Factors Influencing Organizational Decision-Making
MGMT20144 – Management and Business Context
Different contextual factors, including organizational governance, business risks, organizational functions, and environmental forces, play a significant role in influencing organizational decision-making. One of the most significant functions of organizations is to take appropriate decisions in line with the corporate goals and objectives to evolve competitive advantage in business. Sometimes, it becomes difficult for the organizational managers to overcome issues surrounding the management of contextual factors to retain a high level of performance in the aggressive marketplace. This assessment is purposed to discuss the role of contextual factors in influencing organizational decision-making through the analysis of five peer-reviewed journal articles, published between 2014 and 2018.
a) Organizational structures or governance
Pratt, M., Elstak, M., & Bhatt, M. (2015). Organizational identification during a merger: The role of self-enhancement and uncertainty reduction motives during a major organizational change. Journal of Management Studies, 52(1), 32-62. DOI: 10.1111/joms.12105
The research discusses how organizational structure, a key contextual factor for influencing organizational decision-making, is impacted during the merger of a business unit with its parent company. The authors have tried to explore the role of uncertainty lessening purposes and the self-enhancement in determining evaluation during a major change within an organization. Based on the survey analysis, the authors identified that the self-assessment purposes, which were measured through the supposed external status coupled with the perceived identity of the organization, continued persuading the organizational identification during the merger. Nevertheless, the impact of self-enhancement motives was reduced during the consideration of uncertainty lessening purposes. In this research, the authors also demonstrated that during a major change in an organization, multiple identification purposes commenced working together. Besides organizational structures, organizational identity is also largely persuaded by the merger of two large or small-scale businesses. Organizational managers need to focus on enhancing their knowledge domain of how the merger of businesses influences organizational identity as well as structure. Based on the findings of this research, which evaluates the role of multiple motives identification during a major organizational merger, managers of organization would be able to maintain organizational identification during and after the merger of two businesses.
b) Environmental forces
Elbanna, S., Di Benedetto, C., & Gherib, J. (2015). Do environment and intuition matter in the relationship between decision politics and success? Journal of Management and Organization, 21(1), 60-81. DOI: 10.1017/jmo.2014.65
In this research article, the authors discuss the impact of political behaviour on the decision-making in organizations. Political behaviour is a major contextual factor that creates a significant impact on the results of managerial decisions within an organizational context. It was found that the organizational politics would disfigure the information needed during the effective decision-making process. Due to organizational politics, managers often need to conduct decision-making based on imperfect information that leads to the generation of disappointing results. The political decision process is discordant and time-consuming, which certainly creates intricacies for organizational managers to carry out their responsibilities effectively devise business strategies. the findings of the research support the research hypothesis that says political behaviour at a higher level reduces the effectiveness of organizational decision-making. If the product uncertainty is high, then the relation between political behaviour and less success in decision-making becomes even stronger. Another significant finding was that the intuition mediated the relationship between decision-making success and political behaviour within an organizational context. Based on the findings of the research, the managers of organizations would be able to develop their perception towards reducing political behaviour in the workplace to achieve success in the decision-making process.
c) Risks confronting the firm
Liu, Gao, Lu, & Lioliou. (2016). Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy. Journal of World Business, 51(3), 356-368. DOI: 10.1016/j.jwb.2015.05.002
A few research studies have been conducted on the exploration of how multinational enterprises successfully manage diverse risk surrounding business environment in host countries. In order to manage growth in host countries, multinational companies have to devise effective strategies to overcome challenges related to environmental risks. Based on the resource dependency theory, the authors argue that the localization strategies play a role of a mediator between the international subsidiary performance and environmental challenges. The research findings, which are based on the sample of Chinese multinational enterprises, show that industry challenges largely reduce the market localization and input localization of subsidiaries of Chinese multinational enterprises, leading to create an adverse impact on the performance of subsidiary. Another significant finding of the research implies that the political challenges do not create a significant impact on market localization and input localization. However, the political barriers have a positive impact on the international subsidiary performance of Chinese multinational enterprises. With the help of the findings of this research, the managers of organizations would be able to evolve a better understanding of the mechanisms through which risks surrounding business environment create an adverse impact on subsidiary’s performance. In order to respond to the industrial risks or challenges, organizational managers need to commit to both market and input localization.
d) Organization and business practices
Presbitero, A., Roxas, B., & Chadee, D. (2015). Looking beyond HRM practices in enhancing employee retention in BPOs: Focus on employee–organisation value fit. The International Journal of Human Resource Management, 27(6), 1-18. DOI: 10.1080/09585192.2015.1035306
The particular research study develops an argument about how the improvement of compatibility between organizational and employee values enhance the effectiveness of Human Resource Management related functions in managing employee retention. Based on the structural equation modelling analysis, the authors find that the compatibility between employee values and organizational values certainly plays a significant role in mediating the effects of HRM functions in retaining employees. Nevertheless, in the context of US owned BPOs, both employee and organizational values negatively influence employee retention process. Since employees rarely leave the organization in case of sharing similar values as their organizations, Human Resource Management functions can be used in a strategic way in order to enhance the employee and organization value required to reduce turnover. Providing incentives and other employee benefits to some selected employees often create an adverse impact on other employees, leading to reduced employee morale.
It is significant to equip groups of employees for training and development session, rather than selecting individuals with high knowledge, skills and competencies. Organizational managers should be aware of the fact that compatibility between an employee and organizational values plays a significant role in enhancing employee retention. Focusing on the enhancement of fit between organizational and employee values can facilitate managers to engage skilled and experienced employees in the business.
e) The functions of diverse firms
Remane, G., Hanelt, A., Nickerson, R., & Kolbe, L. (2017). Discovering digital business models in traditional industries. Journal of Business Strategy, 38(2), 41-51. DOI: 10.1108/JBS-10-2016-0127
This research paper discusses a structured approach for managers to adopt the digital business model in the business. There are three steps to develop and adopt the particular model in business, such as evaluation of existing services and products, deconstructing the business models and exploration of new configurations. In order to reflect whether the digital business model is customer-centric, the manager needs to define the target market based on the customers’ perspective. It is significant to identify a variety of options to design business models. Based on taxonomy-building methodology, the business model components must be deconstructed. Discovering new configuration is another significant step towards adopting the digital business model. It is important for the manager to focus on value proposition since it reveals the specific offerings that compete for the same consumer. In this research, the authors identify the role of taxonomy in differentiating the digital business model to the physical model. In order to evaluate the effectiveness of the new digital business model, organizational managers need to focus o develop a better understanding of traditional and innovative business models that largely influence the target market. Based on the findings of the research, organization managers can evolve their knowledge domain of appropriate approaches required to be followed to adopt the digital business model in business.
CQUniversity should focus on their organizational and business practices in order to enhance the productivity of the organization. As discussed in this assessment, it is significant for the organizational managers to check the compatibility between organizational and employee values for enhancing employee retention rate effectively. Organizational managers of CQUniversity should devise effective strategies to enhance fit between organizational and employee values, which can facilitate them in engaging skilled and experienced employees in the business for a long period. Human Resource Management practices should be conducted strategically to overcome conflict existing between organization and employee values.