March and the pursuit of organizational intelligence: the interplay between procedural rationality and sensible foolishness

2019 ◽  
Vol 29 (1) ◽  
pp. 225-239 ◽  
Author(s):  
William Ocasio ◽  
Luke Rhee ◽  
Dylan Boynton
Keyword(s):  
Decision Making ◽  
Bounded Rationality ◽  
Organization Theory ◽  
Common Theme ◽  
Exploration And Exploitation ◽  
Procedural Rationality ◽  
Organizational Intelligence ◽  
Garbage Can Model ◽  
Causal Ambiguity

Abstract March’s long and varied career in organization theory encompasses a number of seemingly disparate themes from rationality, to ambiguity and the garbage can model, to exploration and exploitation in organizations. We examine March’s diverse research trajectory and conclude that his different insights can be brought together under one common theme for his career: that both procedural rationality and sensible foolishness are necessary for the pursuit of organizational intelligence. Traditional models of rationality, even bounded rationality, are insufficient because goals are unstable and inconsistent, and causal ambiguity leads to myopic learning or worse. To explain the interplay between procedural rationality and sensible foolishness in organizations, we explore their role in the inter-related processes of programing, monitoring, sensemaking, search, and decision making.

Michael D. Cohen, James G. March, and Johan P. Olsen, “A Garbage Can Model of Organizational Choice”

2016 ◽  
Author(s):  
Werner Jann
Keyword(s):  
Decision Making ◽  
Institutional Theory ◽  
Organization Theory ◽  
Policy Making ◽  
Formal Model ◽  
Administrative Reform ◽  
Garbage Can Model ◽  
Organizational Choice

This chapter examines “A Garbage Can Model of Organizational Choice,” a paper authored by Michael D. Cohen, James G. March, and Johan P. Olsen. It first discusses the assumptions of the garbage can model about decision-making in organizations, paying particular attention its three main elements: problematic preferences, unclear technologies, and fluid participation. It then considers four “relatively independent streams” and their interrelations: problems, solutions, participants, and choice opportunities. The chapter also assesses the paper’s main impact by focusing on organization theory and the original formal model before turning to the more specific areas of policy-making, administrative reform, and institutional theory.

Reasonable Bounds on Rationality

2020 ◽  
Author(s):  
Igor Grossmann ◽  
Richard Eibach
Keyword(s):  
Decision Making ◽  
Bounded Rationality ◽  
Cognitive Resources ◽  
Previous Theory ◽  
Making Choices ◽  
Points Of View ◽  
Sound Judgment

Previous theory and research on bounded rationality has emphasized how limited cognitive resources constrain people from making utility maximizing choices. This paper expands the concept of bounded rationality to consider how people’s rationality may be constrained by their internalization of a qualitatively distinct standard for sound judgment, which is commonly labeled reasonableness. In contrast to rationality, the standard of reasonableness provides guidance for making choices in situations that involve balancing incommensurable values and interests or reconciling conflicting points-of-view. We review recent evidence showing that laypeople readily recognize the distinctions between rationality and reasonableness and thus are able to utilize these as distinct standards to inform their everyday decision-making. The fact that people appear to have internalized rationality and reasonableness as distinct standards of sound judgment supports the notion that people’s pursuit of rationality may be bounded by their determination to also be reasonable.

Beyond Bounded Rationality: CEO Reflective Capacity and Firm Sustainability Performance

2021 ◽  
pp. 1-38
Author(s):  
Yingya Jia ◽  
Anne S. Tsui ◽  
Xiaoyu Yu
Keyword(s):  
Decision Making ◽  
Bounded Rationality ◽  
Three Dimensional ◽  
Strategic Decision ◽  
Future Research ◽  
Sustainability Performance ◽  
Business Executives ◽  
Dimensional Measure ◽  
Reflective Capacity ◽  
Mediating Mechanisms

ABSTRACT Optimal or rational decision making is not possible due to informational constraints and limits in computation capability of humans (March & Simon, 1958; March, 1978). This bounded rationality serves as a filtering process in decision making among business executives (Hambrick & Mason, 1984). In this study, we propose the concept of CEO reflective capacity as a behavior-oriented cognitive capability that may overcome to some extent the pervasive limitation of bounded rationality in executive decision-making. Following Hinkin's (1998) method and two executive samples, we developed and validated a three-dimensional measure of CEO reflective capacity. Based on two-wave surveys of CEOs and their executive-subordinates in 213 Chinese small-medium sized firms, we tested and confirmed three hypotheses on how CEO reflective capacity is related to a firm's sustainability performance (including economic, societal, and environmental dimensions) through the mediating mechanisms of strategic decision comprehensiveness and CEO behavioral complexity. We discuss the contribution of this study to the literature on the upper echelons and information processing perspectives. We also identify the implications for future research on strategic leadership and managerial cognition in complex and dynamic contexts.

scholarly journals Ambidexterity as Practice: Individual Ambidexterity Through Paradoxical Practices

2020 ◽  
Vol 56 (2) ◽  
pp. 143-165 ◽  
Author(s):  
Angeliki Papachroni ◽  
Loizos Heracleous
Keyword(s):  
Organization Theory ◽  
Practice Theory ◽  
Greek Philosophy ◽  
Exploration And Exploitation ◽  
Individual Level ◽  
Competing Demands ◽  
The Individual ◽  
Previous Learning

Following the turn to practice in organization theory and the emerging interest in the microfoundations of ambidexterity, understanding the role of individuals in realizing ambidexterity approaches becomes crucial. Drawing insights from Greek philosophy on paradoxes, and practice theory on paradoxes and ambidexterity, we propose a view of individual ambidexterity grounded in paradoxical practices. Existing conceptualizations of ambidexterity are largely based on separation strategies. Contrary to this perspective, we argue that individual ambidexterity can be accomplished via paradoxical practices that renegotiate or transcend boundaries of exploration and exploitation. We identify three such paradoxical practices at the individual level that can advance understanding of ambidexterity: engaging in “hybrid tasks,” capitalizing cumulatively on previous learning, and adopting a mindset of seeking synergies between the competing demands of exploration and exploitation.

scholarly journals Organizations: power/history/imagination

2003 ◽  
Vol 1 (1) ◽  
pp. 01-11 ◽  
Author(s):  
Stewart Clegg
Keyword(s):  
Bounded Rationality ◽  
Organization Theory ◽  
Organization Studies ◽  
Ideal World ◽  
The Core ◽  
Organization Analysis ◽  
Points Of View ◽  
The Trinity

The paper takes the assumptions of bounded rationality as the premise for organization theorizing. It draws a distinction between a science of objects and a science of subjects, arguing the latter as the more appropriate frame for organization analysis. Organization studies, it suggests, are an example of the type of knowledge that Flyvbjerg, following Aristotle, terms 'phronesis'. At the core of phronetic organization studies, the paper argues, there stands a concern with power, history and imagination. The core of the paper discusses power and the politics of organizing, to point up some central differences in approach to the key term in the trinity that the paper invokes. The paper concludes that organization theory and analysis is best cultivated not in an ideal world of paradigm consensus or domination but in a world of discursive plurality, where obstinate differences in domain assumptions are explicit and explicitly tolerated. A good conversation assumes engagement with alternate points of view, argued against vigorously, but ultimately, where these positions pass the criteria of reason rather than prejudice, tolerated as legitimate points of view. In so doing, it elaborates and defends criteria of reason.

scholarly journals Global development of innovative financial services. Does family economic socialization influence investor behavior in real estate crowdfunding?

2021 ◽  
Vol 129 ◽  
pp. 02010
Author(s):  
Renata Legenzova ◽  
Gintarė Leckė
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Bounded Rationality ◽  
Financial Services ◽  
Family Members ◽  
Investor Behavior ◽  
Equation Modeling ◽  
Global Development ◽  
The Impact ◽  
Economic Socialization

Research background: Globalization, digitalization and growth of technological innovations trigger development of new financial services, such as real estate crowdfunding. Seeking better return opportunities individual investors often disregard neoclassical decision-making criteria, while behavioral factors, such as social influence, emotions, cognitive abilities are gaining importance. This paper addresses the role of family economics socialization as a complex process by which individuals acquire social skills, knowledge, behavior patterns needed to make investment decision by purposively or spontaneously interacting with their family members. Purpose of the article is to assess if and how family economic socialization impacts on investor behavior in real estate crowdfunding. Methods: Research data was collected through an online survey of Lithuanian real estate crowdfunding investors. Then structural equation modeling technique was employed to investigate the impact of family economic socialization on behavior of real estate crowdfunding investors. Findings & Value added: Findings revealed that majority of real estate crowdfunding investors make bounded rationality investment decisions. Family, as one of the main agents of the economic socialization, does not ensure rationality of the crowdfunding decision-making process. Purposive family economic socialization has no impact on the behavior of investors with bounded rationality, yet it has a significant impact on behavior of rational family members. Spontaneous family economic socialization proved to have a positive and significant impact on the behavior of investors with bounded rationality. Taking into consideration rapid global development of innovative financial services market, such results might be a troubling signal for the product developers and market regulators.

scholarly journals Systematic Exploration and Uncertainty Dominate Young Children’s Choices

2019 ◽  
Author(s):  
Nathaniel J. Blanco ◽  
Vladimir Sloutsky
Keyword(s):  
Decision Making ◽  
Young Children ◽  
Cognitive Control ◽  
Exploration And Exploitation ◽  
Top Down ◽  
Reward Seeking ◽  
Systematic Fashion ◽  
Systematic Exploration ◽  
Competing Demands ◽  
Exploration Exploitation

Organisms need to constantly balance the competing demands of gathering information and using previously acquired information to obtain rewarding outcomes (i.e., the “exploration- exploitation” dilemma). Exploration is critical to obtain information to discover how the world works, which should be particularly important for young children. While studies have shown that young children explore in response to surprising events, little is known about how they balance exploration and exploitation across multiple decisions or about how this process changes with development. In this study we compare decision-making patterns of children and adults and evaluate the relative influences of reward-seeking, random exploration, and systematic switching (which approximates uncertainty-directed exploration). In a second experiment we directly test the effect of uncertainty on children’s choices. Influential models of decision-making generally describe systematic exploration as a computationally refined capacity that relies on top-down cognitive control. We demonstrate that (1) systematic patterns dominate young children’s behavior (facilitating exploration), despite protracted development of cognitive control, and (2) that uncertainty plays a major, but complicated, role in determining children’s choices. We conclude that while young children’s immature top-down control should hinder adult-like systematic exploration, other mechanisms may pick up the slack, facilitating broad information gathering in a systematic fashion to build a foundation of knowledge for use later in life.

scholarly journals Exploratory Choice Reflects the Future Value of Information

2018 ◽  
Author(s):  
Alexander Rich ◽  
Todd Matthew Gureckis
Keyword(s):  
Decision Making ◽  
Relative Frequency ◽  
Value Of Information ◽  
Exploration And Exploitation ◽  
Expected Number ◽  
Uncertain Environments ◽  
Novel Approach ◽  
Conflicting Evidence ◽  
The Future ◽  
Future Value

The tension between exploration and exploitation is a primary challenge in decision making under uncertainty. Optimal models of choice prescribe that individuals resolve this tension by evaluating how information gained from their choices will improve future choices. However, research in behavioral economics and psychology has yielded conflicting evidence about whether people consider the future during exploratory choice, particularly in complex, uncertain environments. Adding to the empirical evidence on this issue, we examine exploratory decision making in a novel approach-avoid paradigm. In the first set of experiments we find that people parametrically increase their exploration when the expected number of future encounters with a prospect is larger. In the second we demonstrate that when the number of future encounters is unknown, as is often the case in everyday life, people are sensitive to the relative frequency of future encounters with a prospect. Our experiments show that people adaptively utilize information about the future when deciding to explore, a tendency that may shape decisions across several real-world domains.

A new EDAS method based on prospect theory for Pythagorean fuzzy set and its application in selecting investment projects for highway

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peng Li ◽  
Ju Liu ◽  
Cuiping Wei ◽  
Jian Liu
Keyword(s):  
Decision Making ◽  
Prospect Theory ◽  
Bounded Rationality ◽  
Large Scale ◽  
Score Function ◽  
Critical Factor ◽  
High Grade ◽  
Content Type ◽  
Investment Projects ◽  
Criteria Weights

PurposeChina is a critical factor for constructing an all-round well-off society. Infrastructure construction, especially high-grade highways, in the western area is an essential component of the strategy for large-scale development of west China. It is crucial to evaluate investment projects for high-grade highways and select the best one. Testing investment projects and selecting the best one can be recognized as a multicriteria decision-making (MCDM) problem. In this process, decision-makers (DMs) usually face with uncertain information because of complicated decision environment or their limited knowledge.Design/methodology/approachA new Evaluation based on the Distance from Average Solution (EDAS) for PFS based on the DEMATEL is proposed: The authors offer a new score function and prove some properties for the score function. They put forward a novel Decision-making Trial and Evaluation Laboratory (DEMATEL) method for PFS to analyze the relations of criteria and get criteria weights. Considering the bounded rationality of DM, the authors propose a new EDAS method for PFS based on prospect theory. They apply their proposed approach to a western city's actual case in selecting a suitable project for building a high-grade highway.FindingsBy comparison, the authors can observe that our method has some traits: (1) considering bounded rationality of DM; (2) fewer computation; (3) having the ability to obtain the relation of criteria and finding the critical factor in the decision system.Originality/valueIn this paper, the authors propose a new EDAS method for PFS based on the DEMATEL technique. They transform PFS into crisp numbers by their proposed new score function for PFN to make the decision process more convenient. Then, the authors use the DEMATEL method to obtain the relationship between criteria and criteria weights. Furthermore, they propose a new EDAS method for PFS based on DEMATEL to reduce the computational complexity. Finally, they apply our method to a real case and compare our method with two traditional methods.

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