Decision-Making in High-Velocity Environments: The Importance of Guiding Principles

Abstract

This paper presents a field study of decision-making processes at two organizations operating in high-velocity environments. It reviews existing literature on managerial knowledge structures and decision-making, and identifies methodological and conceptual limitations with these approaches with respect to organizations in high-velocity environments. The authors develop two interpretive cases that focus on the articulated and social methods management teams used to make decisions. They found that both organizations used rules of thumb or heuristic reasoning in their decisionmaking, that these rules of thumb functioned as headlines of deeper organizational narratives, and that these narratives were grounded in emotional as well as purely rational considerations. They suggest that the term ‘guiding principle’ usefully integrates their three findings into a second-order concept that may be further explored in future research of both a descriptive and prescriptive nature.

A Model for Ethical Decision Making in Business: Reasoning, Intuition, and Rational Moral Principles

“…Integration of knowledge by essentials makes filing and retrieving information more efficacious and provides decision makers an invaluable tool: guiding principles (Oliver and Roos 2005;Locke 2002). Principles are the broadest of integrations: based on essences of things (such as rationality as the essential characteristic of man), they uncover causal relationships that apply to a range of specific situations (for example, that using reason leads to positive outcomes in hiring people, in diagnosing illness, in solving engineering problems, etc.).…”

A Multidimensional Conceptualization of Environmental Velocity.

“…Studies of healthcare, for instance, have labeled those environments as both high velocity (Stepanovich & Uhrig, 1999) and moderate velocity (Judge & Miller, 1991). Furthermore, our understanding of velocity and its effects across industry contexts has largely focused on only one attribute of velocity -the rate of change -as prior research has tended to use measures associated with the "clockspeed" of an industry (e.g., Nadkarni & Narayanan, 2007a;Oliver & Roos, 2005;Smith et al, 1994) or equated velocity to the speed at which new opportunities emerge (Davis, Eisenhardt & Bingham, 2009). …”

Walking between decision models: analogising in strategic decision making

“…Thus, managers scan and notice (Starbuck and Milliken, 1988) information cues which are processed through experience-based mental models (Gentner and Stevens, 1983), sometimes labelled as representations , and as knowledge structures or schemas (Walsh, 1995;Oliver and Roos, 2005). The models are based on sets of propositions and causal rules, amenable to computational simulation (Greca and Moreira, 2000).…”

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“…The observation that most theoretical insights in management cognition stem from controlled environments (Oliver and Roos, 2005) is valid also with respect to analogising, although the agent-simulation approach of complements earlier experimental studies (Isenberg, 1988;Dahl and Moreau, 2002;Bolton, 2003). examine competitive positioning based on analogising across industries.…”