Academic journal article Journal of Managerial Issues

Formal Data Use in Strategic Planning: An Organizational Field Experiment

Academic journal article Journal of Managerial Issues

Formal Data Use in Strategic Planning: An Organizational Field Experiment

Article excerpt

During the last forty-five years, great progress has been made in research regarding the strategic-decision making process. The rational decision-making process as defined by Taylor (1947), Weber (1947) and others has been refined to a boundedly rational model of decision making, first by Simon (1957) and later by March and Simon (1958) and others (Fredrickson and Mitchell, 1984; Fredrickson and Iaquinto, 1989). The boundedly rational model of decision making has been further refined to consider context (Eisenhardt, 1989; Dean and Sharfman, 1996). More recent research has focused on cognitive biases (Das and Teng, 1999), ambiguity of commitment, decision-maker experience, affect and insight, network of associated issues (Langley et al., 1995), competitive threat, perceived external control of the organization, uncertainty of strategic issues being addressed (Dean and Sharfman, 1996), argumentation rationality (Werder, 1999), and evaluation tactics (Nutt, 1998).

The aforementioned research has focused on the cognitive, social, and political processes of strategic decision making. More recent literature suggests that the quantity of data gathered should vary according to the degree of environmental uncertainty facing the firm (Makadok and Barney, 2001). Thus, process and information quantity are important elements in understanding strategic decision making. One study in the information technology literature suggests that a knowledge acquisition information system might help managers "systemize their thoughts during strategic planning" (Jonas and Laios, 1993: 20). However, no management research has focused on the type of information that serves as input to the strategic decision-making process. That is, what types of information do strategic planners actually use? We begin this study by reviewing managerial and psychological decision-making perspectives, and we use this review to predict the types of information strategic decision-making teams will use. We then evaluate our research question by combining qualitative and quantitative methods. We conclude by presenting and discussing the implications of our findings.

STRATEGIC DECISION-MAKING PROCESSES

Strategic planning and decision making have received a great deal of attention but are still not very well understood. The extant literature has provided a variety of models regarding managerial decision making. For example, one stream of research suggests that managers process information in an intuitive manner (e.g., Agor, 1986; Mintzberg, 1994; Sternberg and Wagner, 1987), while another research stream suggests that managers deliberately seek out and sort through enormous amounts of new information in order to make effective decisions (e.g., Thomas et al., 1993). A more reconciliatory research stream suggests that strategic decision-making processes lie toward the middle of a continuum between purely rational and purely intuitive processes (Blattberg and Hoch, 1988; Werder, 1999).

This evolving research is important given the growing emphasis on understanding the dynamics of strategic decision making. Hambrick and Mason's (1984) seminal work directed researchers toward the importance of the top management team (TMT) in decision making and directing strategy. Subsequent research has extended Hambrick and Mason's work by examining TMT decision making in several contexts, including environmental scanning (Daft and Weick, 1984), sensemaking (Thomas et al., 1993), interpretation (Gioia and Chittipeddi, 1991), framing (Nutt, 1998), and seeking a functional level of conflict (Amason, 1996). Khatri and Ng (2000) noted that while theoretical decision-making models abound, applied research regarding TMT information use in decision making is virtually nonexistent.

Many researchers acknowledge that rational data gathering activity lies at the heart of strategic decision making (Wally and Baum, 1994; Nutt, 1998; Werder, 1999). Rational data gathering includes environmental scanning that involves acquiring and processing voluminous amounts of information. …

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