Flexible Decision Styles and the Choices of Top Executives

Abstract

Managers who have access to several modes of understanding have been described as ideal decision-makers. This article reports on research that explored how flexible styles of decision-making, defined by the number and kinds of accessible modes of understanding, influence the choices of top executives. Instruments were used to measure attitude toward ambiguity and uncertainty and to determine the style of the participating top executives. The participants were asked to evaluate eight capital expansion projects in terms of adoptability and risk. Inferences about decision-making were drawn from these evaluations. The tolerance for ambiguity and uncertainty scores and the adoptability and risk ratings were associated with the participant's style. Top executives with ajexible style who have access to each of the modes of understanding were found to be aggressive decision-makers with a high tolerance for ambiguity and uncertainty.

Capabilities for strategic flexibility: a cognitive content framework

“…Cognitive style is a theoretical construct used to describe an individual's manner of processing information. Some researchers suggest that cognitive style also captures aspects of an individual"s belief system or cognitive content (Nutt, 1993). Others disagree, and suggest that cognitive style only describes an individual"s cognitive activity, rather than the content of their cognitive models (Foxall and Bhate, 1993).…”

“…Nutt, 1993). For example, some decision makers may have a style of cognition and processing information that means they are more flexible than other decision makers.…”

Capital Budgeting Theory and Practice: A review and agenda for future research

“…Findings showed that managers with greater overconfidence would prefer to introduce more risky products and seem to fail many times. In early 1990s, some studies found that managerial overconfidence tends to innovation (Staw, 1991) and to plant expansion (Nutt, 1993). Glaser, Schafers, and Weber (2008) surveyed senior managers behavior and they observed that when managers are optimistic, they increase their exposure to firm specific risk when transaction on invest more and in turn increase investment cash flow sensitivity.…”

Moderating Effect of Social Uncertainty between Capital Budgeting Practices and Performance

“…There is only flimsy evidence in extant literature to support the impact of capital budgeting techniques on firm performance (e.g., Kim, 1981;Pike, 1988;Farragher, Kleiman and Sahu, 2001;Jiang, Chen and Huang, 2006;Vadeei et al, 2012) Therefore this study evaluates the moderating effect of uncertainty between capital budgeting practices and performance. So, study is an endeavour to build on earlier findings examining the factors influencing capital budgeting practices (Aggarwal, 1980;Schall and Sundem, 1980;Scapens and Sale, 1981;Kim, 1981;Mukherjee and Henderson, 1987;Haka, 1987;Klammer,Koch and Wilner,1991;Staw, 1991;Ho and Pike, 1992;Nutt, 1993;Sangster, 1993;Chen, 1995;Slagmulder, 1997;Bowman and Moskowitz, 2001;Zhu and Weyant, 2003;McGrath and Nerkar, 2004;Verbeeten, 2006;Donker, Santen, Zahir (2009);Brown and Sarma, 2007;Glaser, Schafers, andWeber, 2008, Daunfeldt andHartwig,2011).…”