Decision Making Bibliography
Bibliography compiled by Jim Blasick and Kurt Heppard email@example.com
Last updated: January 6th, 1995.
Burgelman, Robert A; Grove, Andrew S. (1996) Strategic dissonance. California Management Review, 38(2): 8-28.
High-tech firms frequently face the dangers and opportunities associated with strategic inflection points in their development trajectory. Strategic inflection points (SIP) are caused by changes in fundamental industry dynamics, winning strategies, and dominant technologies. SIPs generate strategic dissonance in the organization because they are associated with divergencies between top management's strategic intent and strategic action. Top management can take advantage of the information generated by strategic dissonance to develop new strategic intent and lead the organization through the turbulence and uncertainty associated with SIPs. This requires a capacity for strategic recognition on the part of top and senior management. Strategic recognition in turn is facilitated by an internal selection environment that allocates resources based on competitive reality and values dissent and debate. Strategic recognition is the foundation for exerting strategic leadership: encouraging debate and bring debate to a conclusion that realigns the basis of competition and distinctive competence, and strategy and action.
Ketchen, David J Jr; Shook, Christopher L. (1996) The application of cluster analysis in strategic management research: An analysis and critique. Strategic Management Journal, 17(6): 441-458.
Cluster analysis is a statistical technique that sorts observations into similar sets or groups. The use of cluster analysis presents a complex challenge because it requires several methodological choices that determine the quality of a cluster solution. The application of cluster analysis in strategic management research is chronicled where the technique has been used since the late 1970s to investigate issues of central importance. Analysis of 45 published strategy studies reveals that the implementation of cluster analysis has been often less than ideal, perhaps detracting from the ability of studies to generate knowledge. Given these findings, suggestions are offered for improving the application of cluster analysis in future inquiry.
Walsh, James P. (1995) Managerial and organizational cognition: Notes from a trip down memory lane. Organization Science, 6(3): 280-321.
Top-down information processing theory suggests that individuals create knowledge structures to help them process information and make decisions. While the benefits of employing such knowledge structures are widely noted, there is a growing concern that they can limit decision makers' abilities to understand their information environments and thus, compromise their decision making. This issue has captured the imagination of managerial and organizational cognition researchers. To date, their inquiry has been eclectic in focus and method. To order and advance this work, extant research is reviewed on the developmental origins and decision consequences of both the content and structure of knowledge structures at multiple levels of analysis. A host of research challenges are identified to help develop a better understanding of knowledge structure representation, development, and use in
Dixit, Avinash K; Pindyck, Robert S. (1995) The options approach to capital investment. Harvard Business Review , 73 (3): 105-115.
Companies make capital investments to create and exploit profit opportunities. Opportunities are options - rights by not obligations to take some future action. The old present value presumption that investment decisions are either reversible or now-or-never propositions turns out to be flawed. Irreversibility, uncertainty, and the choice of timing alter the investment decisions in critical ways. The net present value rule should be modified: The present value of the expected stream of cash from a project must exceed the cost of the project by an amount equal to the value of keeping the investment option alive. As with the financial call option, the greater the uncertainty over the profitability of a capital investment, the greater the value of the opportunity and the greater the incentive to wait and keep the opportunity alive. If a company can identify some situations that would cause it to rethink a go-ahead decision, the ability to wait and avoid those eventualities is valuable.
Korsgaard, M Audrey; Schweiger, David M; Sapienza, Harry J. (1995) Building commitment, attachment, and trust in strategic decision-making teams: The role of procedural justice. Academy of Management Journal, 38 (1): 60-84.
A study examined how decision-making procedures can facilitate the positive attitudes necessary for cooperative relations in decision-making teams. It is hypothesized that consideration of member input and members' influence on a decision affect their perceptions of procedural fairness and their commitment to the decision, attachment to the group, and trust in its leader. An experiment with intact teams of middle- and upper-level managers was conducted. An intact management team is a pre-existing, relatively permanent team of employees, as opposed to an ad hoc group. The sample consisted of 20 intact management teams of a Fortune 500 company participating in its executive development program on strategic management. The experiment indicated that perceived fairness partially mediated the impact of procedures on commitment, attachment and trust.
Lu, Yuan; Heard, Rachel (1995) Socialized economic action: A comparison of strategic investment decisions in China and Britain. Organization Studies, 16 (3): 395-424.
Six strategic investments occurring in 3 Chinese state enterprises and 3 British firms matched, by types of products, with their Chinese equivalents, were examined. In both China and Britain, the form of decision processes in these large business organizations have exhibited a similar bureaucratic style, in terms of complex approval procedures, asymmetric power relations along hierarchies, multiple vertical channels for communication, and negotiating between senior and operational managers. In China, however, managerial autonomy was strictly limited by the domination of planning authorities who controlled resource allocation. The involvement of multiple external agencies, who were responsible for the economy, technology, society, and national demands, introduced a disparity of interests into investment decision-making. In Britain, managers enjoyed more autonomy to formulate investment strategies, and British firms appeared to pursue the target of profitability more explicitly, through social obligations and the perceived requirements of managers' personal careers were also critical in decision making.
Molloy, Steve; Schwenk, Charles R. (1995) The effects of information technology on strategic decision making. Journal of Management Studies, 32 (3): 283-311.
Information technology (IT) may be defined as computer-based technology for the storage, accessing, processing and communication of information. Many writers have suggested that the use of IT should improve strategic decisions and have developed a number of propositions about the effects of IT on strategic decision making. However, no study has yet addressed the specific effects of IT on major phases of this process. Using Mintzberg, Raisinghani and Theoret's (1976) strategic decision-making model, a study assessed the effects of IT on the major phases of the process through an intensive examination of 8 decisions in 4 companies. The results of the study provide new information on the specific ways IT improves decision-making efficiency and effectiveness at each stage of the strategic decision process.
Nair, Suresh K. (1995) Modeling strategic investment decisions under sequential technological change. Management Science, 41 (2): 282-297.
Strategic decisions to invest in new equipment are critical not only because of the large initial capital costs incurred but even more importantly because they affect future unit production costs, revenues, and the ability of the firm to perform operations that were not possible earlier. These decisions determine the very competitiveness of the firm. A study attempts to relax some restrictions using forecast horizon procedures to model capital investment decisions where any number of technologies may appear in the future with purchase costs and revenues that may vary over time. A new approach is developed using non unique terminal rewards to solve a dynamic programming model of the problem by introducing converse difference functions and presents an algorithm that is both simple and efficient. Despite the increase in state space from the use of converse functions, it is shown that the computational burden of the algorithm does not increase.
Schoemaker, Paul J H. (1995) Scenario planning: A tool for strategic thinking. Sloan Management Review, 36 (2): 25-40.
Among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. By identifying basic trends and uncertainties, a manager can construct a series of scenarios that will help to compensate for the usual errors in decision making - overconfidence and tunnel vision. Through case studies of Interpublic, an international advertising agency, and Anglo-American Corp. in South Africa, a step-by-step process describing how to build scenarios and how to use the resulting stories to plan a company's future is presented. The scenario method continually pushes the envelope of possibilities since it views strategic planning as collective learning.
Teng, James T C; Cheon, Myun Joong; Grover, Varun (1995) Decisions to outsource information systems functions: Testing a strategy-theoretic discrepancy model. Decision Sciences, 26 (1): 75-103.
In recent years, the decision to outsource information systems (IS) functions has become a viable strategic alternative in managing increasingly complex IS functions. In a study, the IS outsourcing phenomenon is conceptualized as a strategic decision in the organization. Drawing on resource-based theories, resource dependence theories, and other theories of strategic management, a discrepancy model of this decision is developed. Relationships between a number of strategy-theoretic factors and the IS outsourcing decision are hypothesized. These factors include IS resource performance discrepancies manifested in the form of gaps in information quality, IS support quality, IS cost effectiveness and financial performance, as well as the strategic orientation of the firm. Results indicate that, while cost consideration and the firm's financial performance are not associated with the IS outsourcing decision, difficulties in providing good information outputs and IS support services are associated with the decision.
Drummond, Helga (1994) Too little too late: A case study of escalation in decision making. Organization Studies, 15(4): 591-607.
A city council's persistence with a failing department over a 5-year period is examined. The case represents an example of escalation of commitment where decision makers inherit a previously unsuccessful and long established decision as distinct from involvement in an ad hoc venture. Escalation refers to prdicaments in which individuals and organizations become trapped in losing courses of action as a result of earlier decisions. It is concluded that the pressures to escalate in established decisions are different from those previously observed in ad hoc ventures. Escalation in established decisions is cyclical, alternating between structural and social pressures. Project and psychological factors are shown to be secondary. Powerlessness is identified as a new structural variable. It is hypothesized that escalation in established decisions may be basically structural. Decision makers' actions are reminiscent of behaviors that have been observed in precious studies of strategic decision making.
Langley, Ann; Traux, Jean (1994) A process study of new technology adoption in smaller manufacturing firms. Journal of Management Studies, 31(5): 619-652.
Based on longitudinal case studies of new technology adoption in 5 smaller Canadian manufacturing firms, an inductive process model is developed that views the technology adoption process as a partially nested set of 3 parallel and interacting sub-processes that are different in nature: the strategic commitment process, the technology choice process and the financial justification process. These processes are themselves intertwined with other strategic decision processes in the firm, and influenced by a dynamic set of contextual elements that interact with one another over time. The study underlines the problems associated with a narrow conception of technology adoption as a 'decision' while showing how various process models from the literature are useful in understanding different parts of the overall process of adoption.
Levy, David (1994) Chaos theory and strategy: Theory, application, and managerial implications. Strategic Management Journal, 15 (Summer): 167-178.
Chaos theory provides a useful theoretical framework for understanding the dynamic evolution of industries and the complex interactions among industry actors. It is argued that industries can be conceptualized and modeled as complex, dynamic systems, which exhibit both unpredictability and underlying order. The relevance of chaos theory for strategy is discussed, and a number of managerial implications are suggested. To illustrate the application of chaos theory, a simulation model is presented that depicts the interactions between a manufacturer of computers, its suppliers, and its market. The results of the simulation demonstrate how managers might underestimate the costs of international production. It is concluded that, by understanding industries as complex systems, managers can improve decision making and search for innovative solutions.
Mentzer, Marc S. (1994) Alarm clocks, thermostats, and the timing of strategic decisions. Academy of Management Executive, 8 (3): 99-100.
Connie Gersick of the University California at Los Angeles interviewed executives and observed meetings in a single medical products start-up firm to capture the pacing of strategic decision making. The firm did not stick to a failing strategy, nor did it change strategies willingly. Reassessment meetings at timed intervals can give a company a competitive advantage.
Priem, Richard L; Harrison, David A. 1994) Exploring strategic judgment: Methods for testing the assumptions of prescriptive contingency theories. Strategic Management Journal, 15(4): 311-324.
The strategic choice perspective of organizational adaptation (Child, 1972) is central to the field of strategic management. This perspective suggests that choices made by top managers influence organizational design outcomes and firm performance. Several generally untested assumptions about strategic judgment and choice exist in strategic management theories. Direct examination of these assumptions is necessary for sound theory building, and for sound prescription based on current theory. Techniques are presented for eliciting and analyzing the strategic judgments of strategy makers. The potential of these techniques for increasing the internal validity and practical relevance of strategy research is discussed. It is argued that incorporating managerial judgment more directly into the mainstream of strategy research will lead to both new theory and the extension of existing theory.
Rollier, Bruce; Turner, Jon A. (1994) Planning forward by looking backward: Retrospective thinking in strategic decision making. Decision Sciences, 25 (2):169-188.
Retrospective thinking occurs whenever one remembers something from the past, but one can also think retrospectively about hypothetical future events, by imagining that the event has already transpired and then working backward in the mind from the future toward the present. Designers, artists, planners, and other creative individuals utilize retrospective thinking when they mentally envision the object they wish to create and then think about how it might be constructed. A laboratory study designed to investigate retrospective thinking as a technique for increased idea generation is described. Subjects were professional planners and managers with an average business experience of over 20 years. In a planning task, significantly more ideas were generated in the retrospective thinking mode than in the prospective mode, but the ideas were not found to be of greater quality. Evidence emerged that a subset of subjects were better able to make use of the retrospective technique, suggesting that selection along with training may be appropriate for the technique's most effective use.
Rosman, Andrew; Lubatkin, Michael; O Neill, Hugh (1994) Rigidity in decision behaviors: A within-subject test of information acquisition using strategic and financial informational cues. Academy of Management Journal, 37 (4): 1017-1033.
In contrast to prior investigations using between-subjects designs to infer the existence of rigidity in decision behaviors, a study used a within-subject design to directly measure rigidity. The study also extended previous examinations by distinguishing between semantic and episodic informational cues. Finally, the study used a computer process-tracing technique that allows validity assessments of tests and keeps researcher intrusion to a minimum. The results, based on data from 3 different groups of business analysts and 2 studies, suggest the inappropriateness of arguing that individuals show either exclusively rigid or nonrigid decision behaviors.
Wally, Stefan; Baum, J Robert (1994) Personal and structural determinants of the pace of strategic decision making. Academy of Management Journal , 37 (4): 932-956.
A model of the determinants of strategic decision-making pace that incorporates the role of individual differences among excecutive decision makers, organizational structural characteristics, and industry effects is developed. Drawing on data from 151 firms, the study found that chief executive officers'
cognitive ability, use of intuition, tolerance for risk and a propensity to act associated positively with speedy decisions. Decision pace appeared to be faster in centralized organizations and slower in formalized organizations. The results also suggest that the construct of comprehensiveness has both cognitive and organizational structural aspects, with cognitive and comprehensiveness relating positively and organizational comprehensiveness relating negatively to strategic decision-making pace.
Dean, James W Jr; Sharfman, Mark P. (1993) The relationship between procedural rationality and political behavior in strategic decision making. Decision Sciences, 24 (6): 1069-1083.
Procedural rationality and political behavior are central concepts in the literature on decision making in general, and strategic decision making (SDM) in particular. However, little attention has been given to their relationship. The question of whether procedural rationality and political behavior are separate dimensions that can coexist in a decision process, or alternatively represent opposite ends of a single continuum, has not been answered. This question was addressed in a study of 61 strategic decisions in 24 companies using a multiple-informant, structured interview protocol. The central finding of the study was that procedural rationality and political behavior were 2 distinct dimensions of the SDM process. The most obvious implication of the finding is that decisions can be both procedurally rational and political, or neither. Given the conclusion that rationality and politics are 2 independent dimensions, it is interesting to consider whether variation in these 2 dimensions relates to the success of strategic decisions. To explore this question, 4 cases of decision making from the study sample are presented.
Dean, James W Jr; Sharfman, Mark P. (1993) Procedural rationality in the strategic decision-making process. Journal of Management Studies, 30 (4): 587-610.
Despite the central place of rationality in the organization theory, strategic management, and decision-making literatures, little is known about why some strategic decision-making procedures are more rational than others. A study was conducted of 57 strategic decisions in 24 companies, using a multiple-informant, structured interview protocol. Results indicate that environmental competitive threat, perceived external control of the organization, and the uncertainty of the strategic issues being addressed are related to procedural rationality. Surprisingly, some of these relationships were in the opposite direction from predictions. These results are interpreted within a framework that emphasizes the link between procedural rationality and managerial discretion.
Dutton, Jane E. (1993) Interpretations on automatic: A different view of strategic issue diagnosis. Journal of Management Studies, 30 (3): 339-357.
Models of strategic decision-making and environmental scanning typically assume that decision-makers diagnose issues actively, using conscious and intentional effort to identify and to interpret potentially significant events, developments, and trends. When decision-makers confront an issue that is novel in content, about which persons have strong evaluations, where time pressure and information load are intense, or decision-makers exist in an organization that has routinized means for dealing with issues, norms for consistency are prevalent, or the organization has been successful, design and process interventions may be necessary to engage active strategic issue diagnosis.
Gargiulo, Martin , (1993) Two-step leverage: Managing constraint in organizational politics. Administrative Science Quarterly, 38 (1): 1-19.
A study proposes an alternative to resource-dependence approaches to strategic behavior, which predict that actors seek direct cooptive relations to alleviate constraint. An actor can gain leverage on a limiting party by building a cooptive relation with a player that may control this party's behavior, thus using 2-step leverage. Data on dependence relations, political alliances, and confidential discussion networks among decision makers in a cooperative agribusiness furnish evidence of both direct and 2-step leverage and clarify the contexts to which these 2 strategies are used. As predicted by the resource-dependence approach, leaders build ties of interpersonal obligation with people directly affecting their performance in the organization. When policy divergences or personal frictions make these ties untenable, however, leaders build strong cooptive relations with people who may constrain the performance of the party on whom they depend.
Nutt, Paul C. (1993) The identification of solution ideas during organizational decision making. Management Science, 39 (9): 1071-1085.
The idea development stage of a strategic decision making process was investigated. The tactics that decision makers apply to identify ideas were uncovered from a systematic study of 168 decision cases. These tactics and contextual factors describing the decision situation were analyzed to determine how each influences success measured by decision merit, development time, initial adoption, and sustained adoption. A synthesized template that integrated useful practices and procedures from several sources had the most success, but this tactic was seldom used. A cyclical search in which repeated searches were carried out to learn about opportunities was quite successful when used under conditions of low importance, low urgency, and good staff support. The success of the design tactic, which calls for innovation, improved when urgency was present and multiple alternatives were sought. The idea tactic that imposed a fully developed solution was widely used and seldom successful.
Rajaopalan, Nandini; Rasheed, Abdul M; Datta, Deepak K . (1993) Strategic decision processes: Critical review and future directions. Journal of Management, 19 (2): 349-384.
Research in strategic management has often been classified into 2 broad categories: 1. research dealing with issues of strategy content, and 2. research on the process by which strategy is created and implemented. Extensive theoretical and empirical work has been undertaken in strategy content on topics such as portfolio management, diversification, acquisitions and mergers, and the alignment of firm strategies with environmental characteristics. On the other hand, process issues have received relatively less attention. However, currently there is renewed interest in process research, along with an increased awareness of the critical interrelationships between content and process issues. An integrative framework of strategic decision processes is developed that incorporates environmental, organizational, and decision specific antecedents of process characteristics, and their process and economic outcomes.
Schoemaker, Paul J H. (1993) Strategic decisions in organizations: Rational and behavioural views. Journal of Management Studies, 30 (1): 107-129.
Various models have been used to predict and understand strategic decisions in organizations. The present analysis examines 4 classes: 1. the unitary rational, 2. the organizational, 3. the political, and 4. the contextual. They are conceptualized as stemming from different assumptions about goal congruency and coordinative efficiency. The contextual view is especially highlighted, as it is a relatively new perspective, both organizationally and cognitively. A brief discussion is presented of disciplines and findings that either support or refute some of these models. Possible syntheses and reconciliations of the 4 views are explored, focusing on: 1. assumptional fit, 2. level of analysis, 3. cost of fashioning collective rationality, 4. information processing limits in organizational design, and 5. the role of adaptation lags and disequilibrium. A meta-theory is needed to place the various perspectives in a larger framework.
Tannous, George F; Mangiameli, Paul M. (1993) A microeconomic model of the focused factory-vertical integration strategic decision problem. Decision Sciences, 24 (1): 209-217.
The design of a manufacturing strategy incorporates the decision of whether to focus or vertically integrate, or adopt a policy somewhere between the 2 extremes. Unfortunately, the literature contains few models that aid a manager in this decision process. The present analysis designs a model to evaluate and
compare various strategic alternatives along the focused factory-vertical integration continuum. By defining a point along this continuum as the percent of components manufactured internally that are needed to make one finished item (where zero indicates complete focus and one manufacturing step, and one indicates full integration and 100% internal manufacturing), it is possible to delineate the effects of the alternative decision strategies on flexibility and the firm's cash flow. The capital asset pricing model is invoked to assess the impact on the firm's risk and value.
Barr, Pamela S.; Stimpert, J. L.; Huff, Anne S. (1993) Cognitive Change, Strategic Action, and Organizational Renewal. Strategic Management Journal, 13(Summer): 15-36.
Organizational renewal requires that a firm's top managers make timely adjustments in their mental models following significant changes in the environment. The US railroad industry was selected as the subject of a study of whether similar organizations in similar contexts differ in their ability to recognize significant changes in their environments. The investigation focused on the mental models of the top managers of a matched pair of firms. The need for careful matching led to the selection of 2 Midwestern railroads, the C&NW and the Rock Island. Analysis of longitudinal data from these railroads suggsts that renewal hinges not so much on noticing new conditions, but on being able to link environmental change to corporate strategy and to modify that linkage over time. The leaders of the C&NW not only recognize changes in their environment, they also gradually change their mental models of how
organizational performance is affected by the changed environment.
Bettis, Richard A; Bradley, Stephen P; Hamel, Gary (1992) Outsourcing and Industrial Decline. Academy of Management Executive, 6 (1): 7-22.
The improper use of outsourcing is playing an important role in the continuing competitive decline of many Western firms. A notable example of the role outsourcing can play in the process of industrial decline is the US consumer electronics industry. Western managers often view outsourcing as a defensive operational measure. The approach tends to be incremental. A whole series of incremental outsourcing decisions, taken individually, may make economic sense, but collectively they may also represent the surrender of the business's capability to compete. Outsourcing firms often make 4 questionable assumptions: 1. Strategy primarily involves competitive position in the marketplace. 2. Brand share is defensible without manufacturing share. 3. Design and manufacturing are separable. 4. Market knowledge is separable from manufacturing. Treating outsourcing decisions strategically most fundamentally implies an in-depth understanding of the core competences on which the firm intends to build its future competitive advantage.
Day, David V; Lord, Robert G. (1992) Expertise and Problem Categorization: The Role of Expert Processing in Organizational Sense-Making. Journal of Management Studies, 29 (1): 35-47.
An experimental approach was adopted to study the use of expert processing in the categorization of organizational problems. The problem categories of 38 chief executive officers in the machine tool industry were compared with those of 30 MBA students. The results of a problem-sorting task indicated that experts tended to categorize the ill-structured problems significantly faster than
novices. Experts also had greater variance in the number of categories used, and they incorporated more problem information. Follow-up analyses revealed that the number of categories was negatively related to experts' age and positively related to the number of processes and services offered by their respective organizations. These findings are consistent with the contention that experts rely on well-developed, context-dependent heuristics in the early stages of their decision making. It is argued that such heuristics allow organizational experts to make sense of strategic issues quickly and respond in an efficient and effective manner.
Eden, Colin (1992) Strategy Development as a Social Process. Journal of Management Studies, 29 (6): 799-811.
It is argued that the development of strategy in organizations will be more effective if it is seen as predominantly a social rather than analytical process. The strategic planner is a servant of a management team and not of some abstract organization. The success of the strategic planner can only be measured by the extent to which it influences the thinking and action of other people. Using the notion of organizations as negotiated order, it is suggested that designed Group Decision Support Systems (GDSS) can play an important role in facilitating the negotiation of strategy. Six 'support systems' are presented: 1. SODA (Strategic Options Developments Analysis), 2. strategic choice, 3. decision conferencing, 4. SAST (Strategic Assumptions Surfacing and Testing), 5. SSM (Soft Systems Methodology), and 6. system dynamics modelling. It is implied that planners might see themselves as facilitators managing both 'socially negotiated order' and 'negotiated social order.'
Eisenhardt, Kathleen M; Zbaracki, Mark J. (1992) Strategic decision making. Strategic Management Journal, 13 (Winter): 17-37.
The strategic decision making literature is reviewed by focusing on 3 dominant paradigms: 1. rationality and bounded rationality, 2. politics and power, and 3. garbage can. A synthesis of empirical findings confirms that organizations are accurately portrayed as political systems in which strategic decision makers have partially conflicting objectives and limited cognitive capability. Further, strategic decision making is best described by an interweaving of both boundedly rational and political processes. The garbage can model is less relevant and, although it remains a clever reminder of the importance of chance, it is empirically less robust than the other paradigms.
Glazer, Rashi; Steckel, Joel H; Winer, Russell S. (1992) Locally Rational Decision Making: The Distracting Effect of Information on Managerial Performance. Management Science, 38 (2): 212-226.
The phenomenon called 'locally rational' decision making is described. In such decision making, the mere presence of information may have dysfunctional consequences even if decision makers do not process the information incorrectly. Using the results from an experiment conducted with a strategic market simulation game, it is found that the accessibility of information results in a disposition to focus on those components of decision making most clearly addressed by the information. If these components are not the ones most closely tied to success, overall performance may in fact suffer. The decision-making process is therefore locally rational since it may be optimal with respect to specific components of a larger plan, but globally suboptimal with respect to ultimate outcomes and for the organization as a whole. The implications of this phenomenon for the use of market-related data in managerial decision making are described, including the identification of biases in human judgment.
Heintz, Timothy J; Acar, William (1992) Toward Computerizing a Causal Modeling Approach to Strategic Problem Framing. Decision Sciences, 23 (5): 1220-1230.
The use of a combination of a causal mapping method and object-oriented programming (OOP) is proposed for analyzing complex decision-making situations. Causal mapping presents a graphical basis for communicating and arguing logically about problem situations. OOP provides a computer implementation approach that makes it easier to handle the complexities of building causal models. The development of a prototype group decision support system is described that uses comprehensive situation mapping to represent each manager's perceptions of the relationships between key variables of a firm's strategic situation. Suggestions for further development of the system are also provided.
Judge, William Q., Jr; Zeithaml, Carl P. (1992) Institutional and Strategic Choice Perspectives on Board Involvement in the Strategic Decision Process. Academy of Management Journal, 35 (4): 766-794.
The level of a board of directors' involvement in strategic decisions can be viewed as an institutional response or as a strategic adaptation to external pressures for greater board involvement. The antecedents and effects of board involvement were examined from both the institutional and strategic choice perspectives. Data obtained from personal interviews with 114 board members and archival records indicated that board size and levels of diversification and insider representation were negatively related to board involvement, and organizational age was positively related to it. Furthermore, board involvement was found to be positively related to financial performance after controlling for industry and size effects. Overall, the results suggest that both theoretical perspectives are necessary for a comprehensive description of the strategic role of boards.
McGrath, Rita Gunther; MacMillan, Ian C; Tushman, Michael L. (1992) The role of executive team actions in shaping dominant designs: Towards the strategic shaping of technological progress. Strategic Management Journal, 13 (Winter): 137-161.
Two major streams of literature in the strategy field make a contribution to the understanding of the challenges of strategic decision making: industrial organization and the resource based view. Supplementing this research with a focus on the evolution of product classes offers richer insight into the playing field upon which firms compete on the basis of technology. The destiny of a firm is closely linked to the evolution of product class in its industry. Product-class evolution is driven by the variation, retention, and selection of dominant designs in the context of lumpy markets. Business strategy decisions cannot be undertaken without an intimate understanding of the relationship between the firm's technology trajectory and the opportunity space created by lumpiness in the market.
Priem, Richard L. (1992) An Application of Metric Conjoint Analysis for the Evaluation of Top Managers' Individual Strategic Decision Making Processes: A Research Note. Strategic Management Journal, 13 (Summer): 143-151.
Metric conjoint analysis may be particularly appropriate for examination of top manager cognitions in light of the many contingencies posited by strategic management theories. The technique allows testing of contingent decision rule use and comparison of executives' decision rules to the prescriptions of continency theories. A descriptive field study is presented wherein the decision rules for strategy-structure-environment alignment used by the chief executive officers (CEO) of 33 autonomous, nondiversified manufacturing firms are examined. Overall, the CEOs in the sample exhibit preferences for differentiation strategies and organic structures, and their decision rules are consistent with the double interactions suggested by bivariate contingency theories. The large variance in the mean regression parameters, however, indicates that the CEOs may not exhibit homogeneous patterns of decision rules.
Sabherwal, Rajiv; King, William R. (1992) Decision Processes for Developing Strategic Applications of Information Systems: A Contingency Approach. Decision Sciences, 23 (4): 917-943.
Strategic applications of information systems (IS) are considered by IS researchers to be determined by contextual factors, such as environmental uncertainty, and influenced by attributes of the processes preceeding them, such as planning and top management support. For better management of the process leading to these applications, it is essential to understand the relationship between process attributes and contextual factors. The relationship between the context of these applications and the decision-making process leading to them is examined using the successful strategic IS applications from 81 large companies. The results indicate that the external environment is related to whether a rational or political decision-making process is used. The IS function seems to influence the use of the decision process implied by IS researchers, while the IS managers contribute by conducting in-depth analysis. However, the organization structure was not related to any decision process attribute.
Hitt, Michael A; Tyler, Beverly B. (1991) Strategic Decision Models: Integrating Different Perspectives. Strategic Management Journal, 12 (5): 327-351.
Different perspectives of strategic decision making and outcomes have been advanced in the literature. Among those are rational normative, external control, and strategic choice models. Survey data were used to examine several hypothesized effects of factors associated with these 3 perspectives on strategic acquisition decisions. Strong support was found for the rational-analytical normative choice perspective, with objective criteria explaining the greatest amount of total explained variance in the evaluation of targeted firms. However, industry and executive characteristics also produced main effects on target firm evaluations. Furthermore, the strategic decision models were found to vary by industry and executive characteristics of age, educational degree type, amount and type of work experience, and level (chief executive officer and below). The results suggest that strategic decision models are quite complex and have significant implications for future research and for strategic decision making.
Judge, William Q; Miller, Alex (1991) Antecedents and Outcomes of Decision Speed in Different Environmental Contexts. Academy of Management Journal, 34 (2): 449-463.
A study refined and extended the findings of previous research on decision-making speed. Velocity was operationally defined as industry growth coupled with changes in technology and other disruptive forces, such as governmental regulations. Three industries were identified that were judged to vary in velocity.
Using archival data, growth was measured as the change in industry employment and the change in industry sales. Multiple raters in each organization included 32 chief executive officers (CEO) and 54 other executives judged by the CEOs to be most involved in the decision being studied. The results showed that decision speed was associated with simultaneous consideration of many alternatives, regardless of context. In contrast, the relationship between board of directors experience and decision speed was context-specific. Decision speed was associated with higher performance only in high-velocity environments.
Keats, Barbara W. (1991) An Empirical Investigation of Strategic Investment Decision Models. Strategic Management Journal, 12 (3): 243-250.
Organizational strategy generally is recognized as the outcome of a stream of decision-making activities. Recent strategy literature reflects increasing interest in an information processing approach to understanding how those decisions emerge as they do and why. Previous studies have suggested that strategic decision makers develop heuristics for processing strategic information and using it to make decisions. However, there is little or no information as to the specific structuring and content of such heuristics. A new study employed a judgment-capturing methodology to identify the specific structures of decision models and simplification heuristics in a series of strategic investment decisions. In general, the results provide evidence of the ability to tap into actual strategic decision processes used by top management team (TMT) members and to evaluate them, such as in terms of complementarity. The results also suggest the potential for intervention designed to enhance alignment among them.
Mahmood, Mo Adam; Soon, Siew Khim (1991) A Comprehensive Model for Measuring the Potential Impact of Information Technology on Organizational Strategic Variables. Decision Sciences, 22 (4): 869-897.
Organizational and industrial variables that appear to be affected by information technology (IT) are identified, measured, and operationalized in the form of a comprehensive model. The analysis is based on structured interviews with a sample of 31 strategic managers who have experience using IT for strategic decisions. The variables are empirically validated and their reliabilities tested. The comprehensive model is derived from these validated variables. The model is a first step toward measuring the overall potential impact of IT on an organization. The model can also be used to gauge IT's potential impact on individual strategic variables. A set of hypotheses is also presented for future research. The hypotheses primarily relate to the impact of IT on organizational strategic performance. The model provides an empirically validated foundation for the testing of such hypotheses.
Merten, Peter P. (1991) Loop-Based Strategic Decision Support Systems. Strategic Management Journal, 12 (5): 371-386.
A strategic decision support methodology is presented that makes it possible to represent rule-setting and rule-fulfilling decision-making processes in companies with their structural and behavior differences. The proposed methodology also allows the simulation of evolutionary processes in company systems based on these 2 forms of decision making. The new strategic decision support methodology combines the continuous feedback loop concept of system dynamics with discontinuous logical loops, which are called spiral loops. The spiral loop concept, which is based on new developments in evolutionary theory and in the field of artificial intelligence, is used to represent the rule-setting strategic decisions that can generate qualitative change and evolution. In order to demonstrate how loop-based strategic decision support systems work in principle, a generic version of the portfolio simulation model is presented that helps explain and design the evolution of multibusiness firms in duopoly markets.
Skivington, James E; Daft, Richard L. (1991) A Study of Organizational 'Framework' and 'Process' Modalities for the Implementation of Business-Level Strategic Decisions. Journal of Management Studies, 28 (1): 45-68.
Organizational framework and process are proposed as 2 modalities for implementing intended business-level strategic decisions. A model is developed in which the components of the 2 modalities are defined and related to the implementation of low cost and differentiation strategic decisions. The implementation of 57 decisions in integrated circuits, petroleum, and health care firms is used to test the research hypotheses. The results suggest that implementation in these firms utilized both framework and process structural elements but that a different implementation gestalt characterized each type of strategic decision. The implications for strategy implementation are discussed.
Zajac, Edward J; Bazerman, Max H. (1991) Blind Spots in Industry and Competitor Analysis: Implications of Interfirm (Mis)perceptions for Strategic Decisions. Academy of Management Review, 16 (1): 37-56.
The literatures on competitor analysis and strategic decision making are bridged by introducing the notion of competitive decision making into the strategic decision-making literature and by embedding this notion into a framework of industry and competitor analysis. Decision makers typically have specific blind spots when they consider the contingent decisions of competitors. These blind spots are identified, and a discussion is provided of how they may explain such commonly observed phenomena as industry overcapacity, new business entry failures, and acquisition premiums. Competitive decision making is defined as strategic decision making that requires the focal actor to consider the contingent decisions of competitor actors. A major potential contribution of game theory to the strategic management area is the recognition that competitive actors need to fully consider the contingent decisions that other parties will be making. Game theory appears to offer the ideal perspective for understanding competitive environments and making recommendations to competitive actors.
Eisenhardt, Kathleen M. (1990) Speed and Strategic Choice: How Managers Accelerate Decision Making. California Management Review, 32 (3): 39-54.
Strategy making has changed. The carefully conducted industry analysis or deliberate strategic plan no longer guarantees success; instead, speed is important. Fast decision making has emerged as a crucial competitive weapon. Decision makers make fast, yet high-quality, strategic choices by maintaining a constant watch over real-time operating information and relying on quick, comparative analysis to speed cognitive processing. They favor approaches to conflict resolution that are rapid and yet maintain group cohesion. Decision makers' reliance on the private advice of experienced counselors and integration with other decisions bolsters their confidence to decide quickly in the face of high stakes and great uncertainty. Fast decision makers also use multiple, simultaneous alternatives, because comparative analysis sharpens preferences and alternatives provide a fallback position. A final key to fast decision making is the integration of the focal decision with other key choices and tactical plans.
Langley, Ann (1990) Patterns in the Use of Formal Analysis in Strategic Decisions. Organization Studies, 11(1): 17-45.
An empirical study examined how formal analysis is used in strategic decision making in 3 organizations of different structural types. In-depth investigation was made of the role of formal analysis at top levels in 3 organizations - a machine bureaucracy, a professional bureaucracy, and an adhocracy. It was found that formal analysis is used for a variety of purposes in organizations, and the way in which it is used varies from organization to organization. Three patterns of use were identified: 1. Analysis is used for substantive input to decisions, to control implementation, and to ensure convergence toward action. 2. Analysis becomes a key tool of persuasion and verification in the negotiation process between levels of the hierarchy concerning actions to be taken. 3. Analysis appears unproductive as people use it to put forward contradictory positions and to gain time in an atmosphere of indecision and divergence. This suggests that organizational structure is a key factor affecting the decision process.
Lyles, Marjorie A. (1990) A Research Agenda for Strategic Management in the 1990s. Journal of Management Studies, 27 (4): 363-375.
Strategic management research was addressed by querying experts in a systematic way to forecast the most important research agendas for the future. The summary of Schwenk and Dalton (1989) was updated to include 1988 to June 1989 in a literature review. To forecast the most important strategic management research issues in the future, responses from 30 experts about areas in which they are doing research were classified by coders into 9 groupings. Almost 29% of the responses from the experts surveyed suggested that global competition will be the most important issue for strategic management in the 1990s. The next 3 most important issues were: 1. managing new organizational forms - restructuring, 2. strategy implementation, and 3. organization change. Only one respondent listed strategic decision making as an important issue for the future, and only 3 respondents indicated globalization as an area of current research.
Nutt, Paul C. (1990) Strategic Decisions Made by Top Executives and Middle Managers with Data and Process Dominant Styles. Journal of Management Studies, 27 (2): 173-194.
The influence of a manager's decision style in strategic decision making is examined. Simulated decisions were used that controlled for uncertainty, information, and environmental factors. Seventy-nine executive-level hospital managers and 89 hospital middle managers were used in the study. The Myers-Briggs (1963) type indicator was given to each manager to determine decision style. Then, the managers received a set of projects keyed to their individual style to evaluate. Views of adoption and risk were found to be influenced by decision style. The decisions of top executives were more style dependent than those of middle managers. The judicial top executive was found to be action-oriented, and the systematic top executive was action-averse, with the speculative and heuristic top executives taking nearly identical and neutral positions. Top executives with a sensate style were found to be much like top executives with pure systematic style, and top executives with a feeling style were similar to top executives with a pure judicial style.
Sabherwal, Rajiv; Grover, Varun (1990) Computer Support for Strategic Decision-Making Processes: Review and Analysis. Decision Sciences, 20 (1): 54-76.
By drawing extensively from empirical research, an examination is made of how computer-based support for strategic decision-making processes varies across the phases of decision making under a variety of conditions. Consideration is given to the phases of decision making -- the intelligence phase, the design phase, and the choice phase -- under the contingency variables of problem homogeneity, problem knowledge, problem duration, problem predictability, and decision-making style. The relationships between the modes of the strategic decision process, the contingency variables, and the computer-based support (CBS) are studied in order to derive prescriptive implications for the designers of CBS so that they may understand and design tool systems for the strategic decision process. In contrast to management control and operational control decisions, strategic decisions are characterized by low problem knowledge, low problem homogeneity, low problem predictability, and high problem duration.
Schilit, Warren Keith (1990) A Comparative Analysis of Strategic Decisions. Journal of Management Studies, 27 (5): 435-461.
Previous research is extended by examining a series of upward influence interactions between middle-level managers (MLM) and higher level managers (HLM) in various strategic decisions. The analysis provides a comprehensive set of categories and supporting data for the agents, methods, perceived outcomes, and perceived causes of success and failure of upward influence interactions that impact on the strategic decision-making process in organizations. The sample consisted of 60 participants, who were mainly MLMs, representing 57 organizations, each of whom reported to a distinct HLM. The results suggest that: 1. MLMs deal directly with their superiors and use rational or persuasive arguments in their upward influence interactions in strategic decisions, 2. MLMs are very successful in their influence interactions and attribute their success to internal causes, 3. MLMs and their superiors view the influence episode similarly, and 4. upward influence activity in strategic decisions is quite similar to upward influence in nonstrategic decisions.
Silver, William S; Mitchell, Terence R. (1990) The Status Quo Tendency in Decision Making. Organizational Dynamics, 18 (4): 34-46.
The status quo tendency refers to the inclination of decision makers to continue with existing goals and plans beyond the point at which a neutral observer or a statistical model would recommend a change in course. This tendency exists in a wide variety of decision contexts. Beach and Mitchell's image theory describes the way individuals decide to change their plans and goals by using images to organize their thinking. The theory suggests that 3 images are relevant: 1. principle images consisting of the decision maker's imperative guiding principles, 2. goal images representing the ideal future to which decision makers aspire, and 3. strategic images that contain the plans for attaining goals and predict results. Continuous negative feedback about a current plan should be incorporated into the strategic image. Strategies to reduce the status quo tendency include: 1. being vigilant in examining alternatives, 2. having separate groups to monitor the environment, develop new technologies, and generate new ideas, and 3. gathering worst-case scenarios and forecasts of long-term costs.
Sinha, Deepak K . (1990) The Contribution of Formal Planning to Decisions. Strategic Management Journal, 11 (6):479-492.
The effectiveness of planning is conceptualized in terms of the intensity of usage of the planning system by the decision makers. The contribution of formal strategic planning to 1,087 decisions made by 129 of the Fortune 500 companies during the years 1982-1986 is examined. Multivariate analysis of covariance reveals that the characteristics of decisions account for over 15% of the variance in data and should thus be regarded as critical determinants of the contribution that planning makes to decision making. The planning systems examined contribute more to decisions that are considered important and risky as well as to those that are either global in nature or related to divestments. The planning managers do not consider global decisions as being either more important from the point of view of future growth and profitability of the firm or as being riskier.
Bateman, Thomas S; Zeithaml, Carl P. (1989) The Psychological Context of Strategic Decisions: A Test of Relevance to Practitioners. Strategic Management Journal, 10 (6): 587-592.
It is generally agreed that research in the organizational sciences must produce results that are both rigorous and relevant. Such results should go beyond the obvious, leading to unexpected variations in the understanding of organizational phenomena. To test whether the results of the Bateman and Zeithaml (1989) research were obvious to managers, new samples of executives and experienced master of business administration (MBA) students were asked to participate in a survey study. Because the executives and the MBA students made remarkably similar predictions, they were combined into one sample for statistical analysis. The participants accurately predicted the future orientation main effect. Generally, the rationales that the respondents provided in support of their predictions argued that the framing manipulation would influence strategic decision makers. The respondents failed to predict the 2-way interaction effect found in the experiment.
Bateman, Thomas S; Zeithaml, Carl P. (1989) The Psychological Context of Strategic Decisions: A Model and Convergent Experimental Findings. Strategic Management Journal, 10 (1): 59-74.
An attempt was made to build on the view of the strategic formulation process as a series of decisions by developing and testing a model of contextual influences on strategic decisions. Two experiments were presented. In the first, 193 undergraduate students from a junior-level management course at a major university made reinvestment decisions faced with success or failure feedback on a past decision, high or low perceived organizational slack, and decisions framed to depict a positive or negative future outlook. All 3 manipulation measures were demonstrated to have acceptable levels of internal reliability and to have their intended effect on individual group members. In the 2nd study, 48 business executives from the community surrounding the host university made similar decisions in a related experimental design. Results confirm and extend the original findings and suggest that the future outlook of the decision maker, as influenced by the decision frame manipulation, may have a powerful psychological influence.
Dutton, Jane E; Walton, Eric J; Abrahamson, Eric (1989) Important Dimensions of Strategic Issues: Separating the Wheat from the Chaff. Journal of Management Studies, 26(4): 379-396.
Decision makers must use dimensions to sort the wheat from the chaff in the field of potential strategic issues. The dimensions implied by 3 literatures and dimensions generated by an empirical study are compared. A search of the 3 literatures identified 26 dimensions that differentiate strategic issues. Repertory grid techniques were used to identify the range of attributes used to define the 'meaning space' for strategic issues in a sample of strategic decision makers at the Port Authority of New York and New Jersey. Dimensions in the literature overlap those in the empirical study; 13 dimensions accounted for 51% of the frequency with which all attributes were mentioned over all respondents. However, these 13 dimensions exclude the one cited most often in the literature-immediacy. Also, marked differences in the relative importance of classes of dimensions emerged in the sample relative to the literature. Issue content was about 3 times as prevalent in the sample, action was about the same in both, analytic characteristics were almost twice as prevalent in the literature, and source did not emerge in the sample at all.
Eisenhardt, Kathleen M. (1989) Making Fast Strategic Decisions in High-Velocity Environments. Academy of Management Journal, 32 (3): 543-576.
The speed of strategic decision making is explored via a multiple-case design that allows a replication logic; 8 microcomputer firms are examined. The study also uses an embedded design focusing on each firm at 3 levels - top management team, strategic decision, and firm performance. The 4 data sources are initial chief executive officer interviews, semistructured interviews with each member of a firm's top management team, questionnaires completed by each member of the team, and secondary sources. Results indicate that fast decision makers use more, rather than less, information than do slow decision makers. The former also develop more, rather than fewer, alternatives, and use a 2-tiered advice process. Conflict resolution and integration among strategic decisions and tactical plans are also critical in regard to the pace of decision making. Fast decisions based upon this pattern of behavior lead to superior performance. An emergent view places crucial importance upon top management teams. It also emphasizes a complex perspective on cognition and highlights emotions as integral to highstakes decision making.
Fredrickson, James W; Iaquinto, Anthony L. (1989) Inertia and Creeping Rationality in Strategic Decision Processes. Academy of Management Journal, 32 (3): 516-542.
A longitudinal extension of 2 earlier studies by Fredrickson (1984) and Fredrickson and Mitchell (1984) on the comprehensiveness of strategic decision processes is conducted. Questionnaires used in the previous studies were readministered in 1986 in 45 firms in 2 industries. The original studies indicate that comprehensiveness exhibited a positive relationship with organizational performance in a stable environment and a negative relationship with performance in an unstable environment. The new research indicates that comprehensiveness exhibited considerable inertia, with only modest changes occurring since the original studies. Nevertheless, changes in organizational size and executive-team tenure, as well as the level of team continuity, were linked with changes in comprehensiveness. Evolutionary increases in those variables were linked to a phenomenon that is termed creeping rationality. Also, the relationships that had been established between comprehensiveness and performance held for the years after the original studies. Exploratory analysis revealed significant across-industry differences in comprehensiveness.
Greiner, Larry E. (1989) New CEO Intervention and Dynamics of Deliberate Strategic Change. Strategic Management Journal, 10 (Summer): 67-86.
Growing evidence in the executive succession literature and the business press indicates clearly that new chief executive officers (CEO) often attempt to introduce strategic changes upon entering their jobs. However, strategy researchers have generally neglected to document the internal dynamics of these interventions, and many scholars are pessimistic about the likelihood of success. An empirical case study is presented in which a new CEO succeeds at strategic change using an intervention approach called comprehensive-collaborative. A set of testable hypotheses is inferred to explain the unfolding dynamics within this intervention approach, followed by an overall theoretical framework based on a series of phases and underlying themes involving the interplay between the CEO's actions, rational synoptic planning, and emergent political behavior. Future research needs to expand upon this initial framework to test the propositions and evaluate other intervention approaches.
Haley, Usha C. V; Stumpf, Stephen A. (1989) Cognitive Trails in Strategic Decision-Making: Linking Theories of Personalities and Cognitions. Journal of Management Studies, 26 (5): 477-497.
An attempt is made to reveal Jungian personality types' cognitive biases through a strategic management framework. The 4 personality types (sensing-thinking, intuition-thinking, sensing-feeling, and intuition-feeling) appear to use distinct heuristics to collect data, to generate and to evaluate alternatives. The connected heuristics appear as cognitive trails. It is proposed that different personality types habitually use certain cognitive trails; consequently, they can fall prey to biases that lurk in these trails. These cognitive trails may include linked input, output, and operational biases. The results are presented from a pilot study to illustrate some connections between personality types and biases. The tests established links between input biases and personality types and strongly suggested further links between input biases and output biases for the 2 dominant personality types.
Schweiger, David M; Sandberg, William R; Rechner, Paula L. (1989) Experiential Effects of Dialectical Inquiry, Devil's Advocacy, and Consensus Approaches to Strategic Decision Making. Academy of Management Journal, 32 (4): 745-772.
A longitudinal laboratory study of fast-advancing middle managers involved in strategic planning was used to compare the effectiveness of dialectical inquiry, devil's advocacy, and consensus approaches to group strategic decision making. Research participants were 120 middle- and upper-middle-level managers from 3 divisions of a Fortune 500 company. All participants were involved in some aspect of divisional or corporate strategic planning at the time of the study, although none had final authority for making strategic decisions. Results show that, compared to consensus groups, groups using dialectical inquiry and devil's advocacy made significantly higher quality decisions. Members of such groups reported more reevaluation of their own assumptions and recommendations but lower acceptance of their group's decisions than did members of consensus groups. There were no differences between dialectical inquiry and devil's advocacy groups. Experience in using the 3 decision-making approaches improved decision quality, critical reevaluation levels, and the reactions of group members, while reducing the time required to reach decisions.
Schweiger, David M; Sandberg, William R. (1989) The Utilization of Individual Capabilities in Group Approaches to Strategic Decision-Making. Strategic Management Journal, 10 (1): 31-43.
Previous research indicates that groups using dialectical inquiry (DI) or devil's advocacy (DA) make better strategic decisions than groups using a consensus (C) approach. Data gathered from 120 masters of business administration students at a southwestern university were used to show that the DA and DI approaches make better use of the capabilities of individual group members. Particularly, the DI and DA groups produced significantly higher quality recommendations and assumptions than the average of the individuals in the respective groups, while C groups did not. Furthermore, the recommendations and assumptions of the DI groups and the recommendations of the DA groups significantly exceeded those of the best individuals in the respective groups. There were no significant variations for the C groups. The limitations of the study include the generalizability of the findings to actual strategic decision-making situations and the short duration of the study.
Schwenk, Charles (1989) A Meta-Analysis on the Comparative Effectiveness of Devil's Advocacy and Dialectical Inquiry. Strategic Management Journal, 10 (3): 303-306.
The use of meta-analysis allows researchers to draw stronger inferences from past research than are possible from traditional literature. A study applied meta-analysis to the results of several previous experiments on 2 conflict-based decision aids - devil's advocacy (DA) and dialectical inquiry (DI). In each study, subjects were given one of 3 decision aids to make a decision - DA, DI, or the expert condition. The results suggest that neither DA or DI is a superior method for introducing conflict. The results did indicate that DA and DI are more effective than the expert condition across world states. When the assumptions of the expert are not correct, the conflict introduced by both the DA and DI improved decision making. The analysis demonstrated the potential value of meta-analysis in disputed topics in strategic management. Meta-analysis may help researchers to make better choices concerning extensions of previous research.
Schwenk, Charles R. (1989) Linking Cognitive, Organizational and Political Factors in Explaining Strategic Change. Journal of Management Studies, 26 (2): 177-187.
Allison's (1971) classification scheme can be used to categorize recent strategic decision research within 3 different perspectives. These perspectives correspond to Allison's 3 explanatory models, with the same decisions seen as the product of: 1. conscious choice, 2. organizational processes, and 3. political bargaining and compromise. The framework allows a more specific discussion of the ways that environmental change affects top managers' cognitions and how these influence strategic change. Model I, the cognitive perspective, deals with top managers' cognitive models of strategic problems and the factors that affect their construction. Model II, the organizational perspective, focuses on the effects of organizational systems and structure on strategic decision outcomes. Model III, the political perspective, involves strategic management research dealing with external sources of political power and the political structure of organizations. These perspectives can be combined to deal with the strategic change process.
Stubbart, Charles I. (1989) Managerial Cognition: A Missing Link in Strategic Management Research. Journal of Management Studies, 26 (4): 325-347.
The linkages between cognitive science and strategic management research are explored. Schendel and Hofer (1979) implicitly assumed a cognitive basis for much of the strategy-making process, but they did little to systematize a cognitive approach. Strategy scholars have recently focused their efforts upon describing managers' semantic networks, or cognitive maps (what managers know about their competitive situations). Semantic networks have several useful properties, including flexibility, activation, reasoning, and computation. These networks also have limitations, such as: 1. There is no evidence that humans reason according to matrix algebra. 2. Cognitive maps cannot easily represent temporal relations. 3. Cognitive maps used in strategy are often excessively abstract. Today, some scholars regard cognitive simplification and nonoptimal heuristic inferences as a serious threat to managerial decision making. However, strategic management stands to benefit greatly from an infusion of relevant empirical findings, stronger theory, and added support for strategic planning.
Bourgeois, L. J., III; Eisenhardt, Kathleen M. (1988) Strategic Decision Processes in High Velocity Environments: Four Cases in the Microcomputer Industry. Management Science, 34 (7): 816-835.
A firm in a high-velocity environment often is faced with a rate of change so extreme that information is of questionable accuracy and is quickly obsolete. A study explored the manner in which executives make strategic decisions under conditions of high velocity. A field investigation of 4 microcomputer firms found a set of paradoxes involved in decision making under extreme conditions that successful firms resolve and unsuccessful firms do not. An imperative is found to: 1. make major decisions carefully but to decide quickly, 2. have a powerful, decisive chief executive and a powerful top management team, and 3. seek risk and innovation but execute a safe, incremental implementation. In spite of the seeming paradox, firms accomplish all of these simultaneously.
Cray, David; Mallory, Geoffrey R; Butler, Richard J; Hickson, David J; Wilson, David C. (1988) Sporadic, Fluid and Constricted Processes: Three Types of Strategic Decision Making in Organizations. Journal of Management Studies, 25 (1): 13-39.
A study attempted to separate the process, outcome, and implementation of decision making and to focus only on the process aspect. Data were collected on 150 decisions from 30 UK organizations (5 decisions from each firm), and the decisions were analyzed according to the 5 aspects of the strategic decision making process: 1. scrutiny, 2. interaction, 3. flow, 4. duration, and 5. centrality. Cluster analysis uncovered the existence of 3 broad types of strategic decision making: 1. sporadic, 2. constricted, and 3. fluid. The sporadic type of decision making is characterized by short bursts of activity interspersed with delays while information is gathered and groups argue about various issues. The constricted type of decision making usually is focused around a single decision maker, often the chief executive officer, who oversees the information-gathering process. The final type, fluid decision making, is similar to the sporadic type except that the whole process moves more smoothly.
Eisenhardt, Kathleen M; Bourgeois, L. J., III (1988) Politics of Strategic Decision Making in High-Velocity Environments: Toward a Midrange Theory. Academy of Management Journal, 31 (4): 737-770.
A midrange theory linking power, politics, and performance in the 'high-velocity' microcomputer industry was induced from a study of 8 firms in the San Francisco Bay area of California. Every member of each top management team was interviewed. Quantitative data on political patterns within each group also were obtained from questionnaires introduced during interviews. Results indicated that politics arise from power centralization. It was found that autocratic chief executive officers participate in politics and create political behavior among subordinates. It also was found that politics are not organized into temporary and shifting alliances founded on issues; instead, they are organized into stable coalitions founded on demographic characteristics, such as office location and age. Politics within top management teams were found to be associated with poor firm performance.
Lyles, Marjorie A; Thomas, Howard (1988) Strategic Problem Formulation: Biases and Assumptions Embedded in Alternative Decision-Making Models. Journal of Management Studies, 25 (2): 131-145.
The major theoretical approaches to strategic decision making are reviewed, and the way in which each treats the process of problem formulation is identified. Five models of strategic decision making are examined to determine the assumptions and biases made about strategic problem formulation: 1. rational decision-making model, 2. avoidance model, 3. adaptive model, 4. political model, and 5. decisive model. Strategic choice involves a match between managerial perception about the problem and evidence about the problem that emerges from more concrete analytical and formal processes, such as environmental analysis or industry analysis. Strategic problem formulation must weight evidence derived from analytic frameworks with the viewpoints that emerge from behavioral, social, political, and organizational processes in arriving at a suitable problem formulation. Strategic problem formulation also must involve the balancing of these different problem viewpoints and outlooks.
Miller, Danny; Droge, Cornelia; Toulouse, Jean-Marie (1988) Strategic Process and Content as Mediators Between Organizational Context and Structure. Academy of Management, 31 (3): 544-569.
In order to formulate and test a causal model integrating constructs of chief executive officer (CEO) personality, environment, structure, strategy process, and strategy content, 77 firms with 500 or fewer employees were surveyed by questionnaire. The response rate was 78%. Each firm's CEO completed scales on need for achievement, decision-making style, and innovation, while other executives answered questions concerning environmental uncertainty and structure. The results of LISREL analyses show that CEOs need for achievement affects intended rationality of the strategy-making process, which in turn, increases structural formalization and integration. In addition, environmental uncertainty was found to influence product innovation, which increased structural formalization and integration and decreased contralization. The relationship between strategic process and content was also found to affect their mediation between context and structure.
Shank, John K; Govindarajan, Vijay (1988) Making Strategy Explicit in Cost Analysis: A Case Study. Sloan Management Review, 29 (3): 19-29.
Project valuation using only cost accounting methods may neglect important strategic issues. The Baldwin Bicycle Co. case is analyzed in which Hi-Valu Stores Inc. approached the marketing vice-president about the possibility of Baldwin manufacturing bicycles for Hi-Valu. On balance, cost analysis reduces to very attractive short-run incremental profits, some qualitative considerations that somewhat reduce this attractiveness, and a major financing concern that may or may not be binding. A strategic analysis should begin by considering the likely positioning of the bicycles in the marketplace and the penetration most likely to be achieved. This analysis suggests that what Baldwin is actually doing by putting Hi-Valu into business is creating still another direct competitor to its regular customers and giving that competitor a much better price than its regular customers. This is very different from the conclusion arrived at through traditional accounting methods. Thus, to be most effective, cost analysis must consider strategic issues.
Schwenk, Charles R. (1988) The Cognitive Perspective on Strategic Decision Making. Journal of Management Studies, 25 (1): 41-55.
Strategic management researchers are focusing increased attention on the cognitions of key decision makers. This is an important development because: 1. the study of cognition may improve understanding of industry and competitive strategy and the ways environmental factors affect strategic decisions, and 2. sufficient attention has not been paid to the study of cognition in the past. Cognitive research can give insights into the ways decision makers with limited cognitive capacities comprehend and solve very complex strategic problems and into the types of errors they make. Recent research has explored such topics as: 1. heuristics and biases, 2. assumptions and cognitive maps, 3. analogy and metaphor, and 4. the development of strategic schemata. These separate streams of research need to be integrated in order for future research to provide a complete understanding of strategic problem-solving.
Weigelt, Keith; MacMillan, Ian (1988) An Interactive Strategic Analysis Framework. Strategic Management Journal, 9 (Summer): 27-40.
One of the most difficult tasks facing managers is choosing among strategic alternatives. Managers must choose a course of action today based on their beliefs of what the future will hold. A framework was developed that can help managers systematically evaluate and compare the effectiveness of strategic alternatives given different scenarios of the future. The framework explicitly acknowledges 2 key attributes of the strategic problem to allow for greater analytic power: 1. the fact that a firm's payoff for any given strategy is dependent on the firm's action and on the actions of competitors, and 2. the fact that managers do not know what actions competitors plan. Using the framework helps managers construct models systematically, which forces them to answer key questions and think carefully about identifying key environmental factors and evaluating their position relative to others.
Bourgeois, L. J., III; Eisenhardt, Kathleen M. (1987) Strategic Decision Processes in Silicon Valley: The Anatomy of a 'Living Dead'. California Management Review, 30 (1): 143-159.
In California's Silicon Valley, ventures in the limbo between success and failure are known as the 'living dead.' Here, the decision processes of Omicron Computers, one such venture, are compared to those of successful and unsuccessful firms. Omicron Computers, founded in 1981, met its original business plan targets until 1985 when total sales declined. Information was gathered in a series of interviews with and responses to a questionnaire by the 7 top Omicron executives, in addition to observations of these individuals in an all-day strategy session. Omicron was investigated in 1986 when it was in the midst of rethinking its overall business strategy. The case illustrates that a careful, analytical decision process by a collegial group of executives is insufficient for firms in high-velocity, high-technology environments. Firms that are successful deal with the competing tensions of analysis and speed, autocratic and collegial power, and innovation and incrementalism. Finally, attempts to build consensus or await adequate information may be hazardous to the firm's success.
Dess, Gregory G; Origer, Nancy K. (1987) Environment, Structure, and Consensus in Strategy Formulation: A Conceptual Integration. Academy of Management Review, 12 (2): 313-330.
Previous studies on strategy formulation have resulted in conflicting findings primarily because of the absence of a framework that properly explains and predicts the nature of the consensus-performance relationship. A 2-component framework is proposed. First, a descriptive component examines the
environment-consensus relationship in which the environment is conceptualized along the dimensions of munificence, complexity, and dynamism. Second, a normative component explores the role that the match between environment, consensus, and integrating structure plays in explaining differences in organizational performance. Two tenets underlie the model: 1. Firms competing in complex and dynamic environments are required to differentiate their structure into several distinct subsystems. 2. Firms competing in munificent environments may acquire slack resources that enable managers to pursue divergent goals.
Dutton, Jane E; Duncan, Robert B. (1987) The Creation of Momentum for Change Through the Process of Strategic Issue Diagnosis. Strategic Management Journal, 8 (3): 279-295.
A model of strategic issues is developed to investigate how decision makers interpret such issues. The model identifies 3 critical events in strategic issue diagnosis: 1. activation of diagnosis, 2. assessments of the issue's urgency, and 3. assessments of the feasibility of taking action. The first can be triggered by either formal or informal mechanisms. Urgency captures the perceived importance, time pressures, visibility, and responsibility of the issue. Feasibility requires judgments on issue understanding and perceived issue capability. It is possible to predict if and how firms will respond to a changed decision environment if the relationship of each of these interpretive assessments to the creation of momentum for change is known. The study emphasizes the systematic effect that the organization's belief structure and resources have on the assessments in strategic issue diagnosis.
Dutton, Jane E; Jackson, Susan E. (1987) Categorizing Strategic Issues: Links to Organizational Action. Academy of Management Review, 12 (1): 76-90.
A general conceptual framework is presented that is concerned with how the meanings attached to strategic issues by decision makers are translated into organizational responses. The model integrates an interpretive view of organizational decision making with cognitive categorization theory, providing a framework for understanding why organizations in the same industry respond differently to the same environmental events and trends. It is believed that labeling an issue as either a threat or an opportunity affects both subsequent information processing and the motivations of key decision makers. It also is argued that decision makers' cognitions and motivations systematically affect the processing of issues and the types of organizational actions taken in response to them. The model helps researchers better understand the problem sensing and diagnosis process in decision making.
Dutton, Jane E; Ottensmeyer, Edward (1987) Strategic Issue Management Systems: Forms, Functions, and Contexts. Academy of Management Review, 12 (2): 355-365.
Strategic issues are developments or trends that emerge from an organization's internal or external environments and are perceived to have a potential effect on an organization's performance. In order to perceive, analyze, and respond to strategic issues, strategic issue management (SIM) systems are often used. SIM systems are a set of organizational procedures, routines, personnel, and processes. They foster adaptation by helping to solve an organization's problems of managing equivocality and preserving accountability. After describing the different forms and functions of SIM systems, a set of propositions for predicting what form SIM systems will take and what function they will serve based on the organization's need for information are developed. It is argued that organizations in different environmental contexts and with different internal structures will have different forms of SIM systems.
Huff, Anne S; Reger, Rhonda Kay (1987) A Review of Strategic Process Research. Journal of Management, 13 (2): 211-236.
A review of articles over the last 6 years in 7 leading journals was conducted to examine the process of strategic management. A total of 9 different 'streams' of work were identified and critiqued: 1. planning prescriptions, 2. systematic implementation, 3. decision aids, 4. evolutionary prescriptions, 5. planning practices, 6. structures, systems, and organizational outcomes, 7. agendas and attention, 8. contextual influences, and 9. integrative. It was concluded that the research field is giving continuing attention to the possibilities and problems of strategic planning and decision making. The field also is moving into new areas of research, such as how the attention of decision makers is directed toward specific agendas for action. Future research should build on existing theory and research, import concepts and research from related areas, and consider the organizational and environmental context, among other things.
Lang, James R; Dollinger, Marc J; Marino, Kenneth E. (1987) Aggregation Bias in Strategic Decision-Making Research. Journal of Management, 13 (4): 689-702.
Strategy researchers often are confronted with the convenience or the necessity of using existing databases that were put together for purposes that differ from the research being conducted. Inferences from this research can be overstated or even wrong if researchers ignore the pitfalls of translating results based on aggregated data to specific situations. An attempt is made to explore unit-of-analysis problems, specifically as they can occur in strategy research. Independent variable grouping can generate false confidence because of the reduction in variance, but it is less insidious than situations in which aggregation results in estimates that are, in fact, biased. Aggregation bias can result when: 1. the observations are grouped on the dependent variable, or 2. there is an unspecified effect due to the context or setting. In order to make the most appropriate use of quantitative research results, it may be helpful to organize inferences into 3 categories: 1. product level, 2. business level, and 3. organizationally determined.
Lyles, Marjorie A. (1987) Defining Strategic Problems: Subjective Criteria of Executives. Organization Studies, 8 (3): 263-279.
Strategic problems have a substantial influence on the entire organization and are more complicated and ill-defined than other problems. Most strategic problems are unstructured, and there is no one best way for formulating the nature of the problem. Strategic problem formulation (SPF) is a critical aspect of strategic decision making for these problems. A survey instrument mailed to Fortune 500 firms in 6 industries yielded 102 usable replies. Based on Lyles and Mitroff (1980) and Lyles (1981), the survey included 14 items corresponding to the activities of SPF, and a semantic differential scale with 12 items was set up to reflect composite scores representing clarity, politicality, and complexity. It was indicated that managements do value and recognize the complexity of the SPF process. The SPF process employs more complicated inquiry methods than those used in well-defined problems, and these methods are seen by managers as clearer than more simple inquiry techniques.
Pearce, John A., II; Robinson, Richard B., Jr. (1987) A Measure of CEO Social Power in Strategic Decision-Making. Strategic Management Journal, 8 (3): 297-304.
Spekman's (1979) measure of social power at low organizational levels is modified for use in evaluating the social power of chief executive officers (CEO) in strategic decision making. he measure is a 15-item scale called the Social Power Inventory (SPI). The present study involved 374 managers and members of the boards of directors from 16 eastern and southeastern US firms. The sample included 4 steel fabrication firms, 4 electronic component manufacturing firms, and 8 commercial banking firms. Each firm employed between 100 and 350 people. Each respondent completed a questionnaire that included the SPI, and researchers surveyed managers during special group meetings. The validity of the SPI was examined using factor analysis. Five factors were identified: expert, legitimate, reward, coercive, and referent. The results confirm that the SPI is appropriate for use in assessing CEO social power in strategic decision making.
Schilit, Warren Keith; Paine, Frank T. (1987) An Examination of the Underlying Dynamics of Strategic Decisions Subject to Upward Influence Activity. Journal of Management Studies, 24 (2): 161-187.
A study was conducted to investigate the strategic decision-making process in situations that are subject to upward influence activity. Specifically, strategic decisions in which middle-level managers exert some degree of influence were examined. A total of 60 managers from a variety of organizational settings maintained a diary of the interactions between themselves and their direct superiors over a 2-month period. Results indicated that the strategy-making process deviated considerably from typical rational comprehensive approaches in that strategies were affected by: 1. initial sense-making activity, 2. perceptions of risk and return, 3. power and negotiation skills, 4. coalition activity, 5. functional area differences, and 6. formal analysis. It also was found that the strategic decision-making process in decisions involving upward influence activity generally lasted for several years.
Wolfe, Joseph; Jackson, Conrad (1987) Creating Models of the Strategic Decision Making Process via Participant Recall: A Free Simulation Examination. Journal of Management , 13 (1): 123-134.
Several attempts have been made to explain the process involved in strategic decision making. Most of these models have used participant recall as the methodology for studying this process. However, participant recall may be an invalid method for data gathering due to problems emanating from the interviewer and/or interviewee. In an attempt to determine the validity of participant recall, a free simulation study was done using teams of students engaged in a complex decision-making exercise. The findings indicated that: 1. subjects disagreed 56.4% of the time, even about the most basic elements of strategic decisions, and 2. recall convergence increased with deeper levels of detail, but information comprehensiveness decreased. It was found that participant recall is highly susceptible to unreliability, and a combination of alternative methodologies should be used to overcome each method's inadequacies.
Dutton, Jane E. (1986) The Processing of Crisis and Non-Crisis Strategic Issues. Journal of Management Studies, 23 (5): 501-517.
A study was conducted to examine how crisis strategic issues are processed differently from noncrisis issues in organizations. Five strategic issues were selected from a set of 12 issue histories of a single firm. The histories included tracings of the changes in an issue's characteristics, such as framing, participants, and information, as they took place over a 5-year time period. The histories were constructed through archival record data and interviews with key individuals. Each respondent was asked to rate the issue in terms of its immediacy, uncertainty, and importance. Results indicated that organizations have repertoires of processing modes that are employed when faced with different types of strategic issues. It was argued that, when confronting strategic issues representing crises, decision makers increase the level of resources expended on an issue, enhance control over issue resolution, and increase the level of issue-related explanation.
Fredrickson, James W. (1986) An Exploratory Approach to Measuring Perceptions of Strategic Decision Process Constructs. Strategic Management Journal, 7 (5): 473-483.
A new research method for obtaining statistically verifiable measures of the strategic decision process was explored. The method, developed by Fredrickson (1984) and Fredrickson and Mitchell (1984), incorporates 2 phases by which a researcher can measure the comprehensiveness of the decision process. In an application of this method, the first phase involved structured interviews with higher executives in 27 forest products firms and 38 paint and coatings firms to determine: 1. priority issues facing those industries, 2. the 5 or 6 most important decisions made during their tenure, and 3. the process by which one of those decisions was made. Secondly, decision scenarios were produced for each industry, describing a hypothetical firm faced with the most critical issue in the industry. The scenarios outlined the problem and the steps the firm took to reach a decision about that problem. The executives then answered questions based on the scenarios designed to elicit information about the comprehensiveness of their firms' decision process.
Fredrickson, James W. (1986) The Strategic Decision Process and Organizational Structure. Academy of Management Review, 11 (2): 280-297.
Recently, the belief that the relationship between organizational strategy and structure is reciprocal has been challenged. Many now believe that structure can have a profound impact on strategy through its direct effect on the strategic decision-making process. A study synthesizes and integrates previous work and offers new explanations to fill unspecified gaps. onclusions suggest that a structure's pervasive impact offers a reasonable explanation of why a firm develops a particular way of making strategic decisions. Three different structures are discussed, and the prevalent strategic decision process for each is evaluated. Highly centralized firms are likely to use a strategic decision process that is best understood by using an individual unit of analysis. A firm dominated by formalizations would likely use an organizational decision process. Finally, complex organizations may employ small groups for their decisions.
Lenz, R. T; Engledow, Jack L. (1986) Environmental Analysis Units and Strategic Decision-Making: A Field Study of Selected 'Leading-Edge' Corporations. Strategic Management Journal, 7 (1): 69-89.
The increasing volatility of organizational environments is a growing concern for executives, academicians, and consultants, creating a need to develop more effective ways to provide environmental intelligence to strategic decision makers. However, previous research reveals conflicting findings about the viability of specialized environmental scanning units developed by many corporations. A field study of 10 ''leading-edge'' corporations provides further understanding. Results show that experimentation with alternative administrative structures is continuing and is necessary. Also indicated is the vulnerability of units that are not tightly linked with strategic planning processes. Certain administrative structures appear more promising than others, but several questions remain. Strategic management practice could be improved by extending knowledge of design and management of structures and processes facilitating strategic adaptation.
Pinfield, Lawrence T. (1986) A Field Evaluation of Perspectives on Organizational Decision Making. Administrative Science Quarterly, 31 (3): 365-388.
A field study of a decision process in the Canadian government bureaucracy is employed to evaluate 2 perspectives on strategic decision processes. The first views decision processes as structured, as they follow an orderly but iterative progression from problem recognition to resolution. The 2nd perspective regards the processes as anarchic in that decisions are inferred from the results of fortuitous combinations of problems, solutions, and participants. Both views are judged to be useful for understanding organizational decision processes. For example, the structured view is helpful when there is agreement on organizational goals. The anarchic view is useful when there is disagreement on goals. Both views fail to specify how participation and contextual dependence affect strategic decision processes. A partial synthesis of the 2 models could be employed to link changes in participation and relevant external events to decision control routines that switch decision processes from one phase to another.
Schweiger, David M; Sandberg, William R; Ragan, James W. (1986) Group Approaches for Improving Strategic Decision Making: A Comparative Analysis of Dialectical Inquiry, Devil's Advocacy, and Consensus. Academy of Management Journal, 29 (1): 51-71.
The results of a controlled laboratory experiment that assessed the effectiveness of group decision-making approaches are reported. Three decision-making approaches were compared, including: a consensus approach and the conflict-based approaches of devil's advocacy (involving critique of proposals) and dialectical inquiry (involving development of counter-proposals). Graduate-level business management students, having varying levels of work and managerial experience, were assigned randomly to group decision-making conditions for a strategic decision-making task. It was found that decision recommendations and assumptions were of higher quality for groups using the dialectical inquiry and devil's advocacy approaches than for those using the consensus approach, with the dialectical inquiry approach especially contributing to assumption quality. However, satisfaction with groups, acceptance of their decisions, and willingness to continue working with them was highest for subjects using the consensus approach.