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REF:March,JamesG.1999."UnderstandingHowDecisionsHappeninOrganizations."Chapter2inThe PursuitofOrganizationalIntelligence,pp.1338.

Oxford,UK:BlackwellPublishers

How Decisions Happen in Organizations. In general


Abstract: How we might think about decisions and decision making in organizations Introduction
How decisions actually happen and how we might talk about decision processes Decision making is bounded by individual and organizational constraints Studies show that decisions often stern from a logic of appropriateness rather than a logic of consequentiality

Research on how decisions happen leads us to perspectives that


Embrace the axioms of choice but acknowledge their limitations Combine ideology of choice with appreciation of its complexities and the beauties of its confusions See the technology of reason as requiring a technology of foolishness Imagine a participant as constrained by intelligence, rationality and rules, but sometimes bouncing around a soccer field

Decisions as resulting for intended rational choice (The dominant vision)


Decisions are intentional. Four evidences (Assumes everything is known)
Knowledge of alternatives Knowledge of consequences Consistent preference ordering Decision rule

But there are problems of


Uncertainty and Ambiguity In reality, it is uncertain what the consequences will be In reality, it is uncertain how we will feel about the consequences Attention is a scarce resource. The rationality is limited There are weak assumptions about the preferences They are absolute Stable Consistent and precise Exogenous: not affected by the choices they control

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REF:March,JamesG.1999."UnderstandingHowDecisionsHappeninOrganizations."Chapter2inThe PursuitofOrganizationalIntelligence,pp.1338.Oxford,UK:BlackwellPublishers The cycle of decision making Search is stimulated by a failure to achieve a goal When the goals are not satisfactory, the search starts again and the cycle repeats itself What to learn from all of this Reexamine the function of decision See decision making as process to gently upsetting preconceptions of what is going on Risk Taking Organizations suffer because they take too few or too high risks The risk taking is affected by several factors Danger and slack(presence of resources in excess) Aspiration level, assimilation of resources (More risk with newer resources) Self confidence (past success encourages the risk taker) Conflict Multiple individuals, and even one individual can have multiple choices of behavior Contract process: two stages 1. Find the best deal 2. Execute the contract This is difficult to achieve because people tend to loop infinitely in the first step

Decisions as driven by a logic of appropriateness implemented through a structure of organizational rules and practices, not by a logic consequence
Rules and rule following (evolution)
Rules of appropriateness match situations and identities Situation=define what kind of situation this is Identity=What kind of person am I Matching: What is appropriate for a person like me in a situation like this Three ways the rules develop Feedback from the environment (experience, adapting capacity) Evolving collection of invariant rules Reflecting rules that spread through a group of organizations like an illness

The intelligence of the rules is not guaranteed


experience selection diffusion

The organizations have consistent preferences

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REF:March,JamesG.1999."UnderstandingHowDecisionsHappeninOrganizations."Chapter2inThe PursuitofOrganizationalIntelligence,pp.1338.Oxford,UK:BlackwellPublishers

Decisions as artifacts (Outcomes as artifacts rather than central to understanding decision making)
There is a lot of uncertainty, just like a soccer game with infinite players that always kick the ball to the goals they consider good Emphasis on overlapping networks of linkages rather than coherent hierarchies
Hierarchy views are based on ideas of male domination and subordination Computer techniques and math modeling is unlikely to be possible to model networking

Temporal orders
There is order, but not conventional order A matter of the attention that individuals pay to a particular decision Garbage can approach: any solution can be associated with any problem, provided they are contemporaries

Symbols and construction of meaning


Focus on the outcome=significance More time spent in meetings than real decision-making Some researches view symbols as perversions Processes of choice reassurances (make-believe) Intelligent choice Reflects planning, thinking analysis sensitive to the concerns of relevant people The right people are involved Used to reassure that managers affect the performance of organizations (ha!) Premise: Life is choice. Argument: No!, life is interpretation Decision making is a ritual activity (the kick, not the ball)

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REF:March,JamesG.1999."UnderstandingHowDecisionsHappeninOrganizations."Chapter2inThe PursuitofOrganizationalIntelligence,pp.1338.Oxford,UK:BlackwellPublishers

Ideas that challenge standard ideas of decision altogether


ELEPHANTS AND OTHER STORIES
Decisions in organizations involve an ecology of actors trying to act rationally with limited knowledge The situation is ambiguous But the elephant is an elephant after all

Activities of decision makers and organizations


Gather information but do not use it Ask for more and ignore it Make decisions first and look for relevant information afterwards Gather and process a great deal of information that has little or no relevance to decisions

Conspicuous things - There is a misunderstanding of the role of information in organizations


Decision makers often operate in surveillance mode rather than problem-solving mode Information is rarely innocent Plays a smaller (less reliable, more strategic) and larger (contributes to making decisions and to execution of other tasks) Adaptiveness is achieved by maintaining a balance between the exploration of new ideas and exploitation of old ones Management of life and organizations is a matter of managing ambiguity and interpretations and a matter of managing choice. We require information sources that are: Less oriented to anticipating and more to interpreting Less tied to prior specifications and more to a wide spectrum op possible actions Less showing consequences of the past and more suggesting alternatives and new objectives Less likely to improve ideas and more to provoke new ones Any technology is an instrument of power Information is a signal and a symbol of competence in decision making

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