SUMMARY
STRATEGIC DECISION MAKING
PRE-MASTER ORGANIZATIONAL STUDIES 2018/2019
TILBURG UNIVERSITY
, BASICS IN STRATEGIC DECISION-MAKING: LECTURE 1 - 6
LECTURE 1 - INTRODUCTION
WHAT ARE STRATEGIC DECISIONS?
Strategic decisions: Decisions committing substantial resources, setting precedents, and creating
waves of lesser decisions; as ill-structured, non-routine and complex; and
substantial, unusual and all pervading.
So, having a baby is not a strategic decision because having a baby had severe consequences. It does affect an
organization, it is not efficient for the resources.
Strategic decisions The process by which a strategic decision is made and implemented and the
making process: factors which affect it. i.e. the process that leads to the choice of goals an
means and the way in which means are affectively deployed.
KEY ASSUMPTIONS
1. Performance has a positive relationship with rationality.
a. This is not true, you do not have all ratio and human beings are not
100% rational.
2. To deal with this, professionals develop tools based on decision analysis
and/or evidence-based approaches.
3. To deal with this, researchers identify the factors that increase or decrease the quality of strategic
decisions from a multidisciplinary viewpoint.
4. To deal with this, researchers identify the factors that increase or decrease the quality of strategic
decision making.
a. Collective intuition, stimulation of quick conflict, the timing of SDM and the diffusion of
politics cause effective decision making.
5. Even though practitioners use the correct procedures and researchers generate evidence why
decisions succeed or fail, this does not lead to brilliant decision making. Something in the
organizational landscape does influence the process.
KEY QUESTIONS
1. How can we understand variation and heterogeneity of the effects of context on SDM processes?
2. How can we understand variation and heterogeneity of the effects on context on SDM processes on
outcomes?
3. How does the research on strategic decision inform the practitioner?
We find the answers by antecedents (geschiedenis), process dynamics and constraining & enabling factors.
More elaborately:
- The way decision making processes unfold is subject to situational factors: Not every situation is suited
for an approach rooted in information gathering and analyses in relation to goals;
- In addition, the interactions between participants in the SDM process and the dynamics of the process
can unfold in different ways leading to different decisions.
,INTEGRATIVE FRAMEWOR K
The integrative framework is a:
- Set of constituent parts with the links between them;
- The analytical scheme to study strategic decision making;
- The integration of sets of factors from a multi-theoretic perspective.
An analytical review scheme is necessary for systematically discerning patterns from a widely differing set of
studies and evaluating the contributions of a given body of research and to guide future research.
Context: Those aspects that are not subject to the choice situation to the decision-makers present at
the moment of decision.
The SDM The process by which a strategic decision is made and implemented and the factors which
process: affect it.
Outcomes: The intended and unintended consequences of a strategic decisions.
Decision level The intended and unintended consequences of a decision considered in terms of financial
outcomes: and/or non-financial outcomes isolated from other influences.
Organization The intended and unintended consequences of a decision considered in terms of financial
level outcomes: and/or non-financial outcomes in the aggregate of all influences on the organizational
outcomes. Outcomes as a consequence of all relevant organizational activity influencing those
outcomes, including the SD.
, PAPER 1: GARBUIO ET AL. (2015) – EVIDENCE DOESN’T ARGUE FOR ITSELF: THE VALUE OF
DISINTERSTED DIALO GUE IN STRATEGIC DECISION MAKING
Definitions
Comprehensiveness: The extent to which an organization attempts to be exhaustive or inclusive in
making and integrating strategic decisions.
Procedural rationality: The extent to which the decision making process involves the collection of
information relevant to the decision and the reliance upon analysis of this
information in making the choice.
Strategic decision The extent to which an investment achieves the outcome established by
effectiveness management at the time the decision was made.
Robustness of analysis The extent to which executives analyse information about the potential
financial returns and risks of the decision at hand (sensitivity analysis).
Quality of Individuals engagement in a fact-based transparent discussion that addresses
Disinterested dialogue a strategic decision as part of the company’s existing portfolio of decisions.
The construct also includes how the experienced members of a decision-
making group engage in a decision.
Strategic decision- The extent to which the decision delivers the expected results.
making effectiveness
Theory & Hypotheses
A robust analysis and disinterested dialogues address two distinct dimensions of the decision-making process,
and may both predict decision-making effectiveness. In the decision making process, a disinterested dialogue
about the analysis may correlate with each other but those two are nevertheless a two distinct construct.
Therefore:
H1: The robustness of analysis and disinterested dialogue are distinct and complementary
dimensions of strategic decision-making process with regard to effective decisions.
The more robust an analysis, the more effective the strategic decision. Executives who rely on a robust analysis
when making choices will be more likely to develop effective plans for matching the company’s plan with the
external environment.
The idea that a robust analysis has an impact on effectiveness of a strategic decision also reflects the
continuous improvement of techniques available to executives to model and predict the outcomes of strategic
decisions. A robust analysis would be more likely to include all possible outcomes, and this would be more
accurately predict the effectiveness of a decision. Therefore:
H2: The robustness of analysis will be positively related to strategic decision making
effectiveness.
However, it is possible that the impact emerges from the disinterested dialogue performed rather than from
the financial analysis. The decision making process involves considerable discussion have also been shown to
help prevent groupthink and improve performance when members are good at reading one another’s
emotions.
STRATEGIC DECISION MAKING
PRE-MASTER ORGANIZATIONAL STUDIES 2018/2019
TILBURG UNIVERSITY
, BASICS IN STRATEGIC DECISION-MAKING: LECTURE 1 - 6
LECTURE 1 - INTRODUCTION
WHAT ARE STRATEGIC DECISIONS?
Strategic decisions: Decisions committing substantial resources, setting precedents, and creating
waves of lesser decisions; as ill-structured, non-routine and complex; and
substantial, unusual and all pervading.
So, having a baby is not a strategic decision because having a baby had severe consequences. It does affect an
organization, it is not efficient for the resources.
Strategic decisions The process by which a strategic decision is made and implemented and the
making process: factors which affect it. i.e. the process that leads to the choice of goals an
means and the way in which means are affectively deployed.
KEY ASSUMPTIONS
1. Performance has a positive relationship with rationality.
a. This is not true, you do not have all ratio and human beings are not
100% rational.
2. To deal with this, professionals develop tools based on decision analysis
and/or evidence-based approaches.
3. To deal with this, researchers identify the factors that increase or decrease the quality of strategic
decisions from a multidisciplinary viewpoint.
4. To deal with this, researchers identify the factors that increase or decrease the quality of strategic
decision making.
a. Collective intuition, stimulation of quick conflict, the timing of SDM and the diffusion of
politics cause effective decision making.
5. Even though practitioners use the correct procedures and researchers generate evidence why
decisions succeed or fail, this does not lead to brilliant decision making. Something in the
organizational landscape does influence the process.
KEY QUESTIONS
1. How can we understand variation and heterogeneity of the effects of context on SDM processes?
2. How can we understand variation and heterogeneity of the effects on context on SDM processes on
outcomes?
3. How does the research on strategic decision inform the practitioner?
We find the answers by antecedents (geschiedenis), process dynamics and constraining & enabling factors.
More elaborately:
- The way decision making processes unfold is subject to situational factors: Not every situation is suited
for an approach rooted in information gathering and analyses in relation to goals;
- In addition, the interactions between participants in the SDM process and the dynamics of the process
can unfold in different ways leading to different decisions.
,INTEGRATIVE FRAMEWOR K
The integrative framework is a:
- Set of constituent parts with the links between them;
- The analytical scheme to study strategic decision making;
- The integration of sets of factors from a multi-theoretic perspective.
An analytical review scheme is necessary for systematically discerning patterns from a widely differing set of
studies and evaluating the contributions of a given body of research and to guide future research.
Context: Those aspects that are not subject to the choice situation to the decision-makers present at
the moment of decision.
The SDM The process by which a strategic decision is made and implemented and the factors which
process: affect it.
Outcomes: The intended and unintended consequences of a strategic decisions.
Decision level The intended and unintended consequences of a decision considered in terms of financial
outcomes: and/or non-financial outcomes isolated from other influences.
Organization The intended and unintended consequences of a decision considered in terms of financial
level outcomes: and/or non-financial outcomes in the aggregate of all influences on the organizational
outcomes. Outcomes as a consequence of all relevant organizational activity influencing those
outcomes, including the SD.
, PAPER 1: GARBUIO ET AL. (2015) – EVIDENCE DOESN’T ARGUE FOR ITSELF: THE VALUE OF
DISINTERSTED DIALO GUE IN STRATEGIC DECISION MAKING
Definitions
Comprehensiveness: The extent to which an organization attempts to be exhaustive or inclusive in
making and integrating strategic decisions.
Procedural rationality: The extent to which the decision making process involves the collection of
information relevant to the decision and the reliance upon analysis of this
information in making the choice.
Strategic decision The extent to which an investment achieves the outcome established by
effectiveness management at the time the decision was made.
Robustness of analysis The extent to which executives analyse information about the potential
financial returns and risks of the decision at hand (sensitivity analysis).
Quality of Individuals engagement in a fact-based transparent discussion that addresses
Disinterested dialogue a strategic decision as part of the company’s existing portfolio of decisions.
The construct also includes how the experienced members of a decision-
making group engage in a decision.
Strategic decision- The extent to which the decision delivers the expected results.
making effectiveness
Theory & Hypotheses
A robust analysis and disinterested dialogues address two distinct dimensions of the decision-making process,
and may both predict decision-making effectiveness. In the decision making process, a disinterested dialogue
about the analysis may correlate with each other but those two are nevertheless a two distinct construct.
Therefore:
H1: The robustness of analysis and disinterested dialogue are distinct and complementary
dimensions of strategic decision-making process with regard to effective decisions.
The more robust an analysis, the more effective the strategic decision. Executives who rely on a robust analysis
when making choices will be more likely to develop effective plans for matching the company’s plan with the
external environment.
The idea that a robust analysis has an impact on effectiveness of a strategic decision also reflects the
continuous improvement of techniques available to executives to model and predict the outcomes of strategic
decisions. A robust analysis would be more likely to include all possible outcomes, and this would be more
accurately predict the effectiveness of a decision. Therefore:
H2: The robustness of analysis will be positively related to strategic decision making
effectiveness.
However, it is possible that the impact emerges from the disinterested dialogue performed rather than from
the financial analysis. The decision making process involves considerable discussion have also been shown to
help prevent groupthink and improve performance when members are good at reading one another’s
emotions.
