This paper proposes a dynamic framework of economic organization called the option‐creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist‐entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide. Copyright © 2008 John Wiley & Sons, Ltd.

The effectiveness of business simulation exercises in uncovering the interconnectedness of business decisions has been explored in the literature. Little research has been done, however, to quantify empirically how simply identifying connections can change the decision maker’s perceptions and actions. This research exposes the process by which business simulations bring about these changes. Using the semantic differential technique and a one-group pretest-posttest design, tests are conducted to assess perceptual changes in problem characterization and approach induced by participation in a business simulation exercise. The results presented provide quantifiable justification for the use of business simulation exercises to induce targeted change in a decision maker’s mental models. In addition, business simulation designers are offered a powerful feedback tool that allows them to customize decision parameters and confirm the desired participant impact has been achieved.

Access to this document was granted through an Emerald subscription provided by emerald-srm:448207 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -Identifying the state of alignment, when there is misalignment, and the path to achieve alignment are of central importance to decision makers today. This paper seeks to offer decision makers some actionable guidance in narrowing the search for possible solution methodologies and to develop a generalized decision alignment framework that can be applied to real decision problems. Design/methodology/approach -Alignment is viewed as a goal of decision makers and the correct matching of decision and action is essential to achieving consistently high performance. Drawing on parallels with the duality problem in linear programming, decision alignment is defined. The decision alignment framework is theoretically developed using examples from a diverse application set, including quantitative research, decision making, education, and e-commerce. Findings -The evidence shows that good research conforms to the decision alignment framework and poor research violates it. Similarly, good decisions conform to the decision alignment framework and poor decisions violate it. The decision alignment framework guides decision makers in constraining and redefining problems to optimize outcome performance, and shows the importance of addressing the dual problem of learning and understanding the phenomena.Research limitations/implications -The theoretical foundation developed can be used to promote future research in decision alignment. By providing a theoretically derived framework, rich opportunities for empirical testing are offered. Researchers are also given guidance on how alignment research can be conducted. Practical implications -The examples presented highlight the prescriptive, communicative, and descriptive value of the decision alignment framework. Practitioners are provided with examples for using the decision alignment framework to build toolboxes of approaches that can be aligned to a characterization of real-world decision problems to improve performance. Originality/value -The introduction of a decision alignment framework is a significant contribution to the mana...

PurposeThis paper proposes a relationship between decision making and key qualities of business systems.Design/methodology/approachThe authors explore the relationship between decision making and systems by contrasting the decision making in two well‐known systems: MRP and JIT. The two systems present two sets of opposing qualities. By considering the relationship between a decision and its environment, we propose that these sets of qualities are not unique to MRP and JIT. They arise from two general approaches to decision making. Having introduced the two approaches, we analyze three product development systems: Stage‐Gate, Agile and Lean.FindingsIn manufacturing, MRP is a push system; JIT is a pull system. MRP seeks perfection; JIT seeks consistency. MRP gives decision makers great discretion; JIT constrains decisions. These opposing qualities, and others, arise from two general approaches to decision making: outside‐in and inside‐out. As the difficulty of decisions increase, relative to a decision maker's ability, the cost of mistakes becomes significant. In these situations, the inside‐out approach should outperform the outside‐in approach. The inside‐out approach constrains decision making to limit the cost of errors. The outside‐in approach embraces complexity, exposing itself to more decision errors. In product development, the Lean and Agile systems exploit the inside‐out approach. They constrain decisions and reduce the cost of errors that arise from two sources. Lean addresses interactions, which add complexity to business systems. Agile addresses unpredictability, which adds uncertainty to business systems.Originality/valueThe relationships the authors propose show how decision making affects the development, control and performance of business systems.

Purpose -The proper identification of a decision problem is paramount to finding a course of action or solution. This paper attempts to capture the general laws or principles that define decision problems. These principles are then used to establish a decision classification system called the decision-order taxonomy. Design/methodology/approach -The decision-order taxonomy is developed by performing a content analysis on the seminal literature in the natural, social, and applied sciences. By identifying the semantic descriptors used to partition various domains, an implicit taxonomy for proper identification of decision problems is hypothesized. Findings -The multidimensional taxonomic classification system and defined nomenclature, together with the identification process, comprise the complete decision-order taxonomy developed in this paper. While applying the decision-order taxonomy to an actual decision problem, insights are exposed which will guide the decision maker toward appropriate solution methodologies.Research limitations/implications -The theoretical foundation developed can be used to promote future research in decision classification. By providing a theoretically derived model, rich opportunities to test the taxonomy empirically are offered. Researchers are also given a foundation upon which they can build interdisciplinary decision models. Practical implications -For practitioners, the decision-order taxonomy provides a new paradigm for communicating decision problems across disciplinary boundaries. The taxonomy also provides guidance to the practitioner as they search for appropriate solution methodologies in unfamiliar disciplines. Originality/value -The establishment of a useful decision-problem taxonomy is a significant contribution to understanding the multidimensional interdisciplinary nature of real world decision problems. The original classifications will promote cross disciplinary communication, a central element in business success.