When decision support systems fail: insights for strategic information systems from Formula

Decision support systems (DSS) are sophisticated tools that increasingly take advantage of big data and are used to design and implement individual - and organization - level strategic decisions . Yet, when organizations excessively rely on their potential the outcome may be decision - making failure, particularly when such tools are applied under high pressure and turbulent conditions. Partial understanding and unidimensional interpretation can prevent learning from failure. Building on a practice perspective, we study an iconic case of strategic failure in Formula 1 racing. Our approach, which integrates the decision maker as well as the organizational and material context , identifies three interrelated sources of strategic failure that are worth investigation for decision - makers using DSS and big data: (1) t he situated nature and affordances of decision - making ; (2) t he distributed nature of cognition in decision - making; and (3) the performativity of the DSS. We outline specific research questions and their implications for firm performance and competitive advantage. Finally, we advance an agenda that can help close timely gaps in strategic IS research

Structuring the decision process

This chapter includes a discussion of leadership decisions and stress. Many leaders are daily exposed to stress when they must make decisions, and there are often social reasons for this. Social standards suggest that a leader must be proactive and make decisions and not flee the situation. Conflict often creates stress in decision-making situations. It is important for leaders to understand that it is not stress in itself that leads to bad decisions, rather, bad decisions may be the result of time pressure in the sense that leaders have not been able to gather enough relevant information. Thus, it is worthwhile for leaders to be able to prioritize properly in order to cope with stressful situations. In some situations, a leader chooses to delegate the decisions to his/her team and then it is important to guard against «groupthink», a phenomenon where members of a team put consensus before anything else as a result of the peer pressure. A number of methods are presented that enable leaders to avoid this phenomenon. Often leaders are involved in decision-making situations where they are forced to navigate between objectives that are in strong conflict with each other. We are talking about «decision dilemmas». These are characterized by the existence of a conflict between the top leadership's desire to control the activities and their wish to give autonomy and independence to the various units. It is important for leaders to be able to strike a balance in different dilemma situations and understand how to best manage conflicts when they aris

The Problem With Bounded Rationality On Behavioral Assumptions in the Theory of the Firm

I discuss and compare alternative approaches to integrating bounded rationality with the theory of economic organization, concentrating on the organizational capabilities approach, which is strongly influenced by the works of Nelson and Winter, organizational economics, particularly transaction cost economics, and, finally, a small subset of the literature on biases to judgment and cognition. I argue that, contrary to the conventional view, both the organizational capabilities approach and transaction cost economics treat bounded rationality rather “thinly,” the former being in actuality more taken up with organizational routines than individual boundedly rational behavior, the latter only invoking bounded rationality to the extent that it helps explaining incompleteness of contracting. The rich literature on cognitive biases, etc. suggests a “thick” approach to bounded rationality that may be helpful with respect to furthering the theory of economic organization. Examples pertaining to the internal organization of firms are provided.capability, organizations, transaction costs

Bounded Rationality in the Economics of Organization Present Use and (Some) Future Possibilities

The way in which bounded rationality enters contemporary organizational economics theorizing is examined. It is argued that, as it is being used, bounded rationality is neither necessary nor sufficient for producing the results of organizational economics. It is at best a rhetorical device, used for the purpose of loosely explaining incomplete contracts. However, it is possible to incorporate much richer notions of bounded rationality, founded on research in cognitive psychology, and to illuminate the study of economic organization by means of such notions. A number of examples are provided.Varieties of bounded rationality, incomplete contracts, economic organization, cognitive psychology

Understanding Diversity

Daan van Knippenberg is Professor of Organizational Behavior at RSM Erasmus University, Erasmus University Rotterdam, The Netherlands. His research interests include work group performance, especially work group diversity and group decision making, leadership, in particular the roles of self and identity, and of emotions, and social identity processes in organizations. In his inaugural address he argues that the effects of work group diversity on group performance should be understood in terms of two processes that have independent and interactive effects: elaboration of task-relevant information and social categorization. He outlines how an integrative model of these processes may explain inconsistent findings in diversity research and provide clear directions for the management of diverse groups. In this respect, he advocates in particular attention for group members’ understanding of work group diversity. Daan van Knippenberg is co-founder of the Erasmus Centre for Leadership Studies, and Associate Editor of Organizational Behavior and Human Decision Processes and of Journal of Organizational Behavior. His research is published in such academic outlets as Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, and Annual Review of Psychology.Diversity;group performance;group composition;team performance;team composition;social categorization;group decision making;information elaboration

A face for all seasons:searching for context-specific leadership traits and discovering a general preference for perceived health

Previous research indicates that followers tend to contingently match particular leader qualities to evolutionarily consistent situations requiring collective action (i.e., context-specific cognitive leadership prototypes) and information processing undergoes categorization which ranks certain qualities as first-order context-general and others as second-order context-specific. To further investigate this contingent categorization phenomenon we examined the “attractiveness halo”—a first-order facial cue which significantly biases leadership preferences. While controlling for facial attractiveness, we independently manipulated the underlying facial cues of health and intelligence and then primed participants with four distinct organizational dynamics requiring leadership (i.e., competition vs. cooperation between groups and exploratory change vs. stable exploitation). It was expected that the differing requirements of the four dynamics would contingently select for relatively healthier- or intelligent-looking leaders. We found perceived facial intelligence to be a second-order context-specific trait—for instance, in times requiring a leader to address between-group cooperation—whereas perceived health is significantly preferred across all contexts (i.e., a first-order trait). The results also indicate that facial health positively affects perceived masculinity while facial intelligence negatively affects perceived masculinity, which may partially explain leader choice in some of the environmental contexts. The limitations and a number of implications regarding leadership biases are discussed

Organizationally Sensible vs. Legal-Centric Approaches to Employment Decisions With Legal Implications

This article is intended to: 1) alert human resource (HR) professionals to the risk that they, and the managers they serve, are unnecessarily contributing to the impact of legal considerations on the management of employees as a result of “legal-centric decision making”; and 2) provide information and guidance that will assist HR professionals in promoting better informed, more organizationally sensible responses to employment issues that have potential legal implications. The “legal-centric decision making” construct is introduced and illustrated, a model of the primary factors contributing to legal-centric decision making is presented, and keys to avoiding legal-centric decision making are identified and discussed

Out-of-Pocket Costs and the Flexible Benefits Decision: Do Employees Make Effective Health Care Choices?

This study analyzes employees\u27 ability to select health insurance benefits that fit their needs.The study analyzes both the actual choices and the implications of those choices for employees, measured as out-of-pocket costs (OPC). By introducing OPC as a measure of decision quality, this study demonstrates its advantages over measuring only employee choice. Results from a sample of manufacturing employees suggest that most employees made cost-optimizing decisions, out-performing recommendations from a linear model. Employees also were financially better off overall with choice than they would have been had they all been placed into either medical plan option available to them. This study supports the value of choice, but does not support the assertion that employees always make benefits decisions that best fit their needs

Direct and indirect effects of mood on risk decision making in safety-critical workers

The study aimed to examine the direct influence of specific moods (fatigue, anxiety, happiness) on risk in safety-critical decision making. It further aimed to explore indirect effects, specifically, the potential mediating effects of information processing assessed using a goodness-of-simulation task. Trait fatigue and anxiety were associated with an increase in risk taking on the Safety-Critical Personal Risk Inventory (S-CPRI), however the effect of fatigue was partialled out by anxiety. Trait happiness, in contrast was related to less risky decision making. Findings concerning the ability to simulate suggest that better simulators made less risky decisions. Anxious workers were generally less able to simulate. It is suggested that in this safety-critical environment happiness had a direct effect on risk decision making while the effect of trait anxiety was mediated by goodness-of-simulation