This research examines the role of framing in the process of decision-making for new capability investments under conditions of policy and technological uncertainty. I argue that framing can explain the decision to exploit current capabilities, but is not sufficient to explain the decision to explore new capabilities.
This research discriminates between “frames” and “framing” in the investigation: whereas “framing” is the process of constructing the meaning of the decision problem, “frame” refers to a specific perspective adopted by the decision makers. I develop a three-level research design: the industry-level analysis adopts the approach of eliciting heuristics to identify general patterns. The firm-level examines sources of variation and causal complexity by comparative case analysis. The decision-maker level investigates the influence of senior managers’ professional experience using a scenario evaluation approach.
Three observations from the case study of Taiwanese solar PV firms: firstly, systematic patterns are found in the process of framing environmental uncertainty and attributing the causes of the decision problem of capability investments. Secondly, whilst differentiated framing exists and corresponds to selective attention; such a difference is not necessarily associated with different choice pattern. Finally, the loosely coupling framing and choices leads to the speculation that the role of deliberate practice, rather than framing has a stronger influence on the decision to explore.
This research illustrates that the capabilities investment decision is not a single event but a complex process. While the stylised psychological principles explain the heuristic judgments, the influencing factors of an organisational decision are interdependent and temporally connected in the decision context. I argue that the problem of framing lies in prohibiting the alterative frame. Therefore exploration needs to be deliberately sought by the specially designed practice. This research contributes to understanding the relationship between behavioural view of descriptive analysis and prescriptive view of procedural rationality in the decision- making process