UNIVERSITI UTARA MALAYSIAMANAGEMENT INFORMATION SYSTEMSBPIN 3053DECISION MAKING AND ITS ROLE IN ENHANCING ORGANIZATIONAL EFFICIENCY AND EFFECTIVENESSPrepared to:Mr. Badruddin bin A.RahmanPrepared by:NAMEMATRIC NO

Dhilan Amani Abduh228793

Halifah Nadia234681

Rafshan Ridho Ilhamy234673

Melati Kiky Anindya234677

Aulia Restu Yohanda234674

TABLE OF CONTENT

1. Cover .. 1

2. Table of Content . 2

3. General: Strategic Information System. 53.1 Internal Factors that Enable the Organization to Implement Information System93.2 Barriers from the Organization Itself....113.3 Barriers from the users perspective . 133.4 Barriers from the systems perspective.15

4. Strategic Decision-Making Processes.. 17

5. Group and Organization Management 20

6. The Political Dimension... 24

7. Conclusion . 31

8. References

1. INTRODUCTIONDecision making is a process that is undertaken at various levels or conditions of uncertainty by individuals and groups. Many different theories of how the decision-making process occurs have been proposed by scholars and some of these are discussed below. Decision making is a concept central to organization theory which has been addressed by researchers in a wide variety of business and sporting situations. It can be studied by underpinning theories from psychology, sociology, mathematics, anthropology and management studies. Whichever underpinning theoretical base is used, decision making is most often viewed as a process which takes place within individuals, groups and organizations (noted as different levels of analysis). It is commonly accepted that decisions are made under varying conditions of uncertainty and from this a number of approaches have been developed to help understand how various decisions are and should be made in different situations.A widely contested model of individual decision making is the rational model which suggests that decisions in organizations are taken in a logical, systematic manner after a consideration of the problem, all its alternative solutions, and the implementation of a final solution (see the figure below).

Evaluate All AlternativesDecision Based on Analysis AlternativesIdentification of Alternatives

Figure 4 Rational Decision-Making Process

An important advancement in the area of decision making is the development of evidence-based management. This is described by Briner, Denyer and Rousseau (2009) as combining the use of practitioner expertise and judgment, contextual evidence, an evaluation of published research and the input of participants, to make effective decisions. The authors describe this as more or less a family of practices adopted by the practitioner who questions the blind acceptance of other firms best practices with the purpose of developing one's own best practice. The process is familiar: discuss and clearly articulate the problem, question or issue; gather and review the internal organizational evidence or data; gather and review the external evidence or data (e.g. published research); gather and consider the views of participants; and start the process of making a decision choice (Strategy and innovation).

Che and Kartik (2009) provided a theoretical look at those times when a decision maker will consult an advisor or consultant before making the final decision. According to them, new discoveries would increase with an increase in difference of opinion between the advisor and the decision maker. The greater the difference of opinion, the greater the effort required to persuade each party, and when decision makers move in a new direction, or break with precedent, they are beholden to exert more effort to persuade followers. Wen and Zhou (2009) also provide a theoretical look at decision making by arguing that when decisions are important and information is limited, it is best for a manager to act with openness meaning to consult with one's subordinates and take their opinions seriously.The ability to make a good decision is dependent upon the ability to generate objectives related to that decision (Bond, Carlson and Keeney, 2008). An objective represents a desire that the decision maker wants to achieve by making a decision (Environmental Uncertainty) in other words, one's criteria or goals. In their studies of students attempting to generate objectives to increase the quality of their decision making, Bond et al.This compares with Briggs and Reinig's (2010) research in which they argue against the commonly accepted notion that as the quantity of ideas increases, so too does the quality of ideas. They argue that each solution space of decision makers has an ability boundary, an understanding boundary, an attention boundary, a goal congruence boundary, and an exhaustion boundary (ORIGINS). Therefore, the relationship between the quantity of ideas generated and the quality of those ideas is more curvilinear with a positive but decreasing slope (ORIGINS). This finding is supported by the research of Kaufmann, Michel and Carter (2009), who studied decision making in the area of the supply chain management of 15 companies and found that decision makers would try to increase their effectiveness by taking on several debiasing strategies. For example, they would attempt to decrease the complexity of problems by standardizing supplies or by reducing the number of suppliers. They would also try to increase the rationality of the decision-making process by using cross-functional groups, holding feedback sessions, using computer-supported feedback data, or training the manager to detect a decision bias. Thus, decision-making models range from rational approaches which prescribe a series of stages in decision making, to political approaches such as the Carnegie model, contingency approaches (Vroom and Jago, 1988), and irrational approaches (Brunsson, 1989).

General: Strategic Information System Moderating Factors in Implementing Strategic Information System

In functioning on its role for enhancement of organizational efficiency and effectiveness, there are few factors which either directly related or in such cases indirectly related, helps to ease the difficulties.

Part of the moderating factors are from the government of certain countries and another part is on the system itself whether is related to system composition or services. The rest of the factors are on the availability of information and connectivity and also internal factors within the organizations.

Government Contribution towards Enhancing the Usage of Information System

In this era, most on government would like to promote the usage of information system. For an example, in Malaysia, government really encourages the usage of information system by implementing policies and also development of basic infrastructures. In strive to become a developed nation by 2020, Malaysia look into information system as one of key primary factors that can contribute to rapid growth of the country. Government starts researches institutes such as Standard and Industrial Research Institute (SIRIM) and Malaysian Industrial and Microelectronics Systems (MIMOS) somewhere in 1985. To further enhance the development, the government launched the Multimedia Super Corridor another ten years later. The implementation of these research institutes and ICT encouragement bodies not only give benefit in term of facilities and instrumentation only but able to be advanced to another policies which involves benefits from another related factors such as tax exemptions, research grants and others.

Building information system infrastructure had been acknowledged as one of top priorities for todays government. It cant be denied that most government believes that ICT will help to enable a country to move from a level to a certain acceptable level. To be in top list of countries with highest Technology Achievement Index (TAI) became a target for developed and developing countries. TAI defines the countrys ability to utilize technology and information and communication technology as a tool for development. TAI, among all, includes measurement of technology creation, innovation information, diffusion of previous innovation and also skills and knowledge. A sample of TAI list as per below figure

TAI Rank TAI value1. Finland - 0.7442. United States - 0.7333. Sweden - 0.7034. Japan - 0.6985. Republic of Korea - 0.6666. Netherlands - 0.6307. United Kingdom - 0.6068. Canada - 0.5899. Australia - 0.58710. Singapore - 0.58511. Germany - 0.58312. Norway - 0.57913. Ireland - 0.56614. Belgium - 0.55315. New Zealand - 0.54816. Austria - 0.54417. France - 0.53518. Israel - 0.514

Apart from developing infrastructure, government also plays an important role by setting up policies and requirements which include usage of information and communication technology and information system as a part of an organizational strive to achieve certain policies and recommendations. As in China, government implements a policy where every pharmaceutical manufacturing must achieve a GMP certification. Manufacturing organization who fails to achieve the certification may face the possibility of closing the business. Many of them believe that usage of information system can facilitate and also accelerate the effort towards GMP implementation and also to attain certification (Zhou and Chen 2002). These types of certification and policies, indirectly promotes the implementation and utilization of information system in manufacturing organizations. Soft encouragements by government also contribute to wider utilization of information technology. The government of China had put a lot of effort in encouraging the organizations to adapt the learning concept and also improve enterprise knowledge (Zhou, Chuah & Chen 2002) by promoting the informationalization to support its industrialization.

Jimba and Atinmo (2000) also agreed that since information society basically operates from global perspective, there should be a certain basic infrastructural requirements in order for a nation to participate. Among all, it includes sufficient computing power, internet access, adequate teledensity and basic economic that able to support connection.It can be agreed also that certain countries governments vision also influence the factors of implementation of information system and information technology in that country, such as cases in Malaysia with Vision 2020, the e-Japan vision in Japan, Botswanas prosperity for all Vision 2016 and also Canadas vision to be the most connected nation in the world.

Systems Contribution towards Enhancement of Information System Utilization

Looking onto systems perception, the evolution of system itself enables more organization to have benefit from the system. As networking and information mailing system growing rapidly, organization may take advantage of new opportunities (Smith 1999). Composition of information system should not be prescribed as only for basic accounting and record keeping (Porter and Miller, 1985) but it should be a strategic tool to gain competitive advantage, improve productivity and performance, finding better way in managing the organization and also developing new opportunities (Gregus and Benova, 2006).

Evolution in information system, from the Material Resources Planning (MRP) which only supports single function towards the Enterprise Resources Planning (ERP) which integrate entire organization, make it simpler to the organization (Soon-Yu, 2005). Md. Hafiz, Mohd Adam and Husnayati (2006) extract the three era model of evolution by John Ward,et al. (1996) which defines the evolution from the era of Data Processing in the 60s which includes remote hardware and user, mainly for cost reduction purposes, towards Management Information Systems era in 70s and 80s that is interconnected, user driven and functions to support the business and much later to the Strategic Information Systems era in 80s and 90s with networked and integrated system, closely related to business strategy and more business driven.

Son-Yu (2005) also conclude that since there are requirement of integration between ERP, Supply Chain Management and Business to Business (B2B), there will be a strong force to providers as SAP, JD Edward, Baan, Oracle and PeopleSoft to introduce newer version with more added values which in the other hand will make it more handy for organization to use it.Supports from system providers also are fatal to organization. Supports are in two categories that are customization of information system to the organizational needs and also support in performance of the system either in maintaining the system, problem solving and also improvement of the system.As an example, SAP provides after sale services such as end-to-end solutions operation, SAP Enterprise support, SAP Safeguarding and few other options. Oracle also has their worldwide support for their users covering PeopleSoft and also JD Edwards.

Availability of Information and Accessibility Functions in Enhancing the Usage of Information System

Jimba and Atinmo (2000) compiled some finding about availability and accessibility as moderating factors in utilizing information system. It refers to Bonzi (1992), Hesse, et al. (1993) and Karminer and Braunstein (1998) who agree that accessibility and availability of information supports the enhancement of productivity of research and studies. As such, smooth access to database will enable organizations to get benefit from the information system.

The push and pull factor as explained by Nancarrow, Pallister and Brace (2001) talks about the speed, easiness, coat and amount of information available (pull factor) and for research suppliers to be the first with information and innovate to remain competitive (push factor) which will enable organization to source more information via the internet.

Wide access to networking and information permits an organization to attain necessary knowledge crucial to its specific business strategy. Internet growths are rather rapid. Organization could use the internet access in order to reach to information or, in the other hand communicate their information to others. In certain cases as Xerox, as cited by Bhatt (2000), the organization uses the facility to survey their customers and asses their satisfaction through an accessible database. This will enable the organization to interact with their customers, knowing their needs and to know the root cause for customers dissatisfaction.

Internal Factors that Enable the Organization to Implement Information System.

Within organization itself, there are also a lot of factors that ease the process of implementing the system. Prasad (2000) listed seven primary factors within the organization that contributes to the information system implementation which discussed as 7T agents that are:

1. Talent Expertise, experience, knowledge and skills and competencies in handling the job, make decision, resolve conflicts and creating culture in the organization.2. Task Complexity of each activity, breakdown of task, structure of work and also probability of successful completion.3. Teamwork Group understanding, dynamics, balance of task, co-operation and commitment between members, job delegation and also satisfaction.4. Techniques tools being used, understanding about system, systematic approach about knowledge and system.5. Technology Affordable system for the organization, availability of system and technology, features and adequacy of system.6. Time Schedules, constraint, arrangement of task to meet the specific timeframe planned for an activity.7. Tool Communication tool, networking system, availability of required tools.

Involvement of management in setting up and implementation of information system are crucial to accelerate the process. Dhillon and Caldeira (2000) believe that the mindsets of the top management are a key determinant to the successful implementation of the system. Teaming up the strategic objective of an organization and information system requirements are vital to the success of implementation. Small and Chen (2003) concluded that effective executive management commitment plays a rather important role in the implementation process. Study shows that an organization that have focus on significant effort in planning, justification and installation, succeed in adopting the system.

According to Davenport, Harris and Cantrell (2004), there are three factors that drive the values that are:1. Integrate, which means unifying the system, with standardization of data and processes that can lead to faster communication and effective decision making.2. Optimization the system, which refers to shaping the processes to fit the unique of strategic need of the organization.3. Informed by transforming work, with means of information, transforming unprocessed data to become useful information that support the strategic organization needs and decision making.User participation and involvement also remarked as one of factors that stimulate the success of information system implementation. Participation means the users willingness to participate in the development and implementation of information system. Involvement stated the psychological state of user and attitude towards the implementation of information system and to the information system itself and the relation are as per shown in below figures.

Intervening Factors in Implementation of Strategic Information System.

Todays operations are much depends on computer based information system. It includes the storage of data and information, processing of data and information, hardware and software, a social system as a result of integration and lastly the documents and procedures as guide to the users. It means that present information system not only technically viewed but it is rather a larger social dimension (Md. Hafiz, Mohd Adam, Husnayati, 2006). But, in implementing the system, there are a lot of obstacles that requires action and decisions. Barriers ranged from deciding on the system until full implementation of the system. It is necessary to look into intervening factor in each and every perspective they appear. Apart from looking into the barriers itself, it is also important to understand the nature of barrier in order to study and counter it through specific actions.

Barriers from the Organization Itself

Top Managements Perception on Strategic Information System

Relationship between functions of information system and corporate strategy does not get much attention from the top management (Pant and Hsu, 1995). Smith (1999) stressed that even though there are some beliefs in the top management that information system is important to the business, but their belief is not visualized by their performance. Information system always been perceived as different from the organization strategic beliefs and treated as some additional operation to support daily tasks. Involvement of the top management is vital to the success of information system. Management should understand that the objective of information system is to generate information on the business activities that useful to support in making sensible decision regarding its operational and strategic tasks (Smith, 1999).

Furthering this, Smith (1999) also pointed out some factors on how importance for a business starter to have the strategic information system in mind at the early stage of set up. They should know about what type of information system available on the shelf and what type of information system that can strategically help the organization to be start up. Later, it is required to think on how the system can help the organization and how it should be incorporated to the planned business framework. The type of data to be selected, the way it going to be stored, how data can be transformed to become information and how these information can be communicated across the whole organization, including suppliers and customers in order to gain mutual understanding for the benefit of the organization. Zhou and Chen (2005) also agreed that implementation process of information system will meet a lot of problem without support and participation from the top management.

Calhoun and Laderer (1990) stressed that failure to understand top managements objectives are another factor contributing to barriers in implementation. It is either the top management did not really know their objectives or do not want to disclose it to the information system function. Misunderstanding the organizational objective in setting up phase of the information system implementation will lead to a major failure into the implementation itself.

Weak in Management and Organizational Structure

Organizations that have a weak management and organizational structure may face a lot of trouble in implementing the system. As stated by Zhou, Chuah and Chen (2005) that some of the failure in introducing the MRP system to Chinese herbal industries are due to the management and organizational structures are outdated and ineffective. Organization that able to utilize the information technology should find that they are able to gain their competitive advantages against their competitors who dont (Smith, 1999). Pant and Hsu (1995) stressed on Barlows (1990) point that degree of success in integration of technology and business much depends on the organization structure.

Failure to Integrate Business Resources and Information System

Information system resources rarely act alone in creating and sustaining competitive advantages (Rajendran and Vivekanandan, 2008). It usually works in relation to other business resources to provide strategic benefits. Performance of an organization depends on how information system resources being integrated with organizational, technical and other resources (Benjamin and Levinson, 1993). Failure to integrate the information system resources with the other business resources will lead to the organizational failure in achieving their competitive advantages.

Barriers from the Users Perspective

Lack in Computerization Skill and Knowledge in Information System.

In order to gain benefit from the system, it is utmost important for the organization to ensure that the users are well equipped with necessary knowledge and skills that required so that the information system can be implemented smoothly. As stated by Zhou and Chen (2005) that one of the cause that make it difficult to introduce the information system in Chinese industries are due to low educational level of the user and the degree of computerization and automation are rather low, causing such an intensive system as MRPII and ERP become unsuitable to those industries.

Apart from inadequate knowledge, failure to adapt to rapid change in information system also becomes a large barrier in implementing the system. Evolution of information system from purely supporting orientation administrative has changed towards more strategic role within an organization. As such, organization must be flexible enough to adapt these changes and gain benefit from it.

Apart from that, continuous training and education of user should be looked into. Implementations are not only about information and technology, but also involving the human resources in the integration. Skill and knowledge have to be improved. Sponsorship for employees to attend external training and competency program could act as an incentive to build strength in users that will benefit the organization.

Failure in having computerization knowledge and skill also lead to failure in User-Information System relationship which supposed to trigger the organization towards achieving its maturity level.

Low Education Level among Information System Users

Level of education also is one of the factors affecting the success of implementation. Low level of education highly related to low computerization skill and knowledge. This again refers to Zhou, Chuan and Chens (2005) findings that low level of education contribute to difficulties in implementation of information system. Low education level may become a result of underdevelopment of certain nation. Jimba and Atinmo (2000) conclude that weak in knowledge and intellectual capability were a result from underdevelopment. Low level of education also closely related to low level of computerization skill and knowledge.

Language and Literacy Barriers

Among all, language also became one of the barriers that limited the implementation of information system. To give an example, most of the systems that available are in English. But in certain region, level of English understanding is so poor that user may fail to interpret the need of the system and also the information that resulted from the processes. As in Thailand, English literacy is so poor that less than five percent are able to understand English5. So implementing the system in this area will lead to a lot of hurdles along the way of implementation. To make it worst, there are some other nations that used other character than Romanized characters, such as Former Soviet Union and some Eastern Europe countries that used Cyrillic characters. For them, utilizing the systems which based on Romanized is rather difficult.

Agourram and Ingham (2007) state about Shing-Kao (1997) who stressed that since people see information with their own values, assumptions and expectations, different person may look at the same information differently.

Perception and Expectation

By implementing the information system, management are hoping that it can help to support decision making which will lead to better performance. But on the employees view, implementation are negatively perceive as a treat for them. They may feel worry about losing their job to technology. Information system actually helps to improvise the data processing tasks for better decision making. Management has to make the employees understand the aim of implementation.

Another problem is on the expectation. Users are expecting that computers may become a solution for problems in data processing. This over-expecting may sometime results in frustration.

Barriers From the Systems Perspective

Nature of the System that Make it Difficult

There are two major technological issues in implementing the system which are;

- Complexity where each technology have their own complexity. The organization need to learn and adapt to the requirement of the system.- Compatibility which refers to suitability of computers to suit for one application to another.

The complicated methodologies also being understood as one of factor contributes to the difficulties. Pant and Hsu (1995) suggests that even though planning of strategic information system known to be important but, some organization still find it as difficult. One of the reasons why it happened is because there is no availability of comprehensive, easy-to-use and structured methodologies.

Fear of Wasting Money without Benefit in Return: Looking into failures experienced by Others

While information system brings a lot of advantages to the organization, there are some organizations that reluctant to implement it. This came from the experiences from other organizations which results in partial failure, even in certain cases, a total failure. Muscatello, Small and Chen (2003) quoted a research by Trunick (1999) which shows that close to 40 percent of organization that implement information system only be able to enjoy partial implementation, while another 20 percent totally abandon the system. Since the cost of implementation is not small, fearing the failure had become a bad dreams for organizations especially those with small in scale and with low financial resources.Failure of information systems implementation in small organizations greatly contributed by lack of resources and formalized systems. They often fail to justify the expenses and time to spend on selection of the system.

Strategic Decision-Making ProcessesBEYOUND THE EFFICIENCY-CONSENSUS TRADE-OFF

This topic examines how managers make strategic decisions efficiently and simultaneously build the consensus often required to implement decisions successfully. The findings suggest that groups employed two critical processesone substantive/cognitive and the other symbolic/ politicalto achieve high levels of efficiency and consensus. On the substantive dimension, they gradually structured complex problems by making a series of intermediate choices about particular elements of the decision. On the symbolic dimension, they took steps to preserve the legitimacy of the decision-making process.

Many scholars contend that successful organizational performance requires efficient decision making and effective implementation (Bourgeois & Eisenhardt, 1988; Janis, 1989; Murnighan & Mowen, 2002; Nutt, 1993; Shull, Delbecq, & Cummings, 1970). Efficient decision making means that the process unfolds smoothly and that managers select a course of action in atimely manner (Eisenhardt, 1989; Harrison, 1999; Mintzberg, Raisinghani,&Theoret, 1976; Trull, 1966). Effective implementation means that managers carry out the selected course of action and meet the objectives established during the decision process (Andrews, 1987; Dean & Sharfman, 1996). Scholars contend that managers must build consensus, defined as common understanding and commitment, to implement decisions successfully (Andrews, 1987; Bourgeois, 1980; Bower & Doz, 1979; Child, 1972; Drucker, 1954; Wooldridge & Floyd, 1990). In sum, for firms to perform well, managers must make high-quality decisions in an efficient manner and simultaneously build consensus to facilitate implementation.

Although scholars contend that effective performance requires efficiency and consensus, much empirical evidence indicates that managers need to make trade-offs when leading decision processes. Thus, the decision-making literature presents a puzzle. It suggests that successful firm performance requires an efficient decision process and effective implementation, but it does not explain how managers can achieve both outcomes simultaneously. Therefore, this hypothesis-generating study addresses the following question: How do managers make decisions in an efficient manner and build the consensus often required to implement those decisions successfully?

CONCEPTUAL BACKGROUND

Several prominent decision-making researchers (George, 1980; Janis, 1989) have proposed models of the multiple trade-offs that managers encounter as they make decisions. Two streams of research support this contention that managers find it difficult to achieve efficiency and consensus simultaneously. One stream focuses on behavioral dimensions of the process, including participation, conflict, and politics. A second stream focuses on cognitive process dimensions, such as the modes of alternative evaluation and analysis. According to both research streams, the factors that promote efficiency tend to reduce consensus, and vice versa. Many scholars have argued that subordinate participation leads to higher commitment and understanding (Kim & Mauborgne, 1991; Tannebaum & Schmidt, 1958; Vroom & Yetton, 1973; Wooldridge & Floyd, 1990). By contrast, other scholars asserted that participation decreases efficiency (George, 1980; March&Olsen, 1976; Vroom&Yetton, 1973).

For instance, one study found that CEOs who made fast decisions consulted their management teams but focused on obtaining advice from one or two of the firms most experienced executives (Eisenhardt, 1989, p. 559). Moreover, The CEO was always in charge, and acted as something of a dictator (Bourgeois & Eisenhardt, 1988, p. 830). Scholars have also found that debates tend to decrease efficiency (George, 1980; Janis, 1972; Schweiger et al., 1986), and that conflict leads to process interruptions and delays (Hickson et al., 1986; Mintzberg et al., 1976). By contrast, others proposed that disagreement may enhance consensus.

Studies have also found that politics decreases efficiency. These scholars argued that politics takes time, energy, and effort to engage in attempts at intra-organizational influence. On the other hand, seeking allies and lobbying others may be constructive, particularly with respect to building commitment and understanding. Politics can help generate support for projects and may persuade others of the merits of a decision. Overall, this stream of research suggests that participation, conflict, and politics all may impede managers from making timely decisions, yet these behaviors can foster consensus.

The second stream of research implies that comprehensive alternative evaluation and formal analytical procedures foster consensus but decrease efficiency. Moreover, they analyzed alternatives simultaneously, rather than sequentially. By contrast, studies have shown that an in-depth analysis of a small set of alternatives fosters consensus. These scholars argued that groups should scan many options, but they must perform a thorough evaluation of a few of the most attractive alternatives to build commitment.

Similarly, scholars have argued that formal analysis slows down the decision process. Eisenhardt (1989) found that fast decision makers rely on realtime information gathered by continuous environmental scanning, whereas slow decision makers rely on data from formal planning and budgeting systems. Others found that formal analysis may help to persuade others of a proposals merits (Langley, 1990; Sapolsky, 1972). In sum, formal analysis may decrease efficiency, but it can enhance consensus when used to justify and sell a decision to others in the firm.

These two streams of research, summarized in Table 1, imply that managers must make trade-offs between achieving efficiency and consensus. Although acknowledging potential trade-offs, scholars continue to contend that successful firms must achieve high levels of efficiency and consensus. They argue that efficient decision making enhances firm performance because it facilitates adaptation to rapidly changing environmental conditions. Similarly, scholars propose that consensus increases performance by enhancing a firms ability to implement decisions. They argued that consensus promotes the cooperation and coordination required to implement decisions successfully. Although these scholars contend that managers should achieve efficiency and consensus, they have not presented research that explains how managers can accomplish this. If anything, prior research suggests that efforts to improve one element of decision-making performance will undermine improvement along other dimensions.

TABLE 1Summary of Prior Research FindingsProcess EfficiencyManagement Consensus

Participation andInvolvementAssertive leadership, consultationwith a few trusted associates enhances efficiency.Broader participation and lessdirective leadership enhancesconsensus.

Level of conflictLevel of conflict either slowspace, or has no effect at all ondecision-making efficiency.Cognitive conflict has positiveeffect, whereas affectiveconflict has a negative effect.

Political behaviorPolitics take time and effort and,therefore, decrease decisionmakingefficiency.Support-generating politicalbehavior builds consensusduring the decision-makingprocess.

AlternativeGenerationBreadth-not-depth strategyenhances efficiency.Breadth-then-depth strategyenhances consensus.

Formal analysisReal-time information fostersefficiency, whereas formal analysisand planning diminish it.Formal analysis, systems, andprocedures can help to buildmanagement consensus.

GROUP & ORGANIZATION MANAGEMENTDATA ANALYSISWith the survey data, I utilized principal components analysis (PCA) to generate decision-level scores for efficiency and commitment. PCA generated more reliable data composites than the traditional technique of averaging the responses to each question. In the survey, managers allocated points among six categories of concerns to indicate the relative importance of different concerns that influenced the decision.

For each decision, I computed the standard deviation of the points assigned to each category and added the standard deviations across all categories. This calculation measured the lack of shared understanding among decision makers. To measure common understanding, I simply subtracted this distance score from a constant. Finally, I constructed the consensus measure by standardizing the decision-level scores for commitment and understanding and multiplying them together (Wooldridge & Floyd, 1990). For the interview data, I developed a coding scheme that enabled me to analyze the transcripts and to identify and classify process characteristics.Coding proceeded in two phases. The first phase consisted of codes assigned to sections of transcript. The codes identified key events, phases, and group interactions during the decision process. For instance, the ALT code identified the generation of an alternative, and the CONT code referred to the description of a contingency plan. In the second phase, I assigned codes to each decision process as a whole. These codes identified the strategies and techniques employed in each process. To assign these codes, I reviewed the previously coded transcripts as well as company documents. For example, the DEV code indicated the presence of a devils advocate during the process.

To assign this code, three or more transcripts had to provide evidence of this technique. For the second phase, I created a checklist with a complete set of decision-level codes and marked the checklist to indicate whether managers employed particular strategies or techniques during that process. A second reader coded 3 of the 10 decisions studied. I took several steps to facilitate the coding process for this individual. I furnished the second reader with detailed written definitions of each code, discussed each definition with him, and then revised the coding scheme to clarify points of confusion. I also provided the reader with written descriptions of the industry and the firm, profiles of the key individuals involved, and definitions of acronyms and terms mentioned during the interviews. After coding first three decisions.

STRATEGIC DECISION-MAKING PROCESSESFor the first phase of the coding scheme, an agreement consisted of the same code being applied to a particular passage of transcript. For the second phase, I recorded an agreement if the two readers placed a check mark next to the same category on the checklist. Inter reader reliability for the first three decisions equaled 71%. Given this evidence of the reliability of the coding scheme, I analyzed the remainder of the decisions without the assistance of the second reader.Finally, I searched for relationships between process characteristics (measured by the coding scheme) and the outcome variables (measured with survey data). To do so, I dichotomized the scores for efficiency and consensus into low and high categories based on the median value of each variable (Bourgeois, 1980). This placed each decision into one of four categories (high/high, high/low, low/high, and low/low). In my analysis, I recorded the number of decisions in each category that possessed particular process characteristics.

OVERVIEW OF THE FINDINGSIn this sample, the groups did not always achieve efficiency at the expense of consensus, or vice versa. In three cases, they achieved high levels of efficiency and consensus. Others achieved poor results along both dimensions, or encountered mixed results. Figure 1 lists the decisions that fell into each category after I dichotomized the scores for the dependent variables. It also provides the mean values of efficiency and consensus for the decisions in each quadrant. Note that business unit was not confounded with decision categorization.Each business unit has one decision in the high/high category and one decision in the low/low category. The remainder of this article presents a series of propositions regarding how some groups achieved efficiency and consensus simultaneously. First, the article describes three propositions associated with the cognitive dimension of the decision process. These propositions concern how groups generated and evaluated alternatives and how they selected a course of action. Then, I turn to the political aspect of the group process.

COGNITIVE DIMENSIONThe results suggest that groups attained greater efficiency and consensus if they made a series of small but critical choices during the process, rather than focusing entirely on the final selection of a course of action. These choices concerned the decision criteria, the elimination of options over time, and the specific events on which the final choice was contingent.

DECISION CRITERIAThe more effective groups made problems more tractable as a means of generating progress. They made a series of critical choices at various points during the process. For example, they chose well-defined criteria before analyzing and debating a set of alternatives.

GROUP & ORGANIZATION MANAGEMENTAlthough these process facilitators maintained a stable set of criteria, low efficiency/consensus groups either never tried to define criteria explicitly or the criteria became ambiguous as the groups revisited options repeatedly. In fact, all groups considered many factors. However, groups fared poorly when the criteria were ambiguous or changed frequently during the process.

ALTERNATIVE EVALUATION: A WINNOWING PROCESSBy contrast, I found that managers did not eliminate options systematically in the low efficiency/low consensus decisions, but instead, revisited the entire list of alternatives repeatedly. For example, on the LEV decision, managers discussed five alternatives for a long period of time. Eventually, they developed a comparative analysis and settled on what one manager called mediocre compromise. Another executive described his frustration: We went through this whole harangue and analysis of all the options . . . and I think at the end of the day, it was sort of a decision. Maybe its a compromise. We kind of did a little of everything.In other words, if we think of these problems as large decision trees, then it appears that groups employed two contrasting analytical strategies for solving the trees. The more effective groups pruned branches off the tree systematically, while the others tried to analyze all of the trees endpoints simultaneously. The latter strategy may be cognitively overwhelming, whereas the former appears to be a more manageable approach to alternative evaluation. GROUP & ORGANIZATION MANAGEMENTThis winnowing procedure enhances efficiency and consensus because it breaks a large, ill-structured decision down into smaller, more manageable pieces (Maier &Maier, 1957). It also makes the evaluation process more transparent,There by enhancing decision understanding. This transparency may enhance peoples perception of the fairness of the process (Kim & Mauborgne, 1997). Finally, this approach builds momentum gradually rather than trying to move to closure in one giant step (Haspelagh & Jemison, 1989).

CONTINGENT CHOICESThe final type of intermediate choice occurs when managers make a tentative decision contingent on specific events unfolding in the near future.For example, in the CVP decision, a majority of the group wanted to serve as a subcontractor in a strategic alliance with a leading aerospace firm. However, several managers had concerns about this choice. They would only support this decision if Vehicle Systems could secure an adequate share of future contracts.

STRATEGIC DECISION-MAKING PROCESSES Downloaded from in some sense, this decision-making practice resembles a real-options approach to strategy development (Kester, 1984; Luehrman, 1998). A real option exists when firms have the ability to delay investments and decisions until they acquire additional information.Similarly, during group decision processes, the options approach leads to greater efficiency and consensus because it creates a way to bridge differences and break an impasse. It helps to alleviate peoples concerns about a decision prior to committing to full scale implementation.

THE POLITICAL DIMENSIONMany scholars have found that political forces play a critical role in organizational decision making (Bower, 1970; Eisenhardt & Bourgeois, 1988; Pettigrew, 1973; Pfeffer, 1992). They have shown that managers engage in political behavior to build support within the firm for their proposals.EQUAL ACCESS TO INFORMATIONIn this organization, managers typically gathered a great deal of information during a decision-making process. Individuals used the information to support their arguments, justify assumptions, and persuade others to endorse their proposals. In some cases, managers provided each attendee with all available information prior to key meetings. In other instances, managers provided some colleagues with more information than others. In many cases, this occurred because individuals tried to pre sell a few key executives on the merits of their proposals prior to meetings and to build a coalition that would support them during the group deliberations. To persuade these influential executives, individuals provided them with access to key data prior to group meetings. The failure to disseminate information to all participants prior to key meetings created perceptions of an unfair process. During a group discussion, people felt disadvantaged if they were examining data for the first time, while others had reviewed it earlier. Individuals also questioned whether their views and opinions were truly valued, if others had failed to share information with them. In addition, participants wondered whether they could influence the opinions of those with privileged access to data, or whether these individuals had established strong preconceived notions about the issue prior to the group discussion. The RES (restructure) decision illustrates the problem caused by unequal dissemination of information. One executive shared data about various alternatives with only a few other staff members prior to a major off-site meeting. When he did provide extensive data to the entire group, individuals were not impressed by the thoroughness of the intelligence-gathering effort but instead felt as though he was presenting them with a fait accomplish. This caused individuals to become frustrated and to question whether they could truly influence the direction of the group discussion. By contrast, in the ALL decision, the strategic planners provided a comprehensive set of information about potential alliance partners to all participants. In addition, individuals were asked to provide each other with any pertinent reports, white papers, and so on prior to group deliberations. Unequal access to information before group meetings creates the perception that others only want to create the appearance of a fair and comprehensive process. It also promotes the formation of factions within the group (haves vs. have-nots). Finally, it discourages minority dissent, because individuals feel the pressure to defer to the experts, that is, those who had more time to digest the data. For these reasons, it has a negative effect on efficiency and consensus.TOKEN ALTERNATIVESIn the case of a token alternative, some individuals presented options that they never intended to consider seriously. In general, token alternatives create the perception that others are not considering all opinions seriously, and that individuals may be engaging in self-serving behavior. They also may cause people to become disenchanted with the entire process. For these reasons, token alternatives have a negative effect on efficiency and consensus.ADVOCACY AND ANALYSISThese managers employed formal analysis regularly. In some cases, however, the primary evaluator or analyst also served as a strong advocate for a particular choice. The advocate employed formal analysis to justify a course of action, rather than to evaluate all options. These data suggest that efficiency and consensus suffer when advocates perform the evaluation. By contrast, some groups of decision makers separated advocacy from evaluation. They invited third parties to provide objective analysis. These third parties often consisted of the firms strategic planners, its financial analysts, or external consultants. When groups fail to separate advocacy from evaluation, they allow individuals to present only analysis that confirms their existing position, rather than a balanced assessment of all options. This inhibits the formation of common understanding. Moreover, it creates the perception that peoples opinions are not being valued and causes people to lose faith in the process. In sum, groups cannot achieve efficiency and consensus simultaneously if people perceive that they have not had equal access to information, and that they have been presented with inauthentic alternatives and analysis. Groups must pay attention to how people perceive the behavior of those who present information, alternatives, and analysis during the process.

CONCEPTUAL FRAMEWORKGroups encounter two difficult challenges when they try to make these kinds of decisions. To reach closure, groups must overcome these obstacles and ultimately agree on a choice that can be implemented effectively. One obstacle is substantive, whereas the other is symbolic in nature. The more effective groups made the choice manageable by gradually structuring the unstructured task. In particular, these groups made a series of intermediate choices along a path toward sustainable closure. They first determined how they would make their decision rather than focusing almost entirely on what course of action to take. They eliminated options as the process unfolded and, ultimately, made tentative choices contingent on the occurrence of specific events. In sum, they treated closure as a process rather than an event. The more effective groups also preserved the legitimacy of the decision making process. As decision processes unfolded, these groups encouraged the gathering of extensive information, the generation of multiple alternatives, and the development of careful analysis. However, they discouraged the tendency to employ these practices for purely symbolic reasons. In the organizational sociology literature, procedural legitimacy refers to the perception that organizational techniques and processes are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions (Suchman, 1995, p. 574). Feldman and March (1981) described the role of legitimacy in the decision process. They argued that rational decision-making methods have a symbolic as well as a substantive role in the decision-making process. In particular, these scholars noted that using information, asking for information, and justifying decisions in terms of information have all come to be significant ways in which we symbolize that the process is legitimate (Feldman & March, 1981, p. 178). However, others have suggested that efforts to enhance legitimacy may be problematic (Ashforth & Gibbs, 1990). In some cases, constituents may perceive attempts to legitimate processes as manipulative and illegitimate (Ashforth & Gibbs, 1990, p. 177). Managers at this firm often gathered much data, considered multiple alternatives, and conducted formal analysis. These actions should symbolize intelligent and rational decision making and, therefore, bolster procedural legitimacy. However, I found that individuals do not perceive all data gathering, alternative generation, and formal analysis in the same manner. Interpersonal tensions arise if individuals perceive that they do not have a genuine opportunity to influence the final decision. Unequal access to information, token alternatives, and advocate driven analysis actually delegitimize a decision process and decrease efficiency and consensus.

IMPLICATIONSThe present studys findings imply that the more effective groups treated closure as a process that began to unfold even during the early stages of a decision. When groups established evaluation criteria, they had begun to plant the seeds for a durable closure and a strong consensus. They formed an important foundation of agreement, and yet they continued to engage in dialogue and debate about many alternatives and assumptions. These groups did not treat closure as an event that occurred after a period of wide-ranging, creative, and open-ended brainstorming and debate. They made progress toward closure by periodically making choices about elements of the problem, even as they continued to debate their differences.These findings provide new insights into how decision makers employ simplification processes to solve complex problems. March and Simon (1958) argued that individuals and groups engaged in satisfying behavior, because peoples cognitive limitations precluded the use of rational- comprehensive analysis for many decisions. Weick (1984) asserted that individuals and groups reframed complex problems as mere problems to address the challenges of bounded rationality. The effective groups in this firm employed a high level of comprehensive or formal analysis and framed problems as large and urgent issues rather than as minor concerns. However, they simplified complex decisions by seeking convergence and closure in small steps, through a series of intermediate choices made at key points during the decision-making process. This simplification strategy enabled them to tackle complex, strategic decisions without sacrificing the comprehensiveness of their analysis and without minimizing the importance of the issue.The present study also makes an important contribution by further developing the concept of procedural legitimacy as it pertains to organizational decision-making processes. Feldman and March (1981) argued that firms employ information for its symbolic value, as well as for its effect on decision quality. In particular, gathering extensive amounts of information symbolizes that managers are engaging in a comprehensive decision-making process. Feldman and March (1981) suggested that social norms emphasize the merits of rational or comprehensive decision making. Thus, gathering extensive information legitimizes a decision process. This research suggests that other actions also may symbolize rational or comprehensive choice and thereby bolster procedural legitimacy. In particular, the utilization of formal analytical techniques and the generation of multiple options signify that managers are employing a thorough and logical decision process.Feldman and March (1981) emphasized the positive benefits of symbolic action in the decision process. The present study offers a different perspective by suggesting that symbolic activity may decrease procedural legitimacy. Others may perceive these options as token alternatives and conclude that individuals are trying to manipulate the process. If so, these attempts to enhance procedural legitimacy will actually delegitimize the process (Ashforth & Gibbs, 1990).In sum, this research suggests that group members make critical attributions during decision-making processes. Individuals attribute motives to others actions (Jones & Pittman, 1982). They may perceive information gathering, alternative generation, and formal analysis as authentic efforts intended to enhance the quality of the decision. On the other hand, they may believe that others are trying to manipulate, rig, or preordain the process.

FUTURE DIRECTIONSFuture research can build on the findings presented here by addressing certain limitations of the present study. Future studies may also extend the framework developed in this research project and explore some new questions that have emerged based on this study.ADDRESSING LIMITATIONSFirst and foremost, the data presented here suggests a series of propositions, but these hypotheses need to be tested systematically in future research. Scholars may choose to test these hypotheses through additional field research or through experimental studies. However, they need to be mindful of the differences between the laboratory setting and real organizations.Second, although I took steps to avoid recollection biases, future studies might avoid this problem altogether by examining decisions in real time. This represents a major challenge for researchers, because these processes unfold over long periods of time. In addition, the processes do not occur within the confines of a series of senior team meetings. They comprise oneon- one and subgroup discussions involving people from different levels of the organization.Finally, this research took place within a large organization operating in a rapidly consolidating, yet somewhat stable industry. Moreover, the company had a fairly analytical culture. These factors may limit the generalize ability of the findings. Future studies could test whether these findings hold in entrepreneurial organizations operating in high-velocity environments. For instance, one might expect that entrepreneurial firms must act so quickly that they cannot afford to develop a series of agreements over time. Therefore, entrepreneurial firms may employ other strategies for simplifying and structuring complex decisions.EXTENSIONS OF THIS RESEARCHFirst, this research focused on how managers conducted decision processes after a problem came to peoples attention but did not explore how issues became part of the firms strategic agenda in the first place. Future studies should pay more attention to how managers initially recognize and diagnose problems. Second, I did not focus much attention on the leader of the decision-making process. Retrospective reporting limited the extent to which I could uncover details about how the leader managed discussions. However, some limited evidence suggested that the leader could occupy a very important role in shaping the context in which decision processes take place.Finally, a great deal of prior research has examined how managers can avoid faulty reasoning and enhance the quality of strategic choice (Bourgeois & Eisenhardt, 1988; Janis, 1972; Russo & Schoemaker, 2002). Future research must examine other decision outcomes and identify the trade-offs that managers face among different objectives. Many scholars contend that managers must make painful trade-offs among competing objectives, such as decision quality, commitment, and efficiency (George, 1980; Janis, 1989). A few argue that effective managers must have the capability to overcome these trade-offs. They call for studies of how, if at all, process outcomes such as decision quality, speed, and implementation are simultaneously achievable (Eisenhardt & Zbaracki, 1992, p. 34). The present study begins to offer insight as to how managers avoid painful trade-offs and accomplish these goals simultaneously.

CONCLUSIONDecision making is a process that is undertaken at various levels or conditions of uncertainty by individuals and groups. Many different theories of how the decision-making process occurs have been proposed by scholars and some of these are discussed below. Decision making is a concept central to organization theory which has been addressed by researchers in a wide variety of business and sporting situations. Decision making could enhance organizational efficiency and effectiveness by doing general strategic information system which is four step to do. Internal factors that enable the organization to implement information system, barriers from the organization Itself, Barriers from the users perspective, barriers from the systems perspective. Then doing strategic decision making process, make group and organization management and do political management. These step is decision making could enhance its role organization efficient and effectively. This research focused on how managers conducted decision processes after a problem came to peoples attention but did not explore how issues became part of the firms strategic agenda in the first place. Future studies should pay more attention to how managers initially recognize and diagnose problems. A great deal of prior research has examined how managers can avoid faulty reasoning and enhance the quality of strategic choice (Bourgeois & Eisenhardt, 1988; Janis, 1972; Russo & Schoemaker, 2002). Future research must examine other decision outcomes and identify the trade-offs that managers face among different objectives. Many scholars contend that managers must make painful trade-offs among competing objectives, such as decision quality, commitment, and efficiency (George, 1980; Janis, 1989). The present study begins to offer insight as to how managers avoid painful trade-offs and accomplish these goals simultaneously.

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