Decision Making
- LAST REVIEWED: 26 July 2017
- LAST MODIFIED: 26 July 2017
- DOI: 10.1093/obo/9780199846740-0004
- LAST REVIEWED: 26 July 2017
- LAST MODIFIED: 26 July 2017
- DOI: 10.1093/obo/9780199846740-0004
Introduction
Decision making, in its broadest sense, is a vast area of research that spans many disciplines, including psychology, economics, political science, and management. Researchers examine decision making at various levels of analysis (individuals, groups, organizations, and nations). They study decisions that range from the trivial (e.g., choices among gambles paying small amounts of money) to the very important (e.g., decisions risking nuclear war). Some scholars attempt to describe or explain actual decisions while others emphasize how individuals should make decisions. Decisions may result in a variety of outcomes that occur over a variety of time spans. The decision maker(s) may make similar types of decisions either repeatedly (e.g., a banker assessing loan applications) or once in a lifetime (e.g., a merger). This article focuses on strategic decision making in an organizational context. Strategic decisions are decisions that critically influence the future of an organization. A description is given of three fundamental theoretical perspectives—the behavioral theory of the firm, behavioral decision theory, and agency theory—that researchers typically use to study strategic decision making in organizations. Discussion is provided of two additional perspectives on decision making, namely, top management teams and cognition. These latter two approaches, while not unified by a central theory, are, nevertheless, widely used for examining and predicting strategic decisions. Strategic decisions usually involve risk. This article therefore examines the treatment of risk by the various studies in this area. It concludes with a look at some Future Directions for Strategic Decision Making research.
Introductory Works
Examples of strategic decisions include Walmart’s decision to expand into Africa by buying Massmart, the South African retailer; Ford’s decision to sell Volvo to Geely, a Chinese competitor; and RBS’s decision in 2007, just before the collapse of the financial markets, to acquire a rival, ABN Amro. Strategic decision-making researchers have examined this topic from a variety of perspectives (see Bromiley and Rau 2011 and Nutt and Wilson 2010 for overviews of research in this area). A number of studies, such as Cray, et al. 1991; Mintzberg and Waters 1985; and Mintzberg, et al. 1976 describe the characteristics of strategic decisions and the processes that organizations use to make them. Other studies attempt to predict the kinds of decisions that decision makers will make, often emphasizing the role of risk and uncertainty.
Bromiley, Philip, and Devaki Rau. “Strategic Decision Making.” In APA Handbook of Industrial and Organizational Psychology. Vol. 1, Building and Developing the Organization. Edited by Sheldon Zedeck, 161–182. Washington, DC: American Psychological Association, 2011.
Provides a comprehensive review of the literature on strategic decision making.
Cray, David, Geoffrey R. Mallory, Richard J. Butler, David J. Hickson, and David C. Wilson. “Explaining Decision Processes.” Journal of Management Studies 28.3 (1991): 227–251.
DOI: 10.1111/j.1467-6486.1991.tb00946.x
Describes and explains some of the common decision-making processes in organizations. Discusses three types of decision processes: sporadic, fluid, and constricted.
Mintzberg, Henry, Duru Raisinghani, and André Theoret. “The Structure of ‘Unstructured’ Decision Processes.” Administrative Science Quarterly 21.2 (1976): 246–275.
DOI: 10.2307/2392045
Presents detailed data on the processes underlying a sample of strategic decisions.
Mintzberg, Henry, and James Waters. “Of Strategies, Deliberate and Emergent.” Strategic Management Journal 6.3 (1985): 257–272.
Presents the idea that strategic choice leads to real-world strategies, which fall somewhere between deliberate (or intended) strategies and emergent strategies. Emergent strategies are patterns of action that are realized despite (or without) intentions.
Nutt, Paul C., and David C. Wilson, eds. Handbook of Decision Making. Hoboken, NJ: Wiley, 2010.
This book contains a collection of articles by prominent scholars in the field of strategic decision making. It provides a good overview of the key issues and perspectives that dominate the research in this area.
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Article
- Abusive Supervision
- Adverse Impact and Equal Employment Opportunity Analytics
- Alliance Portfolios
- Alternative Work Arrangements
- Applied Political Risk Analysis
- Approaches to Social Responsibility
- Assessment Centers: Theory, Practice and Research
- Attitudes
- Attributions
- Authentic Leadership
- Automation
- Bayesian Statistics
- Behavior, Organizational
- Behavioral Approach to Leadership
- Behavioral Theory of the Firm
- Benefits
- Between Organizations, Social Networks in and
- Brokerage in Networks
- Business and Human Rights
- Business Ethics
- Career Studies
- Career Transitions and Job Mobility
- Certified B Corporations and Benefit Corporations
- Charismatic and Innovative Team Leadership By and For Mill...
- Charismatic and Transformational Leadership
- Compensation, Rewards, Remuneration
- Competitive Dynamics
- Competitive Heterogeneity
- Competitive Intensity
- Computational Modeling
- Conditional Reasoning
- Conflict Management
- Considerate Leadership
- Cooperation-Competition (Coopetition)
- Corporate Philanthropy
- Corporate Social Performance
- Corporate Venture Capital
- Counterproductive Work Behavior (CWB)
- Creativity
- Cross-Cultural Communication
- Cross-Cultural Management
- Cultural Intelligence
- Culture, Organization
- Data Analytic Methods
- Decision Making
- Diversity
- Diversity and Firm Performance
- Diversity and Inclusion, Global Perspective on
- Dynamic Capabilities
- Emotional Labor
- Employee Aging
- Employee Engagement
- Employee Ownership
- Employee Voice
- Empowerment, Psychological
- Entrepreneurial Firms
- Entrepreneurial Orientation
- Entrepreneurship
- Entrepreneurship, Corporate
- Entrepreneurship, Women’s
- Equal Employment Opportunity
- Ethics
- Executive Succession
- Faking in Personnel Selection
- Family Business, Managing
- Feedback
- Financial Markets in Organization Theory and Economic Soci...
- Findings, Reporting Research
- Firm Bribery
- First-Mover Advantage
- Fit, Person-Environment
- Forecasting
- Founding Teams
- Global Leadership
- Global Talent Management
- Goal Setting
- Grounded Theory
- Hofstedes Cultural Dimensions
- Human Capital Resource Pipelines
- Human Resource Management
- Human Resource Management, Strategic
- Human Resources, Global
- Human Rights
- Humanitarian Work Psychology
- Humility in Management
- Impression Management at Work
- Imprinting
- Influence Strategies/Tactics in the Workplace
- Information Economics
- Innovative Behavior
- Intelligence, Emotional
- International Economic Development and SMEs
- International Economic Systems
- International Strategic Alliances
- Job Analysis and Competency Modeling
- Job Crafting
- Job Design
- Job Satisfaction
- Judgment and Decision Making in Teams
- Knowledge Sharing and Collaboration within and across Firm...
- Leader-Member Exchange
- Leadership Development
- Leadership Development and Organizational Change, Coaching...
- Leadership, Ethical
- Leadership, Global and Comparative
- Leadership, Strategic
- Learning by Doing in Organizational Activities
- Licensing
- Management History
- Management In Antiquity
- Managerial and Organizational Cognition
- Managerial Discretion
- Meaningful Work
- Mentoring
- Multinational Corporations and Emerging Markets
- Multiteam Systems
- Neo-institutional Theory
- Neuroscience, Organizational
- New Ventures
- Organization Design, Global
- Organization Development and Change
- Organization Research, Ethnography in
- Organization Theory
- Organizational Adaptation
- Organizational Ambidexterity
- Organizational Behavior, Emotions in
- Organizational Citizenship Behaviors (OCBs)
- Organizational Climate
- Organizational Control
- Organizational Corruption
- Organizational Hybridity
- Organizational Identity
- Organizational Justice
- Organizational Legitimacy
- Organizational Networks
- Organizational Paradox
- Organizational Performance, Personality Theory and
- Organizational Responsibility
- Organizational Surveys, Driving Change Through
- Organizations, Big Data in
- Organizations, Gender in
- Organizations, Identity Work in
- Organizations, Political Ideology in
- Organizations, Social Identity Processes in
- Overqualification
- Passion
- Paternalistic Leadership
- Pay for Skills, Knowledge, and Competencies
- People Analytics
- Performance Appraisal
- Performance Feedback Theory
- Planning And Goal Setting
- Proactive Work Behavior
- Psychological Contracts
- Psychological Safety
- Real Options Theory
- Recruitment
- Regional Entrepreneurship
- Reputation, Organizational Image and
- Research, Ethics in
- Research, Longitudinal
- Research Methods
- Research Methods, Qualitative
- Resource Redeployment
- Resource-Dependence Theory
- Resources
- Response Surface Analysis, Polynomial Regression and
- Role of Time in Organizational Studies
- Safety, Work Place
- Selection
- Selection, Applicant Reactions to
- Self-Determination Theory for Work Motivation
- Self-Efficacy
- Self-Fulfilling Prophecy In Management
- Self-Management and Personal Agency
- Sensemaking in and around Organizations
- Service Management
- Shared Team Leadership
- Social Cognitive Theory
- Social Evaluation: Status and Reputation
- Social Movement Theory
- Social Ties and Network Structure
- Socialization
- Spin-Outs
- Sports Settings in Management Research
- Stakeholder Theory, Transaction Cost Economics and
- Stakeholders
- Status in Organizations
- Strategic Alliances
- Strategic Human Capital
- Strategy
- Strategy and Cognition
- Strategy Implementation
- Stress
- Structural Contingency Theory/Information Processing Theor...
- Team Composition
- Team Conflict
- Team Design Characteristics
- Team Learning
- Team Mental Models
- Team Newcomers
- Team Performance
- Team Processes
- Teams, Global
- Technology and Innovation Management
- Technology, Organizational Assessment and
- the Workplace, Millennials in
- Theory X and Theory Y
- Time and Motion Studies
- Training and Development
- Training Evaluation
- Trust in Organizational Contexts
- Turnover
- Unobtrusive Measures
- Validity
- Virtual Teams
- Whistle-Blowing
- Work and Family: An Organizational Science Overview
- Work Contexts, Nonverbal Communication in
- Work, Mindfulness at
- Workplace Aggression and Violence
- Workplace Coaching
- Workplace Commitment
- Workplace Gossip
- Workplace Meetings
- Workplace, Spiritual Leadership in the
- World War II, Management Research during