Choice Theory Flashcards
What is the key of choice theory?
Choice theory chooses the decision-making process as a central starting point to analyze organizations (instead of leading systems)
What is it’s institutional & instrumental view?
institutional: modern companies as complex organization’s where decisions are continuously made. The enterprise is organizationally - meaning humans with different targets, information & expectation making difficult decisions
instrumental: through an organization, authority is granted and information streams are directed and canalized. Organization as a complex structure of communication and relations in a group of humans. Organizational problem of design: targeted directing decisions of organizational members
What are the streams of choice theory?
Choice process-driven approach: Descriptive choice theory, description of actually proceeding decision-making process (Exponents: Simon, Cvert, March)
Choice logical approach: Normative choice theory, optimization of decision-making processes instrumentalization of organization (Exponent: Max, Laux, Lierman)
What is the key element of choice theory?
humanity and therewith imperfection of decision makers
What is choice theories image of humanity? (Basically speaking)
humans (have): basically personal interest limited in rationality individually different in ability, knowledge, skill & motivation are adaptive
What is choice theories image of humanity? (spefically speaking)
humans (are/have) more specifically: DECISION. ORIENTED
- satisfier instead of maximizer (satisfied with good enough)
- no consistent, stable preferences, several targets parallel/simultaneously
- results are less important than process itself
- behave utility-maximizing (avoid work, willingness to maximize personal income, risk-averse)
What is the decision logical basic model?
DECISION LOGICAL
- Measures to manipulate behavior (depends on chracteristic of decision-maker, the environment of decision-maker)
- Meta decisions (characteristics of primary determinants of decision and selected alternative for action)
- All orga. members make decisions not just instances
- separation of object decision and orga. decisions (object: prices, portions, investments; orga: selecting management actions to manipulate object decision in employees)
- guiding principle: organizers have to select right measures to manipulate behaviour so employees are able to make right object decision
What are the determinants of decisions (decision-logical approach)
Primary: Evaluation of Alternatives, likelihood and target function. Information structure and Forecast function as main determinants
Secondary: Attributes of decision-making (motivation, qualification & basic attitude towards future)
Environment of decision-making (scope of action, access to information, general communication structures with the company)
Measure to manipulate behaviour (decision logical)
- Initiating and restricting disposal capabilities
- Standards of behavioural rules
- Improvement of information
- Improvement of decision makers abilities
- Improvement of decision makers motivation
Differences between choice process-driven vs choice logical approach
Shared basic assumption:
scope for decision making and radius of operation for every orga. member, completion of scope depends on characteristics of orga members (knowledge, skill, attitude), orga. manipulates decision making behaviour, right in terms of effective and efficient decisions disireable)
Specialities of process-driven approach:
no one and only orga. target: - instead consideration of individual targets
decision problem doesn’t exist by itself but has to be perceived
Area of alternatives not completely examined
Short-term implication of decisions within own range of action are of interest
Uncertainty of the future is not considered in decision model
No search for optimum solution
Major part of action based on routine and habit
Describe the cases of limited rational decisions with example
MISTAKE: subjectively rational but objectively wrong (intensified specialisation increases efficiency, however. efficiency decreases because of interface problems)
SELF INTEREST: personally rational but organisationally wrong (Head of sales saves expenses due to poorly qualified personnel and inexpensive shipping agencies - rise of mistake and decrease of customer satisfaction lead to profit decrease)
IDENTIFICATION WITH ONE SECTION: logically rational but wrong in broader context (Head of a partictular devision applies funds to modernise his devision instead of investing in R&D which equal higher profit)
LIMITED ATTENTION: short-term rational but wrong in the long term (outsourcing particular functions to external suppler to save costs in the short term leads to higher power of supplier and loss in competence in the long run)
Name the 4 Quasi-solutions of Conflict Management
LOCAL RATIONALITY
subdividing decision problems into lower level problems
LEVEL OF ACCEPTABILITY ORIENTED RULES OF DECISION
satisfying decisions instead of optimum (satisfying concept)
ORGA. SLACK
presence of surplus resources
SEQUENTIALLY TARGET TRACKING
incompatible targets to be pursued successively
Name the stages within the learning cycle
Individual beliefs
Individual action
Organizational action
environmental responses
Advantages and Disadvantage of Choice Theory
ADVANTAGE
impact on advancement of organizational theories
great impirical importance
suitable to analyse interdependencies of environment and organizations
DISADVANTAGE
Exposition of structures and processes which sustain orga. in tendency to positive (no consideration of individual self-fulfilment)
No consideration of social systems and its impact on organization
