Heuristics as adaptive decision strategies in management

Artinger, Florian; Petersen, Malte; Gigerenzer, Gerd; Weibler, Jürgen

doi:10.1002/job.1950

Cited by 210 publications

(224 citation statements)

References 152 publications

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“…This is consistent with past literature on heuristics explaining that although certain heuristics may lead to success in one firm, those same heuristics may not be “ecologically rational,” or in other words, may not be well‐suited to a different firm in a different environment (Artinger, Petersen, Gigerenzer, & Weibler, ).…”

supporting

confidence: 90%

Capability creation: Heuristics as microfoundations

Bingham

Howell

Ott

2019

Strategic Entrepreneurship

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Research Summary While much research suggests that capabilities are critical for firms, little is known about the individual‐level origins (“microfoundations”) of capabilities. Using in‐depth nested case studies, we explore how firms develop an internationalization capability. The setting is six entrepreneurial firms from three culturally distinct countries. Our data show that executives begin by seeding the process with imperfect heuristics and then managers continue development by elaborating their understanding of what task to perform and how to perform it. Importantly, managers across hierarchical levels support the development of their firm's internationalization capability by abstracting key heuristics away from any one experience such that the capabilities become less routine over time. Overall, we contribute to the microfoundations movement in strategy and to the literature on organizational learning. Managerial Summary Firm capabilities are not just important to strategy, but often are the strategy of firms, especially in dynamic markets. Popular examples include Cisco's acquisition capability, Hewlett–Packard's alliance capability, Starbuck's internationalization capability, and Apple's product development capability. Unfortunately, it is often unclear to executives how to build a firm capability. We explore how entrepreneurial firms develop their own internationalization capability over time. Our data show that these capabilities develop through a process of seeding, elaborating, and abstracting key heuristics for internationalization. Importantly, we show that this process is shaped by extensive communication within and across multiple hierarchical levels. In this way, heuristics move from individual‐level “rules of thumb” for action to firm‐level understandings for fueling growth and creating competitive advantage.

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supporting

confidence: 90%

Capability creation: Heuristics as microfoundations

Bingham

Howell

Ott

2019

Strategic Entrepreneurship

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“…Although perceptions of specific locations change over time due to political and economic events, managers consistently employ heuristics for choosing the least risky and most profitable international locations. Our results suggest that managers exploit context-specific information (e.g., Goldstein & Gigerenzer, 2002;Hogarth & Karelaia, 2007) and then apply heuristics in their decision-making that remain stable over time (e.g., Artinger et al, 2015). The changes in the institutional environment between 2013 and 2017 influenced managers' perception of risk and return with regard to specific countries but the overall disposition of opting for locations that offer high returns but have low risks does not change.…”

Section: Discussionmentioning

confidence: 79%

“…Despite potential changes in perception of specific locations, the underlying relationship between risk and returns should be a stable function (see Artinger, Petersen, Gigerenzer, & Weibler, 2015;Bowman, 1980). This can be explained by the fact that decision makers orient their focus on a given target level for performance (e.g., survival or maximizing organizational returns) (March & Shapira, 1987) and their individual tolerable risk level (Johanson & Vahlne, 1977).…”

Section: International Location Decisions and The Risk-return Relatmentioning

confidence: 99%

How does de‐globalization affect location decisions? A study of managerial perceptions of risk and return

Ambos

Cesinger

Eggers

et al. 2019

Global Strategy Journal

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Research Summary Our understanding of how managers take international location decisions is still scarce. Building on the microfoundations view, we explore managers' perceptions of risk and return in a discrete choice experiment with 2,618 decisions in 2013 (a globalizing world) and 2017 (a de‐globalizing world). While managerial perceptions vary over time due to economic and political changes, such as the current de‐globalization trend, decision heuristics remain remarkably stable: locations perceived as least risky offer the highest expected returns. We also find that distance is a good proxy for managerial perceptions. Investigating the microfoundations of decision‐making we show that international experience, risk‐taking propensity, and shareholder status affect heuristics. In sum, our study provides novel insights into the microfoundations of location decisions and extends the behavioral perspective on internationalization. Managerial Summary While many researchers in the field of international business and global strategy have studied internationalization, surprisingly few of them put the actual decision maker in the spotlight. This study investigates the decision heuristics of managers who are confronted with international location decisions. We show that their perceptions of risk and return in the context of a globalizing world (in 2013) and in the context of a de‐globalizing world (in 2017) vary. However, the underlying heuristic—locations that are perceived as least risky offer the highest expected returns—remains stable. Our study also indicates that distance is a good proxy for managerial decisions and that managers' international experience, risk‐taking propensity, and shareholder status affect their decision‐making patterns.

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“…Heuristics are rule-of-thumb strategies that may or may not work in certain situations (Artinger, Petersen, Gigerenzer, & Weibler, 2015). For example, in the most basic form with mere verbal statements, heuristics in management could include "start small, grow big organically" or "minimize initial investments" (Manimala, 1992).…”

Section: Rational Problem-solving Approachmentioning

confidence: 99%

Supporting self-experimentation of behavior change strategies

Lee

2013

Proceedings of the 2013 ACM Conference on Pervasive and Ubiquitous Computing Adjunct Publication

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Desirable outcomes such as health and wellbeing are tightly linked to people's behaviors, thus inspiring research on technologies that support productively changing those behaviors. Many behavior change technologies are designed by Human-Computer Interaction experts, but this approach makes it difficult to personalize support to each user's unique goals and needs. As an alternative to the provision of expert-developed pre-fabricated behavior change solutions, the present study aims to empower users' selfexperimentation for behavior change. To this end, two levels of supports were explored.First, the provision of interactive digital materials to support users' creation of behavioral plans was developed. In the initial step, a tutorial for self-experimentation for behavior change that was fully scripted with images in succession was created. The tutorial focuses on facilitating users' learning and applying behavior change techniques.Second, users were equipped with a tool to support their implementation of contextaware just-in-time interventions. This tool enables prototyping of sensor-based responsive systems for home environments, integrating simple sensors (two-state magnetic sensors, etc.) and media event components (wireless sound, etc.).To evaluate the effectiveness of these two approaches, a between-subject trial comparing the approaches to a sleep education control was conducted with 27 participants over 7 weeks. Although results did not reveal significant difference in sleep quality improvement between the conditions, trends indicating greater effectiveness in the two treatment groups were observed. Analysis of the plans participants created and their revision performance also indicated that the two treatment groups developed more specific and personalized plans compared with the control group.

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Heuristics as adaptive decision strategies in management

Cited by 210 publications

References 152 publications

Capability creation: Heuristics as microfoundations

Capability creation: Heuristics as microfoundations

How does de‐globalization affect location decisions? A study of managerial perceptions of risk and return

Supporting self-experimentation of behavior change strategies

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