Organizational Theory
Programmed decisions—repetitive and routine
Rules, routines, and standard operating
procedures can be developed in advance.
Nonprogrammed decisions—novel and
unstructured
Solutions must be worked out as problems
arise.
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Organizational Theory
Models of organizational decision making
Rational model—decision making is a
straightforward, three-stage process.
This model ignores the uncertainty that
typically plagues decision making.
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Organizational Theory
Models of organizational decision making
Carnegie Model—a model that addresses
the realities of decision making:
Satisficing
Bounded rationality
Organizational coalitions
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Organizational Theory
Models of organizational decision making
Incrementalist Model—managers select
alternative courses of action that are only
slightly, or incrementally, different from
those used in the past.
Often referred to as the “science of
muddling through.”
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Organizational Theory
Models of organizational decision making
Unstructured Model—describes how decision
making takes place in environments of
high uncertainty.
Consists of three stages similar to the
rational model, but understands that
problems may require rethinking alternatives
and going back to the drawing board.
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Organizational Theory
Models of organizational decision making
Garbage Can Model—a view of decision
making that takes the unstructured process
to the extreme
The decision-making process is turned around,
with organizations as likely to start making
decisions from the solution side as from the
problem side.
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Organizational Theory
Learning organization—an organization that
purposefully designs and constructs its
structure, culture, and strategy to enhance
and maximize the potential for
organizational learning to take place
Managers need to encourage learning at
four levels: individual, group,
organizational, and interorganizational
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Organizational Theory
Knowledge management: a type of ITenabled organizational relationship that
has important implications for both
organizational learning and decision
making
Involves sharing and integrating of expertise
within and between functions and divisions
through real-time, interconnected IT
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Organizational Theory
Knowledge management:
Codification approach - knowledge is carefully
collected, analyzed, and stored in databases
where it can be retrieved easily by users who
input organization-specific commands and
keywords
Personalization approach –pursued when an
organization is facing uncertainty/new problems
More reliance on know-how, insight and judgment
Identifies resource persons within organization for
consultation
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Organizational Theory
Cognitive Biases
Cognitive dissonance: the state of discomfort or
anxiety that a person feels when there is an
inconsistency between his or her beliefs and
actions
Decision makers make decisions consistent with their
attitudes, images or decisions.
Illusion of control: a cognitive bias that causes
managers to overestimate extent to which
outcomes of an action are under their personal
control
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Organizational Theory
Cognitive Biases
Projection: cognitive bias that allows managers to justify
and reinforce their own preferences and values by
attributing them to others
Ego-defensiveness: cognitive bias that leads managers to
interpret events in such a way that their actions appear
in most favorable light
Escalation of commitment: cognitive bias that leads
managers to remain committed to losing course of action
and refuse to admit that they have made a mistake
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