Organizational Theory

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Organizational Theory
Programmed decisionsrepetitive and
routine Rules routines and standard operating
procedures can be developed in
advance. Nonprogrammed decisionsnovel and
unstructured Solutions must be worked out as
problems arise.
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Organizational Theory
Models of organizational decision
making Rational modeldecision 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 Modela 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 Modelmanagers 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 Modeldescribes 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 Modela 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 organizationan 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 IT-enabled
  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