Week 4 - Strategic Decision Making
Eisenhardt &
Zbaracki
Author Eisenhardt & Zbaracki (1992)
Title Strategic Decision making
- Review of literature on strategic decision making; contributes with a synthesis of theory on
strategic decision. Suggest agenda for future research.
- Current paradigms in strategic decision making rest on tired debates about single goals, perfect
rationality and unrealistic assumptions. Necessity to have new vision.
Current paradigms in strategic decision making:
1. Rationality and bounded rationality (synoptic comprehensive model of decisions)
Based on the assumption that human behaviour has some purpose and this translates into a common
model of rational action.
Strategy as a process where actors enter a decision situation with a known objective, gather
appropriate information, develop a set of alternative actions, and then select the appropriate
alternative
- Cognitive Limitations of the rationality paradigm
• Goals can be inconsistent across people and time rather than rationally identified and
dealt with.
• Search behaviour is often local
• Standard operating procedures often guide much of organisational behaviour.
Yesterday’s actions best predict tomorrow’s behaviour.
- Rearrangement of the rational paradigm
Decisions have a unique pattern of solutions. The identified phases (identification,
development and selection) are not sequential but rather they follow various routines. Steps
in a rational strategic decision making processes actually shift, branch, cycle and recycle.
- Rationality vs bounded rationality
Rationality and bounded rationality as a dichotomy or continuum. Decision makers can
move along the rationality vs bounded rationality continuum. Using more information and
viewpoints increases rationality. Having extensive dialogue and devil’s advocate produces
Eisenhardt &
Zbaracki
Author Eisenhardt & Zbaracki (1992)
Title Strategic Decision making
- Review of literature on strategic decision making; contributes with a synthesis of theory on
strategic decision. Suggest agenda for future research.
- Current paradigms in strategic decision making rest on tired debates about single goals, perfect
rationality and unrealistic assumptions. Necessity to have new vision.
Current paradigms in strategic decision making:
1. Rationality and bounded rationality (synoptic comprehensive model of decisions)
Based on the assumption that human behaviour has some purpose and this translates into a common
model of rational action.
Strategy as a process where actors enter a decision situation with a known objective, gather
appropriate information, develop a set of alternative actions, and then select the appropriate
alternative
- Cognitive Limitations of the rationality paradigm
• Goals can be inconsistent across people and time rather than rationally identified and
dealt with.
• Search behaviour is often local
• Standard operating procedures often guide much of organisational behaviour.
Yesterday’s actions best predict tomorrow’s behaviour.
- Rearrangement of the rational paradigm
Decisions have a unique pattern of solutions. The identified phases (identification,
development and selection) are not sequential but rather they follow various routines. Steps
in a rational strategic decision making processes actually shift, branch, cycle and recycle.
- Rationality vs bounded rationality
Rationality and bounded rationality as a dichotomy or continuum. Decision makers can
move along the rationality vs bounded rationality continuum. Using more information and
viewpoints increases rationality. Having extensive dialogue and devil’s advocate produces
