From pride to prudence: The role of financial literacy in mitigating cognitive biases among narcissistic entrepreneurs

Abstract

This study argued the growing concern of cognitive biases that hinder the rational decision-making among women entrepreneurs exhibiting narcissistic personality traits. Moreover, it also explores how narcissistic personality traits shape cognitive biases among women entrepreneurs, emphasizing financial literacy as a mediator and financial mindfulness as a moderator. For this purpose, data were collected from 215 registered women entrepreneurs operating in the SME sector across Punjab, Pakistan, using a proportionate stratified sampling technique and were analyzed through Smart-PLS. The results indicate the significant bonding between narcissistic personality traits and financial literacy as well as the financial literacy acts as the robust mediator between narcissism and cognitive biases. Furthermore, financial mindfulness serves as a strong moderator, significantly diminishing the cognitive biases and improving the rational financial decision-making. The findings highlight the necessity for focused financial literacy initiatives, particularly for women entrepreneurs susceptible to behavioral biases. This article addresses how personality-driven cognitive biases hinder women entrepreneurs’ financial decisions. Our findings indicate practical guidance for policymakers, financial institutions, and program developers to design gender-sensitive financial literacy and mindfulness initiatives that enhance resilience and rational decision-making. This paper also introduces a novel framework that connects personality traits, cognitive biases, and financial literacy to entrepreneurial decision-making, with a particular focus on the unique dynamics of emerging markets.