Session 243

Understanding Decision Making Processes

Track H

Date: Tuesday, November 8, 2011

 

Time: 16:00 – 17:15

Paper

Room: Sundial


Session Chair:

  • Anatoly Kandel, Caldwell University

Title: Biased Agents, Unbiased Organizations: Can Organizations Mitigate Individual Biases?

Authors

  • Dimo Ringov, ESADE Business School

Abstract: Can organizations mitigate the impact of individual biases on organizational decisions? This study investigates whether and how organizational structure and decision making process affect the quality of organizational decisions. Theoretical arguments about the impact of organizational structure and decision process on organizations’ disposition effect - a decision bias that refers to actors’ tendency to sell assets whose prices have increased since purchase, yet hold on to assets that have dropped in value since purchase - are evaluated empirically on a large sample of mutual fund portfolio decisions. The findings suggest that decision making process significantly affects the disposition bias in organizational decisions.

Title: Decision Comprehensiveness and the Outcomes of Firms: A Quantitative Synthesis of Several Decades of Research

Authors

  • Ioannis Thanos, Lancaster University
  • Chet Miller, University of Houston
  • Vassilis Papadakis, Athens University of Economics and Business

Abstract: The link between decision-making comprehensiveness and the outcomes of firms has received substantial attention over the years. Even so, theoretical disagreements and empirical inconsistencies have plagued this important area of research. To help in the process of better understanding the effects of comprehensiveness, a quantitative synthesis was undertaken. The results of our meta-analytic synthesis provide a number of insights that have non-trivial implications for interpreting past work and for planning future work. Examples of key findings include 1) purposefully restricting the range of dynamism, which is a common practice, leads to weak observed relationships, 2) focusing on profitability as the outcome variable, which is also very common, leads to weak observed relationships, and 3) using archival outcome data leads to weak observed relationships.

Title: Managerial Decision-Making During Organizational Decline: The Moderating Role of Incentive Pay and Managers’ Core-Self Evaluation

Authors

  • Daniel Han Ming Chng, China Europe International Business School
  • Eric Shih, Sungkyunkwan University
  • Matthew Rodgers, Ohio State University
  • Xiaobing Song, Dalian University of Technology

Abstract: We develop and test theory regarding managerial decision-making during organizational decline. Drawing on threat rigidity theory, prospect theory, and behavioral agency theory, we demonstrate that the effects of organizational decline on managers’ strategic risk-taking, strategic change, and decision comprehensiveness are influenced by incentive pay as well as their core self-evaluation. Using a computerized management simulation, our results show that managers not only take more strategic risk and make more strategic changes but are also less comprehensive in their strategic decisions during decline. Further, incentive pay encourages greater strategic risk-taking, strategic change, and decision comprehensiveness during decline. These incentive effects were stronger for managers with higher rather than lower core self-evaluation. Implications for how organizations can influence managers’ strategic decision-making during decline are discussed.

Title: Rational and Experiential Information Processing Styles and Strategic Decision Processes

Authors

  • Daniela Blettner, Simon Fraser University
  • Zhengjun Wang, University of Southern Mississippi

Abstract: Rational and experiential processes have interested researchers in strategic management since Barnard. However, in strategic management little empirical research on these two information processing styles exits. With a series of experiments of team-based sequential strategic decision making under uncertainty, we contribute to toward filling that gap. We examine the effect of experiential and rational information processing and moderating effects (interpersonal style, illusion of control, risk propensity) on strategic decision making and performance. Our study contributes to strategy process research by providing systematic insights into the effectiveness of rationality and intuition.

All Sessions in Track H...

Sun: 09:30 – 10:45
Session 325: Strategy Process and Practice Research in Perspective and Future Directions
Sun: 11:15 – 12:30
Session 326: Systems Perspective to Strategy Process Research
Sun: 13:45 – 15:00
Session 327: Strategy Process, Acquistion Process and Activity Sequences
Mon: 08:00 – 09:15
Session 238: Processes for Adaptation and Change
Session 244: TMT Traits, Characteristics and Roles
Mon: 11:00 – 12:15
Session 239: Risk, Uncertainty and Behavior
Mon: 13:30 – 14:45
Session 237: Dynamic Capabilities, Evolution and Change
Mon: 15:15 – 16:30
Session 242: Managerial Levels and Roles in Processes
Tue: 11:15 – 12:30
Session 241: Perspectives on Strategy Making and Planning
Tue: 14:15 – 15:30
Session 246: Processes of Resource Management
Tue: 16:00 – 17:15
Session 243: Understanding Decision Making Processes
Wed: 08:00 – 09:15
Session 304: Alliances and Cooperation Processes
Wed: 09:45 – 11:00
Session 240: Organizational Structures and Processes


Strategic Management Society

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