The Role of Information Feedback in the Management Group Decision-Making Process Applying System Dynamics Models

Abstract

The research project addresses the influence of feedback information on the decision process supported by the application of system dynamics models. A user-friendly application was developed and used in the experiment with decision groups. The participants were 174 undergraduate management science students. They had the task of determining the optimum business strategy by maximizing the multiple criteria function under three experimental conditions: a 1 ) an individual decision process without the support of a system dynamics model, a 2 ) an individual decision process supported by a system dynamics model, and a 3 ) a decision process supported by a system dynamics model and subject interaction via computer mediation. The hypotheses that the individual decision process supported by a system dynamics model yields higher Criteria Function values than one without a system dynamics model, as well as the decision process supported by both a system dynamics model and subject interaction yields higher Criteria Function values than one supported by a system dynamics model alone were confirmed. The use of system dynamics (SD) models for testing the vision of organizational systems development has a long research tradition (Forester 1973;Simon 1997;Sterman 2000). Simulation models developed by SD methodology are important tools for strategy development and policy planning as an expert support tool (Yim et al. 2004). The main advantages of SD models as an integral part of decision support systems are the possibility of dynamic analysis of the considered problem under different scenarios (Larsen et al. 1997). Information provided by a simulation model is in fact feed forward information about the anticipated business response (effect of the selected input parameter values on the business outcome) in a decision process (Kljajić 1994). The anticipative perspective of such a complex adaptive system is further emphasized, for example, in Shakun (1999) by the contribution to procedural rationality -how decisions should be or are made -in purposeful complex adaptive systems.Many decision processes in organizations, where knowledge elicitation is the main concern (Ford and Sterman 1998) rely on groups of experts (Beach 1997;Tung 1987;Tung et al. 2001). The study of Isaacs (1999) also agrees that the new approach addressing the development of organizational strategy considers a collective understanding of organizational processes. Group decision-making has some advantages in the sense of a larger knowledge base, different points of view, and the generation of new ideas and synergetic effects (Hale

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