, and strong dependence on personal experience. A qualitative case study approach was used to capture the meanings, processes, and contextual factors behind investment decision-making. Data were collected through semi-structured interviews, limited observation, and document analysis involving Moroccan SME owners, managers, and supporting informants selected through purposive and snowball sampling. The data were analyzed using thematic analysis supported by data condensation, data display, and conclusion drawing. The findings reveal five main patterns. Investment decisions were framed as a balance between business growth and survival. Optimism and intuition shaped opportunity assessment. Risk aversion and fear of debt influenced investment timing and financing choices. Anchoring to past prices and previous experiences affected evaluation of investment costs and expected returns. Mimicry and social influence shaped investment behavior through competitors, family, and business networks. These findings show that behavioral biases are not only cognitive errors, but also adaptive responses to uncertainty, social responsibility, and limited market information. The study contributes to behavioral finance by explaining how SME investment decisions are constructed through experience, risk perception, and social context. The findings imply that SME support programs should integrate behavioral finance education, investment readiness tools, and context-based mentoring to improve decision quality.
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