Strategic decision making

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Citation: Kathleen M. Eisenhardt, Mark J. Zbaracki (1992) Strategic decision making. Strategic Management Journal (RSS)
Internet Archive Scholar (fulltext): Strategic decision making
Tagged: Business (RSS) strategy (RSS), decision making (RSS), leadership (RSS)

Summary (Abstract)

Eisenhardt and Zbaracki's article is a general review of the literature on strategic decision making. The authors define a strategic decision as one which is important, in terms of the actions taken, the resources committed, or the precedents set and which constitute infrequent decisions taken by top management in an organization and which critically affect the health and survival of that organization.

The authors essentially argue that the current literature have been focused on three dominant paradigms which has framed research on the subject:

  1. Rationality versus bounded rationality which is a literature stems back to the basic organization work by March and Simon (1958) in their classic book Organizations and which is often framed in terms of cognitive limitations, the role of reputation, and the debate between rationality versus bounded rationality. The authors suggest that work has suggested that this bounded rationality may be better treated as multi-dimensional.
  2. Power and politics which treats organizations as political systems, decisions as preferences of the powerful, and examines the role of politics.
  3. The "garbage can" model of organization which treats organizations essentially as anarchies and a random confluence of streams.

Their basic conclusions is that (1) rationality is basically bounded and that its ridiculous to keep arguing this and that (2) it is useful to to keep writing articles that argue against the idea that organizations have a single goal and (3) that the garbage can model can be dismissed as useless and without empirical support.

They criticize the field for continuing to work on these questions which, the authors argue, are essentially solved problems. They argue that we need to understand a series of mechanisms behind action and they suggest we start with cognition (i.e., heuristics, insight) and conflict. They strongly emphasize cognitive models.

Politics and conflict are very different constructs. Politics is about influencing people and conflicts is mostly about head-to-head arguments.