Impact Factors Affecting the Rationality of Managerial Decisions in Business

Abstract

This paper provides a theoretical analysis of the key factors that affect the process of making managerial decisions in business. The research objective was to reveal the palliative meaning of the impact of certain external conditions on entrepreneurship. The model of social relations of business entities is determined by their desire to meet their needs. The normativity of these relations depends on an external regulator that presumes their rationality and integrity. The state dictates "the rules of the game" and guarantees balanced social and legal opportunities for business entities. As a basic component of entrepreneurship, managerial activity depends on the collaboration of many external and internal factors. Under their impact, the abstract model of business activity faces conditions that determine the evolutionary path of a commercial organization. Permanently manifested factors form a "pattern" of managerial decisions that ensure either growth and profit or losses and financial and legal insolvency for the company. The quality of management decisions depends on how well the enterprise manages risks, resources, and uncertainty. The goal of a commercial organization is connected with the conditions of certainty and uncertainty, social utility and the overall economic good. Under such circumstances, an ideal competing market (Pareto efficiency) seems unlikely due to the fact that external and internal factors affecting the business sphere change the social relations that form them. As a result, economic, social, and legal risks increase, but the welfare of society does not, and individual economic entities bear financial and image losses.