The Nature of Strategic Decision Making – Exploiting the role of
managers’ incremental and radical learning
Matić Ivan, Ph.D., University of Split, Faculty of Economics, Croatia
Bulog Ivana, Ph.D., University of Split, Faculty of Economics, Croatia
ABSTRACT
The purpose of this paper is to examine the role of two basic types of learning in contemporary organizations –
incremental (knowledge exploitation) and radical learning (knowledge exploration) – in making organization’s
strategic decisions. In achieving this goal a conceptual model of influence of learning types on the nature of strategic
decision making and their outcomes was formed, on the basis of which the empirical research was conducted,
encompassing 54 top managers in large Croatian companies. The paper discusses the nature of organizational learning
and decision making at strategic management level. The results obtained are suggesting that there is a relationship
between managers' learning type and decision making approaches at strategic management level, as well as there is the
interdependence between these two processes with strategic decision making outcomes. Within these results there are
interesting insights, such as that the effect of radical learning on analytical decision making approach is significantly
weaker and narrower when compared to the effect of incremental learning on the same approach, and that analytical
decision making approach does not affect strategic decision making outcomes.
Keywords: managers’ learning types, strategic decision making approaches, strategic decision making outcomes
THEORETICAL BACKGROUND OF THE RESEARCH PROBLEM
A path one business organization will take, and where that path will lead, depends on a broad range of decisions
made by managers in the managerial structure of an organization. Of course, the importance of all managerial decisions
is not the same. Strategic decision making is a key organizational process, and strategic decisions are the most
important decisions made in an organization. Because of its importance for organizational success, the nature of
strategic decision making has been a topic of interest for many researchers. The influence factors and outcomes of
strategic decision processes have been the subject of numerous studies over the last three decades (Gool and Rasheed,
2005, p. 999). Although much empirical research has been done trying to describe and explain strategic decision
making, knowledge is still limited and mostly based on descriptive research and assumptions that have not yet been
tested, especially concerning the link between the nature of strategic decision making and organizational learning.
Considering that it is difficult to even conceive how decision making processes that include such activities as search,
design and choice could operate effectively without valid information (Argyris, 1976, p. 365) it is more then logical that
decision making and the learning are processes that happen continually, implying an increase of complexity. The
individual analysis of each process is not enough to explain all reality. The overall study implies the understanding of a
whole network of intertwined processes that is extremely difficult to be modeled (Janczak, 2005, p. 58).
Recent research has highlighted the notion that people can make judgments and choices by means of two systems
that are in most cases labeled as tacit (or intuitive) and deliberate (or analytical) (Hogarth, 2002, p. 2). Whereas strategic
decision making mostly involves both approaches this study examines the influence of learning types under which each
approach is liable to be more effective. I doing so, this paper focuses on two basic decision making approaches;
analytical and intuitive that explain the way decision maker collects and processes available information and performs
all the activities in strategic decision making process, as well as two basic types of learning in contemporary
organizations; incremental and radical, that here explain the nature of decision maker’s correcting the detected errors or
reaffirming past behaviors in its actions, bearing in mind changes in cognition and/or behavior. Following relevant
literature’s propositions that radical or double-loop learning provides more effective decision making (Argyris, 1976, p.
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
7
363), especially in higher levels of organization (Fiol and Lyles, 1985, p. 10), the research problem of this paper is to
investigate the effects of incremental and radical learning on two basic decision making approaches on strategic level in
organization, and consequential effectiveness of mentioned strategic decision making.
The nature of strategic decision making
Decision making is the one of the most important functions of managers in any kind of organization (Nooraie,
2012, p. 405). Without decisions, an organization cannot achieve any success. Various definitions of the decision
making process could be found in the literature, but they are all stating that it is a continuous process, very time
consuming for the decision maker, representing the basis of the business existence and performance, and targeting
mainly managers. Among different managers' decision, strategic decision making is the most important and plays vital
roles in any organization. It is central managerial activity in all types of business organizations; large and small, for
profit and not - profit, private and public (Elbanna and Child, 2007, p. 562). Which way the business organization will
take, and where that way will lead it, depends on strategic decisions. They are long term, highly unstructured, complex,
and inherently risky and have great impact on the future of the organization.
Strategic decisions determine the stream of all business activities required to achieve organizational objectives.
They differ from other types of decisions (administrative and operational) because they deal with the range of
organizational activities, cope with uncertainty, involve extensive risks and changes, etc. They have been described as
decisions that commit significant resources, set precedents, and drive a series of lesser decisions (Mintzberg et al., 1976,
p. 246); as ill-structured, non-routine, and complex in their nature (Schwenk, 1988).
They influence organizational direction, administration, and structure (Christensen, et al., 1982). They are dealing
with the problems that have extremely high stakes, and whose solutions have long–term implications for the
organization, targeting mainly business areas essential for organizational growth, prosperity, and survival. Its
importance primarily results from effects it has on organizational performance. Namely, successful strategic decision
making enables an organization to maintain competitive position, align internal operations with external environment
and survive threats and challenges, while conversely, because of their magnitude, a single, poorly made strategic
decision can lead to the demise of an organization and result in corporate embarrassment, large economic losses for
stakeholders or even bankruptcy (Mueller et al., 2007, p. 853). Therefore, it is not surprising that there is a growing
interest into the nature of strategic decision making among researcher all over the world.
Strategic decision making approaches
Understanding strategic decision making as a process structured from the activities of information gathering,
processing and assessment; as a process of knowledge and information transformation in managerial activities (March,
1991), in the literature which deals with the issues of how decision making truly happens in organizations, have
contributed to the identification of two basic approaches to decision making: analytical and intuitive. These approaches,
based on the principles of main behavioral decision theories, are explaining how decision making happens in
organization. The differences between them reflect different behavior of decision makers with regard to their way of
thinking, perception of the entire environment, understanding of different internal and external variables and their
interactions, interpretation of events, undertaken activities in the search for possible outcomes in order to achieve
defined goals, etc.
Analytical approach denotes decision making based on formal analysis, it is methodological by nature, proactive,
and time exhaustive, while the intuitive approach denotes decision making based on overall knowledge, experience,
available information, but without the support of formal analysis. Generally, when it is about strategic decision making,
researchers have given preference to analytical decision making over intuitive decision making. One of the basic
assumptions is that systematic and careful analysis yields choices which are superior to those coming from intuitive
processes, but this assumption, as Khatri and Ng (2000, p. 58) are stressing, has recently come under fire, because
advances in cognitive and artificial intelligence confirmed that there is nothing mystical or magical about intuitive
processes. Moreover, as Khatri and Ng (2000, pp. 58-59) are emphasizing, researchers confirmed that intuitive
processes evolve from long experience and learning and “consist of the mass of facts, patterns, concepts, techniques,
8
The Journal of International Management Studies, Volume 7, Number 2, October, 2012
abstractions, and generally what we call formal knowledge or beliefs, which are impressed on our minds" (Barnard,
cited in Simon, 1987). Empirical researches have confirmed that both approaches are represented in the field of strategic
decision making.
Manager’s learning types
The concept of learning in organizations, i.e. organizational learning, due to its proposed role of one of the main
sources of competitive advantage (e.g. Fiol and Lyles, 1985; Garratt, 1987; De Geus, 1988; Stata, 1989; Kiechel, 1990;
Senge, 1990; Epstein and Roy, 1997; Grieves, 2000; Marquandt, 2002) has been quantitatively and qualitatively
developing rapidly in the literature for the last two to three decades and has moved to the center of interest in
organizational theory (Miner and Mezias, 1996, p. 90). Nevertheless, the discipline itself is still failing to produce a
somewhat unified organizational learning definition, while a comprehensive organizational learning theory is still,
according to many authors like (Easterby-Smith, 1997, p.1085) from this point of view a distant and almost
unachievable goal. To this day the main contributions of the relevant literature can be associated with organizational
learning and learning organization overlaps and differentiation; with offers of wide spectrum of organizational learning
definitions and finally with various organizational learning types, levels and processes identification and definition.
Some of the most important development in the mentioned literature, like Crossan et al.’s 4I framework (1999), are
trying, by encompassing mentioned contributions like organizational learning types, levels and processes, to move
mentioned literature towards a more unified and comprehensive organizational learning theory, but the road is still very
long and full of barriers and drawbacks due to highly diversified and fragmented organizational learning literature.
When it comes to organizational learning types, the relevant literature offers a multitude of classifications,
depending of author(s)’s scientific background and focus of scientific research. Despite of this, some of the most
important development in the area of organizational learning types, although differently named, are very similar or are
almost identical in their nature. Namely, within two basic types of organizational learning, which generally in the
literature are most frequently called incremental or lower level learning and radical or higher level learning, the
following and many other distinctions or organizational learning types can be found: single-loop and double-loop
learning (Argyris i Schön, 1974, 1978, 1996; Argyris 1976, 1977, 1990, 1991, 1992, 1994, 1996, 1998; Schön, 1975,
1983a, 1987); lower and higher level learning (Fiol i Lyles, 1985), first-order and second-order learning (e.g.. Lant i
Mezias, 1992; Virany, Tushman i Romanelli, 1992; Arthur i Aiman-Smith, 2001; Sörensen, 2002), non-strategic and
strategic learning (Mason, 1993), adaptive and generative learning (Senge, 2000); knowledge exploration and
exploitation (March, 1991), incremental and radical learning (Miner i Mezias, 1992; Sörensen, 2002), passive and
active learning orientation (Sadler-Smith, Spicer i Chaston, 2001), etc. (Visser, 2004, p. 4). A certain consensus in the
relevant literature has been reached about listed organizational learning types as comparative learning processes and
learning outcomes (Miner i Mezias, 1996; Argyris, 1996, 2003; Arthur i Aiman-Smith, 2001) (Visser, 2004, p. 2).
Following the general accepted but very widely settled posture about organizational learning as a process which
involves transformation of information into knowledge (Argyris i Schön, 1978, Fiol i Lyles, 1985, Huber, 1991, Lee et al.,
1992, Day, 1994, Dimovski, 1994, Crossan et al., 1995), the basic distinction in the views of most influential authors of the
discipline is whether mentioned information processing (acquisition, interpretation and storage of information into
organizational memory) encompasses behavioural and cognitive changes (Habadaras, 2009, pp 4). When managers, in
their actions during the process of decision making, detect and correct errors without questioning or changing their
governing values, i.e. when they experience matching between expected and real outcomes or experience and correct
mismatching between expected and real outcomes, the learning is single-loop or incremental. On the other hand, when
mismatching between expected and real outcomes is corrected with questioning and changing the governing values and
then action, the learning is double-loop or radical. Incremental, single-loop or lower-level learning encompasses repetition
of previous behaviours and introduction of new routines into unchanged situations or contexts, while radical, double-loop
or higher-level learning demands understanding of cause-effect relationships and development of complex rules and
associations related to new actions or new meaning of old and new routines in pertaining contexts (adjusted from: Shani
and Docherty, 2003, p. 22 and Fiol and Lyles, 1985 in: Nicolini and Meznar, 1995, p. 737).
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
9
From these definitions’ it is obvious that cognition and behaviour are two different phenomenon and one does not
necessary need to be reflection of other one, i.e. on the one side changes in behaviour can happen without the
development of cognitive associations, while on the other side the knowledge can be acquired without accompanying
behavioural change (Fiol and Lyles, 1985, p. 806). Although both types of learning are useful in certain circumstances,
and can be harmful in others (Miner and Mezias, 1996, p. 89) the exploration of knowledge (radical learning) is much
more important on the long-run because it can lead to new strategies and knowledge, while the exploitation of
knowledge on the other hand is more important on short period of time, due to its profitability effects, while on the
long-run it cannot ensure organization with prosperity (Easterby-Smith and Araujo, p. 4). From this it follows that
strategic decision making, which implies complex and ill-structured problems, oriented predominantly on the longer
period of time, where the probability of ambiguity and errors is very high, the need for learning, especially radical one
is also very high, due to the everyday’s fast-paced changes in organization and its business environment.
METHODOLOGICAL BACKGROUND:
RESEARCH OBJECTIVES AND RESEARCH DESIGN
Attempting to contribute to the better understanding of the nature of strategic decision making process by drawing
upon an empirical investigation of the role of two basic types of learning in contemporary organizations – incremental
(knowledge exploitation) and radical learning (knowledge exploration), authors’ research approach in this paper is
based on the assumption that since the learning is the process of change, the condition-action linkage is knowledge that
results in different decision maker’s cognition and behavior. Bearing this in mind, additional aim of this research is to
illuminate the issue of when and where analytic or intuitive judgment is likely to be more effective. Consequently this
paper confronts two central issues:
(1) How is incremental and radical learning integrated into the nature of strategic decision making in an organization;
specifically - is the incremental or the radical learning the one that gives better effect to the managers intuitive or
analytical decision making approach? Namely, the main question is - what are the differences between learning
practices that focus on control, elimination of surprises, and single-loop or incremental “fixing” of problems with
those that focus on deep or radical learning, i.e. double-loop challenging and changing of assumptions, new insights
and discovery of new opportunities, when compared with intuitive and analytical decision making behavior?, and
(2) What is the effect that learning types as well as decision-making approaches have on the outcome of strategic
decisions in an organization?
In answering to the above listed questions, the starting point is a research model presented in the Figure 1.,
followed with following hypotheses:
H1: Different managers’ learning types results in different strategic decision making approaches
H2: There is interdependence between strategic decision making approaches and their outcomes
H3: There is interdependence between managers’ learning types and strategic decision making outcomes
Figure 1: The research model of the effects of managers’ learning types on the
nature of strategic decision making
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The Journal of International Management Studies, Volume 7, Number 2, October, 2012
In order to achieve the objective of this paper, the survey was conducted in the year 2011 among top managers of
large Croatian companies. To collect primary data, a questionnaire was used as the main research instrument. The unit
of analysis was an organization, i.e. one manager per organization. Since the outcomes of strategic decisions are a
function of the people who are actually involved in making them (Amason, 1996 in: Elbanna and Child, 2007, p. 439),
the data for this study were collected from executives who were closely involved in making these decisions.
Questionnaires with cover letters were posted in stamped, self-returning envelopes to the Chief Executive Officers
(CEOs), including an appropriate introduction, key terms, and questions related to the general organizational and
individual characteristics, questions related to the managers’ learning types, strategic decision making and strategic
decision making outcomes. The respondent where asked to give responses to the offered statements following Likert’s
scale with five levels of intensity, ranging from “I strongly disagree” to “I strongly agree” for all research areas
(managers’ learning types, strategic decision making approaches and strategic decisions outcomes), except for the area
of general organizational and individual characteristics. Concerning the managers’ learning types, the questions were
adapted from Tippins and Sohi (2003) Lopez et al. (2005) and Prieto and Revilla (2006), for the nature of strategic
decision making approaches the questions were adapted from Khatri (1994), Dean and Sharfman (1996) and Khatri &
Ng (2000), while the strategic decision making outcomes were operationalized following Eisenhardt (1989), Butler et al.
(1991) and Schwenk (1990). Selected research instruments, ranging from three to nine items, can be evaluated with
very good to excellent reliability, due to the calculated Cronbach’s alpha coefficients of reliability (internal consistency
or reliability of a psychometric test score), which are all exceeding limit value of 0,7 (Table 1).
Table 1: The selected and used instruments’ reliability evaluation
(Chronbach’s alpha coefficients of measurement scales’ reliability)
Construct
Cronbach’s alpha coefficients
Number of variables (items)
Incremental learning
,911
9
Radical learning
,934
8
Analytical decision making approach
,866
6
Intuitive decision making approach
,836
3
Strategic decision making outcomes
,848
4
The sample included companies of different activities; age, ownership and size (Figure 2). Companies with
manufacturing activities as predominant are dominating the sample (44,44%), followed by companies which are doing
business in catering (14,11%), while the other activities are less represented in the sample as predominant. More then
half of the sample are companies aging between 11 and 20 years (55,56%), while little less then third of the sample are
very old companies, i.e. those older then 50 years (29,63%). Considering companies’ ownership, they are
predominantly in private ownership (74,07%), in which domestic ownership by natural persons plays a central role
(40,74%). Besides just mentioned, the sample is dominated with large and especially very large companies, i.e. those
with more then 500 and 1000 employees (25,93% and 51,85%). When it comes to the characteristics of managers in
described companies, they are predominantly males (74,07%), with university diploma (70,37%), and are members of
the board in which there is a more then one executive (77,78%). Managers are on their current positions in great
majority between 2 and 10 years (85,18%), where one third of overall number of managers in the sample were
introduced on mentioned position very early in their career (33,33%), while almost one half of the sample have earned
current position with substantial years of experience (44,44%).
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
11
Figure 2: Main characteristics of managers (organizations) in the sample
Finally, all collected data from the just described research sample were enrolled and processed on computer using
the software package SPSS 17.0, appropriate and often used in this kind of research, which, together with Microsoft
Visio, also served for producing the tables and figures in the paper.
FINDINGS
The main results obtained from the conducted empirical research are presented in next three tables (Table 2-4),
chronologically following settled hypotheses. Due to the tables’ clearness the abbreviations for research constructs’
variables were used in mentioned tables, while the full names of research constructs’ variables are shown in the
appendix. All inferences are made in relation to significance level of 90% and above, and to generally accepted
correlation coefficients’ intensity intervals. Considering the relationship between managers’ learning types and the
nature of strategic decision making, results are suggesting various inferences (Table 2). Namely, the comprehensiveness
in gathering information and consideration of various alternatives during the strategic decision making process are
under a weak to medium strong positive influence of almost all elements of incremental learning, while this is not the
case with radical learning. The same inference can be made for the relationship of overall analytical decision making
approach with each variable of incremental learning, as well as with overall incremental learning. Concretely said, the
greater managers’ incremental learning is, weakly to medium strongly greater/developed are comprehensiveness in
gathering information and consideration of various alternatives during the strategic decision making process, as well as
overall analytical decision making approach. From all incremental learning variables, only the influence of
executives/managers’ past experiences on their future behaviours has a statistically significant, mainly medium strong,
positive relationship with all analytical decision making approach’s elements.
On the other hand, when considering the relationship between incremental learning and intuitive decision making
approach, analysed by each variable and entirely (constructs), it can be said that there is only few, very weak positive
relationships. Subsequently, it can be stated that exploitation of knowledge by executives/managers in Croatian large
companies is affecting their rationally during the strategic decision making, while this kind of learning (exploitation of
knowledge) has almost no effect at all on the intuitive level of these decision makers. These results, as far as intuitive
decision making approach is concern, are expected due to the fact that a radical and deep change in the mindset or
mental models needs to occur in order for manager to act differently on the subconscious, intuitive level during the
process of decision making. On the other hand, it is somewhat surprising that only two variables of analytical decision
making approach are influenced by incremental learning variables, due to the fact that this kind of decision making is
pretty heavily leaning on objective data, information and knowledge.
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The Journal of International Management Studies, Volume 7, Number 2, October, 2012
When considering two other, opposite to just described relationships, the results are almost opposite. Here, the
relationship between radical learning and intuitive decision making approach, considering each variable and entirely
(constructs), is statistically significant, positive and of weak to strong intensity. On the other hand, when considering the
relationship between radical learning and analytical decision making approach, analysed by each variable and entirely
(constructs), it (relationship) exists only when comprehensiveness in gathering information and consideration of various
alternatives during the strategic decision making process are concerned, but here this relationship is significantly
weaker and covers much smaller number of individual connections. Just mentioned results, as far as intuitive decision
making approach is concern, are expected and consistent with previous discussed results and inferences. Namely,
radical learning implies deep, radical changes of mental models and governing values, which further can and, in the
case of executives/managers of Croatian large companies, leads to changes on the subconscious, intuitive level of these
decision makers. In other words, greater radical learning leads, with weak to medium strong intensity, to greater
significance of previous experiences, feelings and affective reactions as well as to greater leaning on judgement, all
during the strategic decision making process.
All presented results and inferences are suggesting that executives/managers in large Croatian companies,
depending on their dominant learning type, are switching between two basic strategic decision making approaches. This
confirms 1st hypothesis which states that different managers’ learning types result in different strategic decision making
approaches. Thus, generally it can be stated that they (executives/managers in large Croatian companies) are more
favourable to learn incrementally (3,57 versus 3,53), which is reasonable because this type of learning is much easier,
and therefore are more applying analytical decision making approach (3,58 versus 3,20) (Figure 3). While for intuitive
approach, which demands deep mental changes, it is logical that incremental learning does not have significant effect, it
is highly surprising that radical learning does not have significant effect on analytical approach, more so as this
approach is heavily leaning on objective data, information, decision making procedures and techniques.
Figure 3: Mean values and dispersion measures of main research constructs
Table 2: The interdependence between managers’ learning types and the nature of strategic decision making
Spearman's rho Correlation
coefficient Sig. (2-tailed) N = 54
IL-1
IL-2
IL-3
IL-4
IL-5
IL-6
IL-7
IL-8
A1
A2
A3
A4
A5
A6
Analytical decision
making approach
I1
I2
I3
Intuitive decision
making approach
,508**
,096
,421**
,148
,130
,156
,333**
-,095
,033
,141
,067
,000
,244
,001
,143
,174
,131
,007
,247
,407
,154
,316
,312*
,117
,234*
-,166
,149
,102
,170
,057
,332**
,066
,180
,011
,199
,044
,114
,110
,342
,007
,319
,097
*
,083
**
,351
**
,258
,141
,232
*
*
,397
**
-,013
,231
-,013
,031
,230
,000
,046
,005
,030
,463
,046
,001
,464
,411
,047
,276
,392**
,094
,461**
,119
,134
,151
,332**
-,091
-,056
,042
-,050
,438
,231
*
,002
,250
,000
,195
,167
,137
,007
,256
,344
,382
,360
,382**
,057
,293*
,032
,111
,082
,224
-,055
,098
,087
,049
,016
,410
,212
,278
,052
,347
,241
,265
,363
,344** -,028
-,131
-,043
,196
-,086
,012
,261*
,047
,002
,341
,358**
,003
,004
,492
,146
,108
,145
,219
,279*
,117
,020
,200
,419
,173
,380
,078
,269
,465
,028
,367
,366** -,015
,005
,168
,198
,296*
-,002
,133
,145
,095
,456
,112
,076
,015
,494
,169
,147
,248
,439** -,015
,003
,133
,310*
,368**
-,024
,167
,097
,117
,169
,011
,003
,433
,113
,242
,200
,000
,457
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
13
IL-9
Incremental learning
RL-1
RL-2
RL-3
RL-4
RL-5
RL-6
RL-7
RL-8
Radical learning
Managers' learning
types - overall
,612** ,413** ,422** ,415**
,184
,424**
,522**
-,077
-,022
-,065
,000
,001
,001
,001
,092
,001
,000
,289
,437
,319
-,030
,414
,450**
,131
,469**
,072
,083
,171
,350**
-,058
,092
,130
,067
,000
,173
,000
,302
,275
,108
,005
,339
,253
,174
,316
,005
-,121
-,075
-,061
-,065
-,211
-,051
,247*
,505**
,400**
,438**
,485
,191
,295
,330
,320
,063
,358
,036
,000
,001
,000
,090
**
,116
,113
,137
,058
,042
,169
,379
,210
,150
,002
,202
,207
,162
,339
,382
,111
,086
,064
,140
,258
,154
,125
,213
-,012
-,029
-,031
,112
,393
,383**
,247*
,294*
,133
,183
,061
,464
,417
,413
,211
,081
,002
,036
,015
*
,239
*
,206
,385
*
,133
,054
-,021
-,023
,189
,243
,269
,012
,169
,009
,350
,439
,433
,086
,079
,024
,041
,068
,124
,101
,255*
,091
-,120
-,123
,124
,284
,185
,355**
,218
,186
,234
,032
,256
,193
,187
,185
,004
,090
,004
,057
,078
*
,306
,325
**
,033
,322
**
,194
-,084
-,061
-,157
,256
,317
**
,333
**
,323**
,008
,407
,080
,273
,330
,128
,287
,031
,010
,007
,009
,167
,062
,147
-,019
-,097
-,054
,081
,283*
,396**
,255*
,343**
,114
,328
,145
,445
,242
,349
,281
,019
,002
,031
,006
,171
,232*
,161
,112
,170
-,085
,082
,137
,194
,304
,324
**
,122
,209
,110
,271
,278
,162
,080
,057
,008
,108
,046
,240*
,116
,228*
,018
-,074
-,035
,155
,347
,351**
,265*
,282*
,040
,202
,049
,450
,297
,402
,131
,044
,005
,026
,020
,339**
,123
,337**
,016
-,006
,071
,254*
,081
,257*
,206
,209
,006
,188
,006
,454
,484
,305
,032
,281
,030
,067
,065
**. Correlation is significant at the 0.01 level (1-tailed).
*. Correlation is significant at the 0.05 level (1-tailed).
The 2nd hypothesis is oriented on the relationship between decision making approaches and their outcomes. The
results of correlation tests related to this hypothesis are shown in Table 3. Results are pretty uniform and are indicating
on one very important inference. Namely, the relationship between analytical decision making approach and strategic
decision making outcomes mainly was not determined, and if determined it suggested several negative connections. On
the other hand, intuitive decision making approach, all variables and entirely, have weak to medium strong positive
effect on all strategic decision making outcomes. From this it follows that researched executives/managers are much
more satisfied with strategic decisions made intuitively then the one made analytically. Besides that, mentioned
executives/managers are also more satisfied with the implementation of strategic decisions made in this way, and
consequently the results and frequencies of needed interventions related to these decisions are on much better level.
Considering just presented inference, it is obvious that the executives/managers are unsatisfied with decisions made on
analytical/rational way, which can be attributed to the effort they devote on making these decisions in this way.
Moreover, this kind of decisions probably did not produce the results that mentioned executives/managers expected
with regards to the efforts devoted in making them, or they did produce good results, but not much better or even equal
to the results that intuitive decision making approach produced. Therefore, there is interdependence between strategic
decision making approaches and decisions making outcomes, and this interdependence greatly favours intuitive
decision making approach. Thereby, these results are confirming 2nd hypothesis.
Table 3: The interdependence between the nature and outcomes of strategic decision making
Strategic decision
Spearman's rho Correlation
SDM O1
SDM O2
SDM O3
SDM O4
making outcomes
coefficient Sig. (2-tailed) N = 54
-,144
-,061
,048
-,129
-,347**
A1
,330
,366
,177
,005
,149
-,003
-,201
-,203
-,118
-,318**
A2
,071
,198
,010
,492
,073
14
The Journal of International Management Studies, Volume 7, Number 2, October, 2012
A3
A4
A5
A6
Analytical
approach
decision
making
I1
I2
I3
A1
Intuitive decision making approach
,017
,453
-,077
,290
-,011
,468
-,083
,275
-,014
,460
,240*
,040
,428**
,001
,412**
-,061
,330
,001
,408**
,001
-,022
,439
,146
,146
,018
,450
,126
,181
,124
,186
,140
,157
,277*
,021
,359**
,048
,366
,004
,308*
,012
-,041
,385
-,111
,213
-,136
,164
-,069
,311
-,042
,381
,303*
,013
,515**
,000
,472**
-,129
,177
,000
,487**
,000
,094
,250
,332**
,007
-,091
,256
-,042
,380
,092
,254
,180
,097
,256*
,031
,247*
-,347**
,005
,036
,259*
,030
-,002
,496
,057
,341
-,075
,295
-,062
,329
,018
,449
,295*
,015
,479**
,000
,489**
-,144
,149
,000
,483**
,000
**. Correlation is significant at the 0.01 level (1-tailed).
*. Correlation is significant at the 0.05 level (1-tailed).
Finally, when considering the relationship between executives/managers’ learning types and strategic decision
making outcomes, results from Table 4 are offering number of interesting inferences. Generally incremental learning
mainly weakly contributes in positive manner to the executives/managers’ satisfaction with the way strategic decisions
were implemented and their results. This is less expressed in relation with the level of satisfaction with the way in
which mentioned decisions were made and with frequency of interventions needed for these decisions to produce
favourable results. The exchange, through teamwork and conversation, of knowledge and experiences between the
executives/managers and between executives/managers and employees, together with the existence of other learning
opportunities, besides rotation (e.g. special tasks, projects, internal training programs) with the same final aim of
acquiring existing and new knowledge and distributing it throughout organization, are in this sense the most influential
incremental learning’s variables. On the other hand, radical learning has stronger relationship with strategic decision
making outcomes, with significantly larger number of determined connections. This is particularly visible on the results
of made strategic decisions, which are depended on all radical learning’s variables. Within the variables of radical
learning, the attendance of
Table 4: The interdependence between managers’ learning types and strategic decision making outcomes
Strategic decision
Spearman's rho Correlation coefficient Sig.
SDM O1
SDM O2
SDM O3
SDM O4
making outcomes
(2-tailed) N = 54
,399**
-,033
,277*
,187
,281*
IL-1
,088
,020
,001
,405
,021
-,102
,207
,150
,193
,377**
IL-2
,140
,081
,002
,232
,066
,335**
,312*
,344**
,361**
,235*
IL-3
,044
,007
,011
,005
,004
,252*
,191
,123
,040
,292*
IL-4
,188
,386
,016
,033
,083
,155
,319**
,171
,217
,432**
IL-5
,108
,058
,001
,131
,009
,081
,250*
,168
,183
,369**
IL-6
,113
,093
,003
,281
,034
,305*
,262*
,102
,103
,377**
IL-7
,232
,230
,002
,013
,028
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
15
IL-8
IL-9
Incremental learning
RL-1
RL-2
RL-3
RL-4
RL-5
RL-6
RL-7
RL-8
Radical learning
Managers' learning types - overall
,215
,059
,115
,203
,181
,095
,381**
,002
,208
,066
,133
,170
,180
,096
,124
,185
,183
,093
,194
,080
,245*
,037
,203
,071
,218
,338**
,006
,272*
,023
,222
,054
,396**
,002
,265*
,026
,093
,252
,072
,301
,275*
,022
,122
,190
,249*
,035
,303*
,013
,217
,057
,235*
,532**
,000
,155
,132
,438**
,000
,512**
,000
,358**
,004
,436**
,000
,362**
,004
,367**
,003
,348**
,005
,492**
,000
,436**
,000
,487**
,000
,515**
,214
,060
,120
,193
,178
,099
,220
,055
-,035
,402
,192
,082
,098
,241
,395**
,002
,149
,141
,369**
,003
,237*
,042
,255*
,031
,218
,390**
,002
,207
,066
,312*
,011
,474**
,000
,249*
,035
,265*
,027
,241*
,040
,351**
,005
,271*
,024
,410**
,001
,371**
,003
,368**
,003
,369**
**. Correlation is significant at the 0.01 level (1-tailed).
*. Correlation is significant at the 0.05 level (1-tailed).
executives/managers on fairs, shows, conferences, etc.; exploration of new ideas and approaches related to one’s
(executives/managers’) job and implementing them into practice; and the abandonment of previously acquired
knowledge and ways of doing one’s (executives/managers’) job in favour of new knowledge and better ways of doing
one’s (executives/managers’) job; are the most influential ones. From these results it follows that executives/managers’
learning types play a significant role in strategic decision making outcomes, primarily in executives/managers’
satisfaction with mentioned decisions implementations and consequential results, thereby confirming the 3rd hypothesis
set in this paper. This inference is highly expected due to the previously determined relationships and confirmed 1st and
2nd hypothesis, and due to relevant literature which implies the existence of relationship between learning in
organization and organization’s performances.
CONCLUSION
The results of the research in this paper need to be discussed in terms of the importance of organizational learning
and decision making in organizations. They provide deeper understanding of the nature of relationship between
managers’ learning types, decision making approaches, and decision outcomes at strategic management level among
large Croatian companies. In order to increase the knowledge about these two complementary and intertwined processes
(organizational learning and decision making) that are happening continually in an organization, authors created
research model whose aim was to investigate the effects of two basic types of learning – incremental (knowledge
exploitation) and radical learning (knowledge exploration) on two basic decision making approaches on strategic
management level in organization – analytical and intuitive, and consequential effectiveness of strategic decision
making.
Findings are indicating that all hypotheses in this paper can be accepted. When considering the relationship
between managers' learning types and decision making approach at strategic management level of Croatian companies,
results show that different managers’ learning types results in different strategic decision making approaches. Namely,
16
The Journal of International Management Studies, Volume 7, Number 2, October, 2012
the greater managers' incremental learning is, their analytical decision making approach is more developed, as well as
the greater managers' radical learning is, the intuitive decision making approach is more developed. According to the
research results of this paper, exploitation of knowledge by managers in large Croatian companies is affecting their
rationality during strategic decision making process but bypasses their intuition. This was expected since radical and
deep change in the mindset or mental models and governing values needs to occur in order for manager to act
differently on the subconscious, intuitive level during the process of decision making. The result which is especially
interesting regarding the 1st hypothesis set in the paper is that radical learning does not influence analytical decision
making approach in all phases of strategic decision making process. Namely, results show that relationship exists only
when comprehensiveness in gathering information and consideration of various alternatives during strategic decision
making are concerned. One of the possible explanations for these results can be that managers with more advanced
analytical capabilities in deciding are trying to block their intuition to act wholly, and therefore radical learning, which
by its nature implies deep, radical changer in decision maker’s mindset has no significant influence on analytical
decision making approach.
Further, results are indicating that there is interdependence between strategic decision making approaches and
decision outcomes. Namely, there is a relationship between intuitive decision making approach and strategic decision
outcomes, while the relationship between analytical decision making approach and strategic decision outcome was not
determined. To be precise, decision makers in large Croatian companies are not satisfied with these strategic decisions
they made following their rationality in all decision making phases and, by their opinion, these decisions did not
produce expected results. This dissatisfaction can be the result of the efford they invest in the whole decision making
process. These results shouldn’t diminish the importance of analytical decision making approach, which has been
recognized among researchers as important, moreover critical factor for effective strategic decision making. Generally,
when it is about strategic decision making, researchers have given preferences to analytical over intuitive decision
making following basic assumption that systematic and careful analysis yields choices which are superior to those
coming from intuitive processes, but this assumption has recently come under fire, because advances in cognitive
intelligence confirmed that intuitive processes is equally efficient as analysis when making strategic decisions.
Finally, results are indicating that executives/managers’ learning types play a significant role in strategic decision
making outcomes, primarily in executives/managers’ satisfaction with decisions’ implementations and consequential
results. This was expected due to the previously results in this paper, as well as due to relevant literature’s implied
existence of the relationship between learning in organization and organization’s performances.
This paper will be interest for practitioners, mainly managers in organizations, because it provides them with
deeper understanding and greater knowledge about functioning of these two processes. It will be interesting for
academics to because research results open additional questions and the need for the additional research targeting these
two processes. There are many further aspects and causes which should be investigated in order to accomplish the
clearer understanding of these two processes. For the future research it would be very interesting to investigate the
relationship between the nature of organizational learning, strategic decision making and organizational performances
because information about performance and variables that influence those performances can provide managers with
valuable insights into organizational strengths and weaknesses. Additionally, it would be interest to see the differences
of these relationships between public and private organizations, commercial and non-commercial organizations,
manufacturing versus service organizations.
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
17
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The Journal of International Management Studies, Volume 7, Number 2, October, 2012
APPENDIX
Abbreviations of research constructs’ variables
IL1
Level in which some aspects of executives/manager’s job are led by formal policies and procedures.
Existence of person(s)/job(s) responsible for gathering, grouping and internal distribution of employees’
IL2
suggestions/ideas.
Exchange, through teamwork and conversation, of knowledge and experiences between the
IL3
executives/managers and between executives/managers and employees.
Periodical holding of meetings on which the latest innovations, insights, new knowledge, know-how, etc.,
IL4
are presented and discussed.
Existence of established practices, procedures and ways of transfer and exchange of best practical solutions
IL5
in various fields of activities.
IL6
Easiness of executives/managers’ access (availability) to all for them relevant data.
Possession/development of internal rotation programs to enable employees and managers to change
IL7
departments/functions with final aim of acquiring existing and new knowledge and distributing it throughout
organization.
Existence of other learning opportunities, besides rotation (e.g. special tasks, projects, internal training
IL8
programs) with the same final aim of acquiring existing and new knowledge and distributing it throughout
organization.
IL9
Influence of executives/managers’ past experiences on their future behaviours.
RL1
Attendance of executives/managers on fairs, shows, conferences, etc.
Facilitation and emphasis of cooperation agreements with other companies, faculties, institutes, etc., where
RL2
one of the primary goals is to develop/acquire new executives/managers’ knowledge.
Maintaining in contact with professionals, experts and technical officers which can contribute to
RL3
business/organization’s improvement.
Facilitation and emphasis of executives/managers’ accession to external formal and informal associations,
RL4
networks, etc., where important knowledge for managing the business can be acquired.
RL5
Employees and other/lower managers’ participation in making important decisions.
RL6
Developing common insights by executives/managers about various aspects of their job.
Exploration of new ideas and approaches related to one’s (executives/managers’) job and implementing them
RL7
into practice.
Abandonment of previously acquired knowledge and ways of doing one’s (executives/managers’) job in
RL8
favour of new knowledge and better ways of doing one’s (executives/managers’) job.
A1
Comprehensiveness in gathering information during the strategic decision making process.
A2
Intensity of analysing gathered relevant information.
A3
Consideration of various alternatives during the strategic decision making process.
Alternatives’ evaluation in terms of costs and benefits and selection of one which has the greatest estimated
A4
benefit in relation to costs.
A5
Usage of analytical decision making methods and techniques.
Thorough and careful rethinking of decision making activities and monitoring them by formal, written
A6
reports.
Significance of previous experience related to the same or similar problematic issue/area during the strategic
I1
decision making process.
I2
Leaning on judgement during the strategic decision making process.
Significance attached to feeling and effective reactions during the strategic decision making process when
I3
there is not enough information.
Level of satisfaction with the way in which the most important strategic decisions were made in the last five
SDM O1
years.
Level of satisfaction with the way in which the most important strategic decisions were implemented in the
SDM O2
last five years.
SDM O3 Results of the most important strategic decisions made in the last five years.
Frequency of interventions needed to resolve problems resulted from implementing the most important
SDM O4
strategic decisions made in the last five years of even significantly changing mentioned decisions.
The Journal of International Management Studies, Volume 7 Number 2, October, 2012
19