Contextualizing Senior Executive Advice Seeking: The Role of Decision Process Comprehensiveness and Empowerment Climate

Abstract

Senior executives can seek advice both inside and outside the boundaries of the organization and that can affect the choices made and the overall direction of the organization. Perceived environmental dynamism is a primary antecedent of this behaviour as it substantially increases the information-processing demands when solving strategic decision problems. We drew on two ‘fit’ perspectives to theorize about the organizational contingencies of this relationship. First, fit as mediation develops when executive advice seeking takes place after a comprehensive decision process has been used in response to an increase in perceived environmental dynamism. Decision process comprehensiveness fully mediates the relationship between perceived environmental dynamism and internal advice seeking and partially mediates the relationship between perceived environmental dynamism and external advice seeking. Second, fit as moderation develops when empowerment climate weakens this indirect relationship. Decision process comprehensiveness and empowerment climate function as Edgeworth–Pareto substitutes showing that, with regard to senior executive advice seeking, there is negative synergy between decision process comprehensiveness and empowerment climate. The results of our study support the notion that there is a link between information processing at the individual and organizational level, and, more importantly, suggest that power sharing within organizations can reduce the need for senior executive advice seeking when there is decision process comprehensiveness. By elaborating the information-processing perspective on advice seeking and introducing theory on organizational structural power interdependencies, we take the first steps towards a more contextualized and realistic understanding of this phenomenon.

Impact of organizational culture on strategic planning

“…Here, advice-seeking interactions help reduce uncertainty (Redmond, 2015). Organizations' strategic choices are positively affected by senior executives' adviceseeking behaviors inside and outside the organization (Alexiev et al, 2019). From a Organizational culture and strategic planning knowledge management and goal orientation perspective, conceptualization and planning in organizations are positively associated with advice-seeking organizational behavior (Ashford et al, 2003;Gupta et al, 1999).…”

Decision comprehensiveness and the outcomes of firms: Reinterpreting and extending a recent meta-analysis

“…As part of this challenging terrain, examinations of possible moderators and mediators (e.g. Alexiev et al, 2020;Atuahene-Gima and Li, 2004;Feduzi et al, 2016;Heavey et al, 2009) have created some unexpected and contradictory findings. With reasonable arguments for and against the value of strategic decision comprehensiveness, a meta-analysis of the research stream has been long overdue, especially considering the significance of the underlying issues (Forbes, 2007;Miller, 2008).…”

CEO Advice Seeking: An Integrative Framework and Future Research Agenda

“…Advice seeking is a common behavior in which CEOs engage when they face difficulties in making strategic decisions or dealing with critical issues (Alexiev, Volberda, Jansen, & Van Den Bosch, 2019). The literature shows that CEOs frequently seek advice on strategic issues concerning a company’s current or future strategy, such as issues about diversification, acquisitions, innovation, and outsourcing (e.g., Alexiev, Jansen, Van den Bosch, & Volberda, 2010; Haunschild & Beckman, 1998; Jones, Makri, & Gomez-Mejia, 2008; Kroll, Walters, & Wright, 2008; Li & Aguilera, 2008; Mol & Kotabe, 2011).…”

“…First, environmental factors drive CEO advice seeking by generating informational needs for strategic decision making and strategy execution (Eisenhardt, 1989). Often relying on information processing theory, this research conceptualizes CEO advice seeking as “rationalistic, goal-oriented and directed towards information processing” (Alexiev et al, 2019) and focuses on how information requirements in a specific decision context drive the CEO’s choice of advice sources. Accordingly, in uncertain environments, CEOs rely more heavily on external contacts (or hybrid contacts, such as outside directors) for strategic advice, because with a diverse set of expertise and perspectives, these contacts enable CEOs to acquire novel information, identify emergent trends, and develop strategic alternatives (e.g., Heyden et al, 2013; Jones & Cannella, 2011).…”

“…Thus, creating an advice-capable board of directors may require appointing directors who developed their board expertise and social capital gradually and who are not bogged down with too many ongoing board commitments. In addition, using information processing theory, Alexiev et al (2019) argue that the comprehensiveness of the board’s decision process—that is, the extent to which the board attempts to be exhaustive or inclusive in its decision making—may motivate CEOs to seek more advice from internal and external contacts to incorporate additional perspectives and opinions.…”