Intelligence for Strategic Decision Making in Multinational Corporations
David M. Flynn
The nature of strategic decision making requires organizations to make decisions under uncertainty. To help reduce uncertainty, various types of intelligence, that is, information-processing methods, are employed. Intelligence is the problem of gathering, processing, interpreting, and communicating the economic, social, technical, and political information needed in the decision-making process. Formal methods of intelligence include management information systems (MIS) ( Huber 1984) and the decision support systems (DSS) ( Keen and Scott-Morton 1978; Minch and Sanders 1986). Informal methods include external boundary- spanning activity by professionals ( Keegan 1974), communication among intra- company personnel ( Keegan 1974; Kobrin et al. 1980), and the internalization of uncertainty (that is, uncertainty absorption) by strategic planners ( Boulton et al. 1982; March and Simon 1958).
In considering the application of formal information-processing methods to strategic decision making, this chapter focuses on several important issues. First, it provides the rationale for the extension of formal information-processing methods (FIM) to the complex environments facing multinational firms. It then identifies individual (cognitive) and organizational factors that impede the use of formal information-processing methods. Next, based on a review of the literature, it posits that these impediments combine to create a "threshold of uncertainty" for both individuals and organizations. The threshold represents a specific level of uncertainty where formal and informal information-processing methods are used equally. Below the threshold, at low levels of uncertainty, formal methods are more heavily relied on by decision makers. Above the threshold, at higher