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한국어 버전: 

Key Sentence: 
오늘날 비즈니스가 계속 성공할 유일한 방법은 똑똑하고 창의적인 직원들을 끌어들이고, 그들이 성과를 낼 수 있는 환경을 만드는 것입니다. 

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A recent study ("The Riddle of Heterarchy") indicates that the traditional "Assigned leadership" is not working well especially in a creative team, but "Emergent and collective Leadership" is outperforming. 

1. Teams are likely to operate better when there are a number of members with leadership potential (fears of rivalry notwithstanding) than when 
power is a solo affair.

2. It is not only important that team members have diverse skills and resources but that everyone knows what they are, so that they can be fully leveraged.

3. Internal power expressions among team members should shift as appropriate.

4. Team membership should be fluid, with members entering and exiting as necessary to meet shifting situations


The Riddle of Heterarchy: Power Transitions in Cross-Functional Teams,-study-finds.aspx

6 Reference Models for Shop Floor Control

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7 Things You Need to Stop Doing To Be More Productive, backed by science. 

1. Stop working overtime and increase your productivity
2. Don’t say “yes” too often
3. Stop doing everything yourself and start letting people help you
4. Stop being a perfectionist
5. Stop doing repetitive tasks and start automating it.
6. Stop guessing and start backing up your decisions with data
7. Stop working, and have do-nothing time


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Science of Persuasion (설득의 심리학) Korean language 

1. Reciprocity (First Give Small and Take Big). 
2. Scarcity (Provide Benefits, Unique, and Lose)
3. Authority (Diploma, Certificate, Uniform, Suit)
4. Consistency (Make a small change first to make a big change)
5. Linking (Genuine complements)
6. Consensus (Include people in a desired group) 

(English Version) 

(Korean Version) 

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Structuring an Academic Writing

Many people need to write an academic paper or an academic report. Although there are huge numbers of suggestions for academic writing, I want to introduce structures of academic writing in my field (social science, education, and business).  

Introduction / Problem Statement





Department / Institution

Tel:,    E-mail:



(Principal Proposition):

True Statement - Where we are?; Find contradiction:

e.g.) Studies have shown that managers in the multi-national enterprises (MNEs) confront issues of national culture in their daily activities. For instance, policies set by senior managers in one country may in fact represent the cultural assumptions of that country only and, as a result, may differ from the assumptions held by managers who reside in another country and who are expected to carry out the policies. Such differences in national culture may affect the behaviors of the managers and by extension the effectiveness of the policies.


Problem Statement (Interaction Proposition):

Core argument – Challenge to the principal proposition

e.g.) While a range of management behaviors have been studies related to national culture, there have been few if any studies focusing on how human resource development might differ based on national culture. Human resource development has been shown to be a critical factor in determining organizational success.


Need for the Study (Speculative proposition):

Need for the this study …

e.g.) If national culture may affect the way in which managers carry out organizational policies and by extension the effectiveness of those policies, and if no studies have been conducted on how human resource development might differ based on national culture, which is a critical aspect in determining organizational success, then more should be known about how managers in a multinational enterprise differ in their perceptions of human resource development.


Purpose of the study (Explicative statement)

The purpose of this study…

e.g.) The purpose of this study was to determine whether managers in a multinational enterprise differed in their perceptions of selected human resource development practices in their organization. In addition, if such differences were found, the study sought to determine whether managers’ perceptions could be clustered by the countries in which they resided.


Significance of the study


Show the significance of the study

e.g.) Theoretical significance / Practical significance

Research Questions (with conceptual framework):


Specific research questions or conceptual / theoretical framework

Research Method:

Population, steps, Instrument, and strategy


Originality / Value:

Show your originality, value, and beneficiary for readers.




source: Jacobs (2011). Chapter 10. Developing a Research Problem and Purpose Statement. Rocco, T.S., Hatcher, T. Creswell, J.W. (2011). The Handbook of Scholarly Writing and Publishing. 


Each sections of proposed structure of introduction/problem statement can be written with a general structure of academic writing.  

General Structure of Academic Writing


·       General Statement

·       Narrow

·       Points

·       Theses: Thesis1, Thesis2, Thesis3.



·       Thesis 1

·       Support 2

·       Example


·       Thesis 2

·       Support 2

·       Example 2


·       Thesis 3

·       Support 3

·       Example 3



·       Restatement of Problem

·       Opinions

·       General conclusion


Dec. 2012

J. Choi

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JOURNALS in North American Business Press (editor:

Journal of Business Diversity

Contact: Sandra Williams, Ph.D., Editor; 

Journal of Business Diversity

North American Business Press


Phone: 1-866-624-2458

Fax: 1-800-307-1004

Miami, Florida; 

Toronto, Ontario Canada

Seattle, Washington

Los Angeles, California

Journal of Higher Education Theory and Practice

American Journal of Business


Journal of Applied Business and Economics

Journal of Strategic Innovation and Sustainability

Journal of Leadership, Accountability and Ethics

Journal of Management Policy and Practice

Journal of Marketing Development and Competitiveness

International Journal of Business Anthropology

International Journal of China Marketing

Journal of Accounting and Finance

Journal of Organizational Psychology

USASBE Journal 

USASBE members have complimentary online access to the Emerald Enterprise Journal collection through March 12th which includes:


European Journal of Innovation Management

International Journal of Entrepreneurial Behaviour & Research

International Journal of Gender and Entrepreneurship

Journal of Chinese Entrepreneurship

Journal of Enterprising Communities: People and Places in the Global Economy

Journal of Entrepreneurship and Public Policy

Journal of Family Business Management

Journal of Knowledge-based Innovation in China

Journal of Small Business and Enterprise Development

Social Enterprise Journal


To log in please go to and enter the following login id:

Username: EmeraldFreeAccess

Password: USASBE2012

You can then go to the journal table of content you wish to read about and click any issues or use our search/advanced search tool to find relevant content for you. The online access ends on 12th March 2012.


USASBE 2012 was the first opportunity for Emerald to showcase the new Journal of Entrepreneurship and Public Policy (JEPP), edited by Prof Noel Campbell, University of Central Arkansas, USA. Please read the first issue available as a draft version: it includes an interesting paper from USASBE members Jeff Cornwall and William Dennis on the integration of public policy into the classroom and into more traditional streams of entrepreneurship research.


The launch of JEPP ties in with the formation of the new USASBE Entrepreneurship and Public Policy SIG at USASBE. This group was recognized by the USASBE Board of Directors as the 12th official USASBE Special Interest Group during the postconference Board meeting in New Orleans.  If you would like to get involved with the SIG or wish further information, please email Jeff Cornwall at or the 2012 Chair of the SIG, Julian Lange, at


If you wish to receive relevant news on entrepreneurship, please follow us on Twitter at


Best wishes,


Valerie Robillard

Senior Publisher - New Launches and Partnerships

Emerald Group Publishing Limited

Tel:+44 (0) 1274 785044

Fax:+44 (0) 1274 785201


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Katz (2003)

·       A complete educational infrastructure, consisting of more than 300 endowed positions, more than 100 centers, more than 40 refereed academic journals and more than a dozen professional organizations in the United States alone (Katz, 1994);

·       An emerging segmentation of the discipline marked by the growth of specialized professional groups and publishing venues in economics, economic development, finance and high-technology; and

·       Legitimization by various external sources, including

o   National rankings of entrepreneurship programs in the mainstream media (US News and World Report, Business Week) and

o   Inclusion of four top-tier entrepreneurship journals in the Social Science Citation Index (Entrepreneurship and Regional Development, Journal of Business Venturing, Journal of Small Business Management, Small Business Economics).


Dos Santos (2010) List

Model Scores for Entrepreneurship Articles Only (Dos Santos, 2010) – by Ranking


SSCI Listed?

Focus on Entrepreneurship?

Administrative Science Quarterly (ASQ)



Strategic Management Journal (SMJ)



Journal of Business Venturing (JBV)



Entrepreneurship Theory and Practice (ETP)



Organization Science (OSc)



Academy of Management Journal (AMJ)



Academy of Management Review (AMR)



Journal of Management (JOM)



Management Science (MSc)



Family Business Review (FBR)


Yes / No (?)

Journal of Small Business Management (SBM)



Entrepreneurship and Regional Development (ERD)



Journal of Evolutionary Economics (JEE)



Journal of Management Studies (JMS)



Journal of Developmental Entrepreneurship (JDE)

Not found


Quarterly Journal of Austrian Economics (QAE)

Not found


Journal of Business and Enterprise Development (SBD)

Not found


Creativity and Innovation Management (CIM)

Not found


International Journal of Entrepreneurial Behavior and Research (EBR)

Not found


Journal of Small Business Strategy (SBS)

Not found


Journal of Enterprising Culture (JEC)

Not found


Journal of Organizational Change Management (OCM)

Not found


New England Journal of Entrepreneurship (NEE)




·                     Small business economics (at Katz list) was not included in this List. 


Katz, J. A. (2003). The chronology and intellectual trajectory of American entrepreneurship education: 1876–1999. Journal of Business Venturing, 18(2), 283-300. doi:10.1016/S0883-9026(02)00098-8 

Pena, V. (2010). A survey of entrepreneurship education initiatives. No. NS D-4091). Institute for Defense Analyses, Washington, DC: Science and Technology Policy Institute. Retrieved from

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Researchers (Bloom (1985)Bryan & Harter (1899)Hayes (1989)Simmon & Chase (1973)) have shown it takes about ten years to develop expertise in any of a wide variety of areas, including chess playing, music composition, telegraph operation, painting, piano playing, swimming, tennis, and research in neuropsychology and topology. The key is deliberative practice: not just doing it again and again, but challenging yourself with a task that is just beyond your current ability, trying it, analyzing your performance while and after doing it, and correcting any mistakes. Then repeat. And repeat again. There appear to be no real shortcuts: even Mozart, who was a musical prodigy at age 4, took 13 more years before he began to produce world-class music. In another genre, the Beatles seemed to burst onto the scene with a string of #1 hits and an appearance on the Ed Sullivan show in 1964. But they had been playing small clubs in Liverpool and Hamburg since 1957, and while they had mass appeal early on, their first great critical success, Sgt. Peppers, was released in 1967. Malcolm Gladwell reports that a study of students at the Berlin Academy of Music compared the top, middle, and bottom third of the class and asked them how much they had practiced:
Everyone, from all three groups, started playing at roughly the same time - around the age of five. In those first few years, everyone practised roughly the same amount - about two or three hours a week. But around the age of eight real differences started to emerge. The students who would end up as the best in their class began to practise more than everyone else: six hours a week by age nine, eight by age 12, 16 a week by age 14, and up and up, until by the age of 20 they were practising well over 30 hours a week. By the age of 20, the elite performers had all totalled 10,000 hours of practice over the course of their lives. The merely good students had totalled, by contrast, 8,000 hours, and the future music teachers just over 4,000 hours.

So it may be that 10,000 hours, not 10 years, is the magic number. Samuel Johnson (1709-1784) thought it took longer: "Excellence in any department can be attained only by the labor of a lifetime; it is not to be purchased at a lesser price." And Chaucer (1340-1400) complained "the lyf so short, the craft so long to lerne." Hippocrates (c. 400BC) is known for the excerpt "ars longa, vita brevis", which is part of the longer quotation "Ars longa, vita brevis, occasio praeceps, experimentum periculosum, iudicium difficile", which in English renders as "Life is short, [the] craft long, opportunity fleeting, experiment treacherous, judgment difficult." Although in Latin, ars can mean either art or craft, in the original Greek the word "techne" can only mean "skill", not "art".




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대한민국헌법 22조와 과학기술자-김준효

대한민국 헌법 22조 2항은 『과학기술자의 권리는 법률로써 보호한다』고 규정하고 있다.  헌법· 법률 등의 법은 한 사회의 각 구성원이 게임을 운용하는 규칙(룰)이라고 할 수 있다. 야구의 규칙(룰)을 모르고서는 그 팀은 경기를 진행조차 할 수 없듯이, 우리가 법을 모르고서는 불이익을 당할 수밖에 없고, 이는 사회의 발전을 더디게 하는 큰 요인이 된다.

과학기술자 스스로 법을 모르고, 알려고 하지 않고, 그 법을 잘 활용하려고 하지 않는 것이 문제일 수 있다. 위 대한민국 헌법 22조 2항 역시 대부분의 과학기술자가 모르고 있을 것이라고 본다. 또한 위 조항을 활용하여 권리를 주장할 생각도 별로 없었다고 본다. 그러나, 위 조항은 우리 헌법의 과학기술관련 조항들 중 키플레이어와 같은 역할을 한다. 위 조항 이외에 헌법 중 과학기술관련 조항들을 살펴 본다.

헌법 전문 중 『能力을 最高度로 발휘하게 하며』구절은, 과학기술관련 조항들 중 지휘부 역할(프로야구팀의 감독 같은)을 하는 조항이다. 과학기술자 각인의 능력을 최고도로 발휘하게 하면, 이것이 곧 대한민국의 발전이다. 
헌법 第119條 1항 大韓民國의 經濟秩序는 개인과 企業의 經濟上의 自由와 創意를 존중함을 基本으로 한다.
위 조항 중 『創意』는 과학기술자의 능력을 최고도로 발휘하게 하는 구체적 정신능력 내지 핵심가치라 볼 수 있다. 
헌법 第127條 1항 [國家는 科學技術의 革新과 情報 및 人力의 開發을 통하여 國民經濟의 발전에 노력하여야 한다.] 정부는 국가의 발전을 위하여 과학기술의 혁신에 진력하여야 함을 규정하고 있는데, 위에서 본 바의 헌법 조항들의 가치를 실현하기 위하여서는 정부의 노력과 지원(정부는 프로야구팀의 프론트와 같은 역할)이 필수적이다. 
그리고, 다시 이러한 정부의 노력은 헌법 22조 2항으로 돌아가 『과학기술자의 권리를 법률로써 보호』함이 그 핵심이다. 따라서, 과학기술자로서는 자신의 법적 지위 등과 관련하여 문제의식을 느낀다면, 언제든지 헌법 22조 2항에 근거하여 국가의 법적· 제도적 지원을 요청하는 것이 가능하다. 
우리가 무심코 지나쳐 왔지만, 실은 위와 같은 헌법 조항들에 기초하여 각 개별 법률들(예: 과학기술기본법)이 과학기술자의 법적 지위를 보장해 주고 있는 것이다. 

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Participative decision making

From Wikipedia, the free encyclopedia

Participative Decision-Making (PDM) is the way an organization decides to make decisions. The leader must think of the best possible style that will allow the organization to come up with the best results. When the leader involves participants, it is shown to improve job satisfaction. Synergy is important in decisions because it is the ability for people to work together and produce results that can exceed decision making made by an individual(Papa).According to psychologist Abraham Maslow, workers need to feel a sense of belongingness to an organization. (See Maslow's Hierarchy of Needs) When everyone in an organization participates in the decision-making process, organizational communication is much more effective and everyone produces efficient results(Walker 2007).



[edit]Disadvantages of Particpative Decision-Making

When participative decision-making takes place in a team setting, it can cause many disadvantages. These can be anything from social pressures to conform and also group domination, where one person takes control of the group and urges everyone to follow their standpoints. With ideas coming from many people, time can be an issue. The meeting might end and good ideas go unheard. Negative outcomes of PDM are: high costs, inefficiency, and incompetence (Debruin 2007).

[edit]Decision-making through computer-mediated technology

A new kind of participative decision-making is communication through the computer. Although a relatively new approach, this way can involve endless possibilities in order to reach a major organizational decision. There is a huge increase in more active and equal member participation. Individuals can talk to many other individuals at any time, regardless of geographic location and time zone. An organization can come together on a virtual site developed to make it easier to share emails, share presentations and even have a chat room where anyone can add their input. Through a chat room, members of the organizations are able to see what everyone says and no one is blocked from saying their ideas. There is also now a record of past archives of what was said (Berry 2002).

Some disadvantages of a computer-mediated meeting is that sometimes feedback can be slow. Also, there can be many conversations under way at the same time and it might cause confusion. Flaming is also known as a computer-mediated problem and is when a person uses inappropriate behavior or language. Members also feel less personal and relational to their team members (Berry 2002).

[edit]Vigilant Interaction Theory

According to Papa et al., the vigilant interaction theory is a theory that states the quality of the group in a decision-making team, is dependent on the group's attentiveness during interaction. Critical thinking is important for all group members in order to come up with the best possible solution to the decision. Four questions that should be asked:

1. Analyze the problem- What needs to be fixed?

2. Think of objectives- What are we trying to accomplish with this decision.

3. Discuss choices- Think of possible choices that can be used.

4. Evaluate- After coming up with choices, think of all the positive and negative aspects of each.

[edit]Kinds of Participative Decision-Making

In organizations, when coming together to make decisions there are many different types. They are: Collective PDM, Democratic PDM, Autocratic PDM, andConsensus PDM. A PDM style includes any type of decision transfer from a superior to their subordinates (Sager 1999).


In a collective participative decision-making style, the members of the organization have some say of the decision process. This is the most common type used by organizations and is proven to be very effective. Although employees are asked for their opinions, the leader alone makes the final decision and has all control of how the decision will pan out, and takes full responsibility of all the consequences (Connor 2003).


In a democratic participative decision-making style, the leader gives up complete ownership of the decision and lets employees vote. The majority of the votes will win. This causes a fast and effective decision to be made. Although the team might reach a fast decision, no one takes responsibility for the decision and if something goes wrong, an employee can simply state that they did not vote for it.


In an autocratic participative decision-making style, like the collective style, the leader takes control and responsibility of the final decision. The difference is that in an autocratic style, members of the organizations are not included and the final outcome is all on the leader. This is the best style to use in an emergency when an immediate decision is needed.


In a consensus participative decision-making style, the leader gives up complete control and responsibility of the decision and leaves it to the members of the organization. Everyone must agree and come to the same decision. This might take a while, but the decisions made are usually the best since it involves the ideas and skills of many other people. Team work is important in this style and brings members closer together while trust and communication increase.

[edit]Making Decisions Based on Information

To make a good decision, there needs to be a good amount of information that you are basing the outcome from. Information can include anything from charts, surveys, past sales reports, to prior research. When making a decision primarily based from the information you are given from your organization, you can come to a conclusion in four different ways.

Decisive - Little amount of information and one course of action. Decisions are made fast, direct, and firmly.

Flexible - Little information available, but time is not an issue and they come up with many different courses of action.

Hierarchic - Much information available, but one course of action is made.

Integrative - Much information is available, and many decisions are made out of it.

[edit]Decision-Making Stages

Developed by B. Aubrey Fisher, there are four stages that should be involved in all group decision making. These stages, or sometimes called phases, is important for the decision-making process to begin(Papa).

Orientation stage- This phase is where members meet for the first time and start to get to know each other.

Conflict stage- Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out.

Emergence stage- The group begins to clear up ambigiuity in opinions is talked about.

Reinforcement stage- Members finally make a decision, while justifying themselves that it was the right decision.

[edit]Decision-Making Steps

When in an organization and faced with a difficult decision, there are several steps one can take to ensure the best possible solutions will be decided. These steps are put into seven effective ways to go about this decision making process (McMahon 2007).

The first step- Outline your goal and outcome. This will able decision makers to see exactly what they are trying to accomplish and keep them on a specific path.

The second step- Gather data. This will help decision makers have actual evidence to help them come up with a solution.

The third step-Brainstorm to develop alternatives. Coming up with more than one solution ables you to see which one can actually work.

The fourth step-List pros and cons of each alternative. With the list of pros and cons, you can eliminate the solutions that have more cons then pros, making your decision easier.

The fifth step - Make the decision. Once you analyze each solution, you should pick the one that has many pros, and the one that everyone agrees with.

The sixth step-Immediately take action. Once the decision is picked, you should implement it right away.

The seventh step - Learn from, and reflect on the decision making. This step allows you to see what you did right and wrong when coming up, and putting the decision to use.


Allen, J.F., & Judd, B.B.,(2007). Participation in decision-making and job satisfaction: Ideal and reality for male and female university faculty in the United States. Human Communication 10(3), 157-179.

Asmub,B., & Svennevig, J., (2009). Meeting talk. Journal of Business Communication. 46(1), 3-22

Berry, G.R.,(2006). Can computer-mediated, asynchronous communication improve, team processes and decision-making?. Journal of Business Communication. 43(4),344-366.

Brousseau, K.R., Driver, M.J., Hourihan, G., & Larsson, R.(2006). The seasoned executive's decision-making style. Harvard Business Review. 84(2), 110-121.

Connor, P.E., & Becker, B.W.(2003). Personal value systems and decision-making styles of public managers. Public Personnal Management. 32(1), 155-181.

DeBruin, W.B., Parker, A.M., & Fischhoff, B. (2007). Individual differences in adult decision-making competence.Journal of Personality & Social Psychology92(5),938-956.

McMahon, M.(2007).Career Coach: Decision Making. Pulse. United Kingdom

Papa, M.J., Daniels, T.D., & Spiker, B.K.(2008). "Organizational Communication: Perspective and Trends" Sage.

Sagie, A., & Aycan, Z.,(2003). A cross-cultural analysis of participative decision-making on organizations. Human Relations 56(4), 453-473.

Sager, K.L., & Gastil, J.,(1999). Reaching consensus on consensus: A study of the relationships between individual decision-making styles and the use of the consensus decision rule. Communication Quarterly. 47(1), 67-79.

Walker, G.B.,(2007). Public participation as participatory communication in environmental policy decision-making: From concepts to structured conversations.Environmental Communication. 1(1), 99-110.

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Original source:

What is effectuation?

Effectuation is a type of human problem solving that takes the future as fundamentally unpredictable, yet controllable through human action; the environment as constructible through choice; and goals as negotiated residuals of stakeholder commitments rather than as pre-existent preference orderings.  Back to top


What are the key elements of effectuation?

  • A focus on non-predictive control of the future

  • Being tethered to means and being flexible with regard to goals

  • Who comes on board determines what gets done and is in turn determined by what they commit to getting it done.


Back to top


What is the logic underlying effectuation?

To the extent we can control the future, we do not need to predict it.  Back to top


What is the fundamental behavioral assumption underlying effectuation?

Not opportunism and not altruism/trust – but docility (See Simon’s 1993 AER paper titled Altruism and Economics for details).  Docility is the idea that all human beings (leader and member alike) are persuasive and persuadable to varying degrees along a variety of dimensions.  Back to top


How is the use of effectuation related to performance?

At the micro-level (Level of individuals and firms)

  1. First, effectuation separates the performance of a firm from that of the entrepreneur.

  2. Even if superior firm performance is assumed exogenous, effectuation reduces the costs of failure – i.e. in the effectual firm, when failures occur, they occur earlier and at lower levels of investment.

  3. Effectuation also increases the probability of entrepreneurial success, irrespective of the probability of firm success – it allows the entrepreneur to create a larger temporal portfolio.  Because the effectual entrepreneur is able to create more number of firms over his or her lifetime, it increases his or her chances of hitting a home run, ceteris paribus

At the macro-level (Level of the economy)

  1. A larger proportion of the population become entrepreneurs

  2. More firms get founded

  3. Failing firms fail at a lower level of investment            Back to top


What are the boundaries and limitations of effectuation?

Effectuation is most effective in a problem space where the future is highly unpredictable, the decision maker’s goals are ambiguous, and the environment is not independent of the actors involved.  It follows then that it is not effective in exogenous environments that are predictable and where goals are specified ex-ante.

The following diagrams illustrate two ways of organizing the boundaries for effectuation:

Back to top


What is NOT effectuation?  Comparisons with related extant theories

Effectuation is not Bayesianism

While Bayesianism uses its probability estimates as proxy for the truth and focuses on updating our beliefs about the future based on those estimates, effectuation seeks to falsify the conditioning assumptions of the estimate so the prediction does not come true – i.e., the Bayesian takes the distribution as independent of the decision maker; but the effectuator partitions the event space into controllable and uncontrollable events and takes the distribution as largely endogenous to his or her own actions.  Back to top

Effectuation is not improvisation

While the improviser is creative in the use of his or her means, effectual creativity has more to do with the generation of novel goals.  Moreover, effectuation spells out specific strategies for goal creation with stakeholders taking center-stage rather than available resources.  Effectuation emphasizes a logic that is an inversion of traditional goal driven maximization, rather than a time compressed or even simultaneous execution of traditional notions of rationality.  Back to top

Effectuation is not unconstrained social construction. 

In fact, effectuation is highly constrained by actual means available and negotiations with particular stakeholders on particular commitments.  However, entrepreneurs act on the belief that their actions have a large impact on what will happen in their future.  Additionally, to varying degrees in different settings, these actions can contribute to the creation of their future.  Effectuation spells out a path to transform a wide variety of stakeholders with pluralistic and even conflicting aspirations into a meaningful hierarchy of constraints that converge into valuable pragmatic goals – for the individual, the organization and society.  Back to top


Graphical representation of Effectuation as a Process

Back to top


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  1. Favicon of BlogIcon Persuasive Essay Topics 2011.06.15 16:19  댓글주소  수정/삭제  댓글쓰기

    나는 큰 기쁨으로이 정보를 읽을 수 있습니다. 그런 좋은 게시물 주셔서 감사합니다!

Leadership Models and Theories

Fiedler's Contingency Model.

Leadership Traits

Leadership theories that attempt to identify the common traits possessed by successful leaders.  These traits included:

·         Adaptable to situations

·         Alert to social environment

·         Ambitious and achievement oriented

·         Assertive

·         Cooperative

·         Decisive

·         Dependable

·         Dominant (desire to influence others)

·         Energetic (high activity level)

·         Persistent

·         Self-confident

·         Tolerant of stress

·         Willing to assume responsibility


However the list is ever growing and no definitive list is possible


Leadership Styles and Behaviours

A different perspective to trait theory for leadership is to consider what leaders actually do as opposed to their underlying characteristics.  A number of models and theories have been put forward to explore this.


T. McGregor (1906-1964) postulated that managers tend to make two different assumptions about human nature.  These views he explored in his theory X and theory Y:




Theory X

1.       The average human being has an inherent dislike of work and will avoid it if he or she can.

2.       Because of this human characteristic, most people must be coerced, controlled, directed, and threatened with punishment to get them to put forth adequate effort toward the achievement of organisational objectives.

3.       The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants security above all.

Theory Y

1.       The expenditure of physical and mental effort in work is as natural as play or rest.

2.       External control and threat of punishment are not the only means for brining about effort toward organisational objectives.  People will exercise self-direction and self-control in the service of objectives to which they are committed.

3.       Commitment to objectives is a function of the rewards associated with their achievement.

4.       The average human being learns, under proper conditions, not only to accept responsibility but to seek it.

5.       The capacity to exercise a relatively high degree of imagination. Ingenuity, and creativity in the solution of organisational problems is widely, not narrowly, distributed I the population.

6.       Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilised.



Other studies were carried out to identify successful leadership behaviours, including studies at Ohio State University and Michigan University, following on from this research two studies of particular note were by Gary M. Yukl and by Robert Blake and Jane Mounton.


Ohio State University Research


A series of studies at the University indicated that two behavioural dimensions play a significant role in successful leadership.  Those dimensions are:

Consideration – (friendship, mutual trust, respect and warmth)

Initiating Structure – (organises and defines relationships or roles, establishes well-defined patterns of organisation, channels of communication, and ways of getting jobs done.)



University of Michigan Research 

Studies carried at the university revealed two similar aspects of leadership style that correlate with effectiveness:

Employee Orientation – (the human-relations aspect, in which employees are viewed as human beings with individual, personal needs)

Production Orientation – (Stress on production and the technical aspects of the job, with employees viewed as the means of getting the work done.


Gary M. Yukl felt that there was a void in existing descriptions of leader behaviour.  They did not provide specific guidelines for behaviour in varying situations.  He and his colleagues isolated eleven leadership behaviours which fall into four broad categories:



Building Relationships

1.       Networking

2.       Supporting

3.       Managing conflict


Influencing People

4.       Motivating

5.       Recognising and rewarding


Making Decisions

6.       Planning and organising

7.       Problem solving

8.       Consulting and delegating


Giving / Seeking Information

9.       Monitoring operations and environment

10.   Informing

11.   Clarifying roles

The Leadership Grid

Robert Blake and Jane Mouton developed another theory called the Leadership Grid, focusing on production/relationship orientations uncovered in the Ohio State and Michigan University studies.  They went a little further by creating a grid based on Leaders’ concern for people (relationships) and production (tasks).  It theory suggest there is a best way to lead people the 9,9 way.


   The leadership Grid


The Major Leadership Grid Styles

1,1        Impoverished management. Often referred to as Laissez-faire leadership.  Leaders in this position have little concern for people or productivity, avoid taking sides, and stay out of conflicts.  They do just enough to get by.

1,9        Country Club management.  Managers in this position have great concern for people and little concern for production.  They try to avoid conflicts and concentrate on being well liked.  To them the task is less important than good interpersonal relations.  Their goal is to keep people happy.  (This is a soft Theory X approach and not a sound human relations approach.)

9,1        Authority-Compliance.  Managers in this position have great concern for production and little concern for people.  They desire tight control in order to get tasks done efficiently.  They consider creativity and human relations to be unnecessary.

5,5        Organisation Man Management.  Often termed middle-of-the-road leadership.  Leaders in this position have medium concern for people and production.  They attempt to balance their concern for both people and production, but they are not committed.

9+9      Paternalistic “father knows best” management.  A style in which reward is promised for compliance and punishment threatened for non-compliance

Opp  Opportunistic “what’s in it for me” management.  In which the style utilised depends on

         which style the leader feels will return him or her the greatest self-benefit.

9,9        Team Management.  This style of leadership is considered to be ideal.  Such managers have great concern for both people and production.  They work to motivate employees to reach their highest levels of accomplishment.  They are flexible and responsive to change, and they understand the need to change.




Contingency Approaches

Contingency theories propose that fro any given situation there is a best way to manage.  Contingency theories go beyond situational approaches, which observe that all factors must be considered when leadership decisions are to be made. Contingency theories attempt to isolate the key factors that must be considered and to indicate how to manage when those key factors are present.  


The continuum of Leadership Behaviour

The model put forward by Robert Tannenbaum and Warren H. Schmidt framed leadership in terms of choices managers may make regarding subordinates’ participation in decision making.


 The continuum of leadership behaviour

The actions shown at the left side of the continuum are relatively authoritarian; those at the right side are relatively participative.  The manager’s choices depend on three factors:



1.       Forces in the manager: The manager’s value system, confidence in subordinates, leadership inclinations, and feelings of security in an uncertain situation.

2.       Forces in the subordinate: Expectations, need for independence, readiness to assume decision-making responsibility, tolerance for ambiguity in task definition, interest in the problem, ability to understand and identify with the goals of the organisation, and knowledge and experience to deal with the problem.

3.       Forces in the situation:  Type of organisation, effectiveness of the group, the problem itself (the task), and time pressure.



Fielder’s Contingency Model

In this model leadership is effective when the leader’s style is appropriate to the situation, as determined by three principal factors:



1.       Leader-member relations: The nature of the interpersonal relationship between leader and follower, expressed in terms of good through poor, with qualifying modifiers attached as necessary.  It is obvious that the leader’s personality and the personalities of subordinates play important roles in this variable.

2.       Task structure: The nature of the subordinate’s task, described as structured or unstructured, associated with the amount of creative freedom allowed the subordinate to accomplish the task, and how the task is defined.

3.       Position power:  The degree to which the position itself enables the leader to get the group members to comply with and accept his or her direction and leadership



Fielder's Contingency Model

Path-Goal Theory

A leadership theory that focuses on the need for leaders to make rewards contingent on the accomplishment of objectives and to aid group members in attaining rewards by clarifying the paths to goals and removing obstacles to performance.  According to the goal-path theory there are four primary styles of leadership:


1.       Directive Leadership: The leader explains the performance goal and provides specific rules and regulations to guide subordinates toward achieving it.

2.       Supportive Leadership: The leader displays personal concern for subordinates.  This includes being friendly to subordinates and sensitive to their needs.

3.       Achievement-oriented Leadership:  The leader emphasises the achievement of difficult tasks and the importance of excellent performance and simultaneously displays confidence that subordinates will perform well.

4.       Participative Leadership: The leader consults with subordinates about work, task goals, and paths to resolve goals.  This leadership style involves sharing information as well as consulting with subordinates before making decisions.



The Path-Goal Model

 The Path-Goal Model




Action Centred Leadership

A model proposed by John Adair (1973) argued that it is not who you are but what you do which establishes you as a leader.  A leader needs to balance the needs of the task, the team and the individual, shown clearly in the diagram below in his 3 circle model.  The effective leader carries out the functions and demonstrates the behaviours appropriate to the circles, varying the level according to the needs of the situation.  The leader whilst balancing the three circles, sits in his/her helicopter above the process, ensuring the best possible overview of what is happening.

Action Centred Leadership Model





Leaders Behaviour under Task

·         Providing clear Objectives

·         Providing appropriate procedures

·         Ensuring there is evidence of progress

·         Ensuring avoidance of digression

·         Ensuring deadlines are met

 Leaders Behaviour under Team

·         Commitment

·         Trust & Openness

·         Sense of purpose

·         Stability

·         Cohesion

·         Success

·         Fun

Leaders Behaviour under Individual

·         To be included

·         To make a contribution

·         To be respected

·         To receive Feedback

·         To feel safe

·         To grow



The Leaders Blueprint






Define Objectives

Identify Tasks and Constraints


Hold team meetings Share Commitment

Clarify Objectives

Gain Acceptance







Consider options

Check resources

Consult     Encourage Ideas

Develop Suggestions     Assess skills



Prioritise   Time scales



Allocate Jobs  Delegate

Set targets


Clarify Objectives   Describe plan


Explain decisions   Listen  Answer questions  Enthuse  Check understanding

Monitor Support

Assess Progress   Maintain standards

Co-ordinate  Reconcile conflict  Recognise effort



Counsel  Discipline


Summarise Progress

Review Objectives

Re-plan Objectives if necessary

Recognise and gain from Success

Learn from Mistakes

Appraise Performance

Guide and Train             Give Praise 


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The Garbage Can Model is a theory within the science of public administration that explains organizational decision making from a systemic-anarchic perspective.



[edit] Development of the Garbage Can Model

The Garbage Can model of organizational theory was developed in 1972 by Michael D. Cohen, James G. March and Johan P. Olsen.

It was developed in reference to "ambiguous behaviors", i.e. explanations/interpretations of behaviors which at least appear to contradict classical theory. The Garbage Can Model was greatly influenced by the realization that extreme cases of aggregate uncertainty in decision environments would trigger behavioral responses which, at least from a distance, appear "irrational" or at least not in compliance with the total/global rationality of "economic man" (e.g. "act first, think later"). The Garbage Can Model was originally formulated in the context of the operation of universities and their many inter-departmental communications problems.

The Garbage Can Model tried to expand organizational decision theory into the then uncharted field of organizational anarchy which is characterized by "problematic preferences", "unclear technology" and "fluid participation". "The theoretical breakthrough of the Garbage Can Model is that it disconnects problems, solutions and decision makers from each other, unlike traditional decision theory. Specific decisions do not follow an orderly process from problem to solution, but are outcomes of several relatively independent stream of events within the organization." (Richard L. Daft, 1982, p.139).

The model was based on a computer simulation coded in FORTRAN. The coding was included as an appendix in the original 1972 article , which was the first time a coding sequence appeared in a social science article.[citation needed]

[edit] Streams of events within the Garbage Can Model

Four of those streams were identified in Cohen, March & Olsen's original conceptualization:

[edit] Problems

Problems require attention, they are the result of performance gaps or the inability to predict the future. Thus, problems may originate inside or outside the organization. Traditionally, it has been assumed that problems trigger decision processes; if they are sufficiently grave, this may happen. Usually, however, organization man goes through the "garbage" and looks for a suitable fix, called a "solution".

[edit] Solutions

They have a life of their own. They are distinct from problems which they might be called on to solve. Solutions are answers (more or less actively) looking for a question. Participants may have ideas for solutions; they may be attracted to specific solutions and volunteer to play the advocate. Only trivial solutions do not require advocacy and preparations. Significant solutions have to be prepared without knowledge of the problems they might have to solve.

[edit] Choice opportunities

There are occasions when organizations are expected (or think they are expected) to produce behavior that can be called a decision (or an "initiative"). Just like politicians cherish "photo opportunities", organization man needs occasional "decision opportunities" for reasons unrelated to the decision itself.

[edit] Participants

They come and go; participation varies between problems and solutions. Participation may vary depending on the other time demands of participants (independent from the particular "decision" situation under study). Participants may have favorite problems or favorite solutions which they carry around with them. They may carry these around until they are able to share them with others and either get assistance in resolving the problem or providing a solution to a problem.

[edit] Why "garbage cans"?

It was suggested that organizations tend to produce many "solutions" which are discarded due to a lack of appropriate problems. However problems may eventually arise for which a search of the garbage might yield fitting solutions.

Probably the most extreme view (namely that of organizational anarchy) of the Carnegie School. Organizations operate on the basis of inconsistent and ill-defined preferences; their own processes are not understood by their members; they operate by trial and error; their boundaries are uncertain and changing; decision-makers for any particular choice change capriciously. To understand organizational processes, one can view choice opportunities as garbage cans into which various kinds of problems and solutions are dumped. The mix of garbage depends on the mix of labeled cans available, on what garbage is currently produced and the speed with which garbage and garbage cans are removed.

[edit] Critiques of the Garbage Can

The Garbage Can model was criticized by Bendor, Moe, and Shotts in their 2001 American Political Science Review article, "Recycling the Garbage Can: An Assessment of the Research Program." In addition to a number of substantive critiques, the paper notes that the informal theory and the computer model are dramatically inconsistent with one another.

[edit] References

  • Bendor, Jonathan, Terry M. Moe, Kenneth W. Shotts "Recycling the Garbage Can: An Assessment of the Research Program" American Political Science Review, Vol. 95, No. 1. (Mar., 2001), pp. 169-190.
  • Cohen, Michael D., James G. March, Johan P. Olsen A Garbage Can Model of Organizational Choice Administrative Science Quarterly, Vol. 17, No. 1. (Mar., 1972), pp. 1-25.[particularly pp.1-3 & 9-13]
  • Das TK, Teng BS, Cognitive biases and strategic decision processes: An integrative perspective, JOURNAL OF MANAGEMENT STUDIES, 36(6) 757-778 NOV 1999
  • Kilduff M, Angelmar R, Mehra A, Top management-team diversity and firm performance: Examining the role of cognitions, ORGANIZATION SCIENCE, 11: (1) 21-34 JAN-FEB 2000
  • Ryan K. Lahti Group Decision Making within the Organization: Can Models Help?
  • March, James G. and Johan P. Olsen. Ambiguity and Choice in Organizations, 2nd edition, Bergen: Universitetsforlaget, 1979. [LB2806.M353.1979]
  • Schmid, H., Dodd, P. & Tropman, J. E. (1987). Board decision making in human service organizations, Human Systems Management, 7(2) 155-161

[edit] External links

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Four Models of (Individual / Organizational) Decision Making.




In this module you will learn
  • the principle of the classical model of rational decision making
  • the limitations of rational decision making and the important concept of bounded rationality
  • 4 models of organizational decision making
    • the management science approach
    • the Cyert-March-Simon (aka Carnegie) model
    • the Mintzberg incremental decision process
    • the garbage can model
  • how the 4 decision making models can be integrated into a single contingency model of organizational decision making based on the 2 dimensions of
    • goal consensus (= degree of agreement on goals among managers)
    • technical knowledge (= knowledge of cause-effect relationships leading to goal attainment)


1.  Rational Approach

The rational approach to decision making is the systematic analysis of a problem and choice of a solution.

Q - Recall one episode in your life in which you feel you have made a decision rationally.  Describe how you arrived at your decision.  (Hint: Choosing a major?  A place to live?  A brand of bicycle to buy?)
Rational decision making takes place in 2 stages (problem identification and problem solution) and can be further broken down into 8 steps.

Exhibit:  Steps in rational decision making  (Daft E11-2 p. 406)

Minicase:  Alberta Manufacturing  (Daft p. 406).  Employee Joe DeFoe is often absent on mondays because of a drinking problem.  The search for a way to handle Joe's absenteeism illustrates the rational approach to decision making.

(NOTE: meaning of "rational approach" used here differs somewhat from the notion of rational behavior in economic theory.  The rational model of economics assumes only that individuals maximize subjective utility.)

Q - "The stage of the rational approach to decision making in which alternative courses of action are considered and one is chosen and implemented is called problem solution."  (TRUE/FALSE?)

2.  Bounded Rationality

Q - Recall an episode in which you could not choose/decide in a rational manner (systematically evaluating all the alternatives and choosing the optimal one).  Describe how you arrived at the decision, and why you could not use the rational approach.  (Hint: Choosing a brand of running shoes to buy?  A book to read over the weekend?)


  • programmed decision:  repetitive, well defined, procedures exist to find a solution (cf. analyzable task in Module 4)
  • non programmed decision:  novel, poorly defined, no procedure exists for finding a solution (cf. unanalyzable task in Module 4)
The bounded rationality perspective on decision making recognizes that the rational approach is often inapplicable, because of bounded rationality (limited time & mental capacity, limited information, & limited resources), as well as personal & social constraints on the individual; bounded rationality constraints are especially important for non programmed decisions.

Exhibit:  Constraints in non programmed decision making  (Daft E11-3 p. 408)

Bounded rationality perspective explains the importance and pervasiveness of intuitive decision making, based on experience, gut feelings, etc., rather than a logical sequence of steps.  EX: buying a tie

Minicase:  Paramount Pictures Corp.  (Daft p. 410-411).  Describes how Barry Diller and Michael Eisner (who were chairman & president of Paramount, respectively) successfully used intuitive decision making to choose movies that the public liked.

Q - "Intuitive decision making uses logic to make decisions."  (TRUE/FALSE?)

Q - "In the Paramount Pictures example, Michael Eisner used intuitive decision making in selecting films."  (TRUE/FALSE?)


Q - Recall an episode in which you made a decision together with one or several other persons.  Describe the decision making process.  How was the decision making process affected by the fact that several persons were deciding together?

In organizations, decisions are made by a collective rather than a single individuals, so that decision making processes are more complicated.  The complication arises from the possibility of disagreement among influential members (such as managers) or factions within the organization.

4 types of decision making processes are distinguished.

1.   Management Science Approach

Developed during World War II, the management science approach is the organizational analog of rational approach at the individual level.  It is based on the use of statistical & mathematical models to find optimal solution to problem (aka operations research).

Minicase:  Urgence Sante  (Daft p. 412).  This public agency schedules ambulance services in the Montreal area involving 80 ambulances and 700 workers with the goal of keeping costs as low as possible.  Urgence Sante uses mathematical techniques to optimize scheduling according to the day of the week and the season.

EX: in the training of flight attendants by an airline decisions must be made concerning how often to schedule classes, and how large the classes should be, to minimize total cost of training.

The management science approach is best used for problems

  • that are analyzable
  • where variables can be identified & measured
 Q - "Management science works best for decisions when problems are analyzable."  (TRUE/FALSE?)

2.  Cyert-March-Simon (aka Carnegie) Model

Developed by Richard Cyert, James March, and Herbert Simon, originally at Carnegie-Mellon University.  This model is the organizational analog of the bounded rationality approach at the individual level.  It emphasizes:
  • bounded rationality (limited time & mental capacity of managers, limited information & resources, so a rational solution often cannot be derived)
  • there is often disagreement among managers about goals, so decision making often necessitates the formation of coalitions of managers who agree on goals and priorities; thus the Cyert-March-Simon model emphasizes the political process involved in decision making
  • hence, managers tend to engage in a problemistic search (= looking around for a quick solution in the immediate, local environment, rather than trying to develop the optimal solution)
  • thus, solution is often chosen to "satisfice" (satisfy + suffice) rather than optimize
Exhibit:  Cyert-March-Simon decision making model  (Daft E11-4 p. 414)
Minicase:  Greyhound Lines, Inc.  (Daft p. 415).  Top management plans to reorganize Greyhounds with cuts in personnel and services and comprehensive computerization are thwarted by disagreement with middle managers.  This illustrates the importance of coalition formation in decision making.

NOTE: the C-M-S model was revolutionary when it appeared because it opposed two traditional assumptions about organizations:

  • the view that the organization makes decisions as a single entity (which presumes that decision making power is concentrated at the top)
  • the assumption that organizations optimize (as in the theory of the firm in economics)
Q - "Problemistic search means that managers look around in the extended environment for a solution to eventually resolve a problem."  (TRUE/FALSE?)

Q - "The Cyert-March-Simon (aka Carnegie) model of organizational decision making says that coalition building is important only at lower levels of management."  (TRUE/FALSE?)

Q - A small university department was comprised of six male faculty members.  During faculty meetings when the department was faced with a difficult decision, a faculty member would suggest they take a break.  During the break, four faculty members would adjourn to the rest room and agree on the decision that would be made.  This an example of what aspect of the C-M-S (aka Carnegie) model?

Q - "The case of Greyhound Lines, Inc. shows that lack of coalition building can lead to organizational failure."  (TRUE/FALSE?)

3.  Incremental Decision Process Model

Developed by Henry Mintzberg at McGill University on the basis of empirical research into the actual decision making process of firms developing new products.  The incremental decision process model emphasizes the structured sequence of activities leading to the solution to a problem.  Major decisions are broken down in small steps taking place in three major phases: the identification, development, & selection phases.
Exhibit:  Incremental decision process model  (Daft E11-5 p. 417)

Minicase:  Gillette Company  (Daft pp. 418-419).  The 13 years development of the Sensor razor illustrates several aspects of the  incremental decision process, including internal and external interrupts.

Contrasting the C-M-S & incremental decision models reveals that the 2 models differ in their emphasis on

  • problem identification (emphasized in C-M-S)
  • problem solution (emphasized in incremental decision process)
Exhibit:  Problem identification versus problem solution  (Daft E11-6 p. 420)
Q - "The incremental decision process model emphasizes political factors."  (TRUE/FALSE?)

Q - "In the incremental decision process, a decision interrupt occurs when an organization must cycle back through a previous decision and try something new."  (TRUE/FALSE?)

4.  Garbage Can Model

The garbage can model was developed by Michael Cohen, James March, & Johan Olsen to describe organizations characterized by organized anarchy (= high uncertainty in both problem identification and problem solution), such as universities.

Organized anarchies have 3 characteristics:

  • problematic preferences (i.e., substantial disagreement on goals)
  • poorly understood technology (= cause & effect relationships difficult to identify)
  • rapid turnover of participants
EX: a university dealing with the "parking problem", the "minority enrollment" problem, the "intellectual climate" problem, etc.

The garbage can model is embodied in a computer simulation with 4 streams of events:

  • problems (= point of dissatisfaction with current situation)
  • potential solutions (= ideas proposed by someone)
  • participants (= employees who come & go)
  • choice opportunities (= occasions for decisions)
Exhibit:  Garbage can model  (Daft E11-7 p. 422)

Examination of the results of the computer simulation reveal the consequences of the model.  The results include

  • solutions without problems (EX: "let's put it on the web")
  • choices made which do not solve problem (EX: changing fraternity rush to improve the intellectual climate)
  • persisting unsolved problems (EX: the parking problem)
  • some problems are resolved (EX: ?)
Minicase:  Casablanca  (Daft p. 423).  The garbage can model is appropriate to describe the chaotic filming of Casablanca with Humphrey Bogart and Ingrid Bergman, with its numerous changes in plot and last minute casting of actors.

Q - Which of the following are characteristics of organizational anarchies?

  • clearly defined problems (Y/N)
  • routine technology (Y/N)
  • slow change (Y/N)
  • ambiguous goals (Y/N)
  • rapid turnover (Y/N)
Q - "In the garbage can model solutions may be proposed even when problems do not exist."  (TRUE/FALSE?)


The contingency framework is based on 2 dimensions:
  • goal consensus (= degree of agreement on goals among managers)
  • technical knowledge (= knowledge of cause-effect relationships leading to goal attainment)
The contingency framework is shown in 2 steps.

Exhibit:  Decision situations  (Daft E11-8 p. 426)

Exhibit:  Decision making processes in 4 decision situations  (Daft E11-9 p. 427)

Exhibit:  Consolidated contingency framework for decision making  (cf Daft pp. 426-427)

Q - What is the best decision making model to describe the production of the movie Casablanca?

Q - In the contingency approach to decision making, when there is a high degree of agreement among managers concerning goals, but there is uncertainty about cause-effect relationships leading to goal attainment, what is the appropriate decision making process?

Q - In the contingency approach to decision making, when there is disagreement among managers concerning goals, but there is no uncertainty about cause-effect relationships leading to goal attainment, what is the appropriate decision making process?

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Herbert Simon, The Challenger for 'Rational Decision-Making" (1916~2001)

Bounded rationality

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In game theory, bounded rationality is a concept based on the fact that rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions. This contrasts with the concept of rationality as optimization.[1] Another way to look at bounded rationality is that, because decision-makers lack the ability and resources to arrive at the optimal solution, they instead apply their rationality only after having greatly simplified the choices available. Thus the decision-maker is a satisficer, one seeking a satisfactory solution rather than the optimal one.[2]

Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rational" entities (see for example rational choice theory). Many economics models assume that people are on average rational, and can in large enough quantities be approximated to act according to their preferences. The concept of bounded rationality revises this assumption to account for the fact that perfectly rational decisions are often not feasible in practice due to the finite computational resources available for making them.

[edit] Models of bounded rationality

The term is thought to have been coined by Herbert Simon. In Models of Man, Simon points out that most people are only partly rational, and are in fact emotional/irrational in the remaining part of their actions. In another work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information" (Williamson, p. 553, citing Simon). Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while sticking within the vein of fairly rigorous formalization. These include:

  • limiting what sorts of utility functions there might be.
  • recognizing the costs of gathering and processing information.
  • the possibility of having a "vector" or "multi-valued" utility function.

Simon suggests that economic agents employ the use of heuristics to make decisions rather than a strict rigid rule of optimization. They do this because of the complexity of the situation, and their inability to process and compute the expected utility of every alternative action. Deliberation costs might be high and there are often other, concurrent economic activities also requiring decisions.

Daniel Kahneman proposes bounded rationality as a model to overcome some of the limitations of the rational-agent models in economic literature.

As decision makers have to make decisions about how and when to decide, Ariel Rubinstein proposed to model bounded rationality by explicitly specifying decision-making procedures. This puts the study of decision procedures on the research agenda.

Gerd Gigerenzer argues that most decision theorists who have discussed bounded rationality have not really followed Simon's ideas about it. Rather, they have either considered how people's decisions might be made sub-optimal by the limitations of human rationality, or have constructed elaborate optimising models of how people might cope with their inability to optimize. Gigerenzer instead proposes to examine simple alternatives to a full rationality analysis as a mechanism for decision making, and he and his colleagues have shown that such simple heuristics frequently lead to better decisions than the theoretically optimal procedure.

From a computational point of view, decision procedures can be encoded in algorithms and heuristics. Edward Tsang argues that the effective rationality of an agent is determined by its computational intelligence. Everything else being equal, an agent that has better algorithms and heuristics could make "more rational" (more optimal) decisions than one that has poorer heuristics and algorithms.

[edit] References

  • Jon Elster (1983). Sour Grapes: Studies in the Subversion of Rationality. Cambridge, UK: Cambridge University Press.
  • Gigerenzer, G. & Selten, R. (2002). Bounded Rationality.Cambridge: The MIT Press; reprint edition. ISBN 0-262-57164-1
  • Hayek, F.A (1948) Individualism and Economic order
  • Kahneman, Daniel (2003). Maps of bounded rationality: psychology for behavioral economics. The American Economic Review. 93(5). pp. 1449–1475
  • March, James G. (1994). A Primer on Decision Making: How Decisions Happen. New York: The Free Press.
  • Rubinstein, A. (1998). Modeling bounded rationality, MIT Press.
  • Simon, Herbert (1957). "A Behavioral Model of Rational Choice", in Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting. New York: Wiley.
  • Simon, Herbert (1990). A mechanism for social selection and successful altruism, Science 250 (4988): 1665-1668.
  • Simon, Herbert (1991). Bounded Rationality and Organizational Learning, Organization Science 2(1): 125-134.
  • Tisdell, Clem (1996). Bounded Rationality and Economic Evolution: A Contribution to Decision Making, Economics, and Management. Cheltenham, UK; Brookfield, Vt.: Edward Elgar.
  • Tsang, E.P.K. (2008). Computational intelligence determines effective rationality, International Journal on Automation and Control, Vol.5, No.1, 63-66.
  • Williamson, Oliver (1981). The economies of organization: the transaction cost approach. American Journal of Sociology 87

(3): 548-577.

  1. ^ Gigerenzer, Gerd; Selten, Reinhard (2002). Bounded Rationality: The Adaptive Toolbox. MIT Press. ISBN 0262571641.,M1. 
  2. ^ "Bounded rationality: Definition from". Answers Corporation. Retrieved 2009-04-12.

Bounded Rationality


Explanations > Theories > Bounded Rationality

Description | Example | So what? | See also | References 



We are, to some extent, rational beings in that we will try to logically understand things and make sensible choices.

However, the world is large and complex, and we do not have the capacity to understand everything. We also have a limited time in which to make decisions. We are also limited by the schemas we have and other decisional limitations.

As a result, our decisions are not fully thought through and we can only be rational within limits such as time and cognitive capability. Herbert Simon indicated that there were thus two major causes of bounded rationality:

  • Limitations of the human mind
  • The structure within which the mind operates

This impacts decision models that assume us to be fully rational. For example when calculating expected utility, you may be surprised to find that people do not make the best choices.


I choose a new hi-fi system based on reading a few magazines and listening to several friends. When the sales person offers me a better bargain, I still turn it down.

So what?

Using it

Either play within the bounds of rationality by giving the other person few choices and limited criteria, or break their existing bounds by showing how these are ineffective (then help them set up cognitive camp elsewhere).


When you make a decision, pause to reflect whether what seems rational is adequate. As necessary, test your decision with other people. Do not be hurried into a decision by others.

See also



Savage (1954), Newell and Simon (1972), Simon (1982)


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