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Unformatted text preview: 1984).
Such variation, the authors assert, could not exist if constraints alone were driving
decisions. Hence, Dean and Sharfman (1996) conclude that it appears likely that
viable outcomes are a product of the decision process used. Leading on from this, the
second assumption is that choices relate to outcomes, and that all outcomes are not
equally good. Once again there can be very little doubt that external forces also
influence decision effectiveness (Hitt and Tyler, 1991; Pfeffer and Salancik, 1978).
Changes in competitor strategies or customer tastes can turn strategic coups into
disasters or vice versa. However, Dean and Sharfman (1996) note that it is unlikely
that the influence of such forces eliminates the impact of choice on decision
effectiveness as it is hard to imagine a decision in which all potential choices will be
equally successful or unsuccessful.
31 The two assumptions then appear plausible (Dean and Sharfman, 1996) which
suggests that it is reasonable to expect the investment appraisal decision-making
process to influence decision effectiveness. However, as Aldrich rightly observed
(1979), the importance of managerial decisions in determining organisational
outcomes is ultimately an empirical question (Dean and Sharfman, 1996). Many
empirical studies have investigated the existence of a relationship between the
investment decision-making process and effectiveness. None have concentrated on
the use of decision analysis in the investment decision-making processes of
organisations. However, several have explored the effects of comprehensiveness,
rationality, formality and consensus in the decision-making process on organisational
performance. In much of the decision theory literature, it is argued that decision
“…convincing rationale for choice, improves communication and permits
direct and separate comparisons of different people’s conceptions of the
structure of the problem, and of the assessment of decomposed elements
within their structures, thereby raising consciousness about the root of any
conflict.” (Humphreys, 1980 in Goodwin and Wright, 1991 p177)
Goodwin and Wright (1991) also argue that adopting a decision analysis approach
implies comprehensiveness/rationality and formalisation of the decision-making
process, improved communication amongst the stakeholders and provides the
organisation with access to a common language for discussing the elements of a
decision problem. This, they argue, helps to build consensus in the company, which
in turn expedites implementation of the decision. Keeney and Raiffa (1972 pp10-11)
say of decision analysis:
“As a process, it is intended to force hard thinking about the problem area:
generation of alternatives, anticipation of future contingencies, examination of
dynamic secondary effects, and so forth. Furthermore, a good analysis should
illuminate controversy – to find out where basic differences exist, in values
and uncertainties, to facilitate compromise, to increase the level of debate and
undercut rhetoric – in short, “to...
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This document was uploaded on 03/30/2014.
- Summer '14
- The Land