UNIVERSITY OF TEXAS AT DALLAS COURSE OUTLINE

School of Management Spring 2006

PH.D. SEMINAR ON ORGANIZATIONAL DECISION MAKING

(MAS 6V02-001)

Dr. Zhiang "John" LIN

Class Time and Location

Time: 2:00 - 4:45 PM, Thursdays

Location: SM 2.102

Instructor’s Contact Information

Office Location: SM 4.405

Office Hours: Before and after class, or by appointment
Phone: 972-883-2753
E-mail: zlin@utdallas.edu
URL: http://www.utdallas.edu/~zlin

Teaching Assistant’s Contact Information

Name: Irem Demirkan
Office: SOM 4.205
Office Hours: By appointment
Phone: 972-883-6268
E-mail: irem@student.utdallas.edu

Required Reading Materials

Textbook: Organizational Decision Making, Edited by Zur Shapira, Published by

(BK) Cambridge University Press, 1997. Available at bookstores.

Reading Packet: Readings for Organizational Decision Making.

(RP) Available with the teaching assistant.

Course Description

This is a Ph.D. level course intended to enrich students' understanding of decision making in
organizations and provide some necessary literature background for further academic research in this
area. As a foundation for organizational theory and behavior, organizational decision making has long
been considered the most important and fundamental topic in organizational research. Simon (1947), for
example, claimed decision making to be the “heart of organizations.” Price (1968) regarded decision
making as “the necessity in all organizations.” Scott (1987) also considered decision making as the basic
operation of an organization. It is the common belief that for any organization to be effective, it is
necessary to have sound decision making.

Throughout this course, we will cover different perspectives including normative, descriptive and
non-rational aspects of decision making. Various theories and approaches under these perspectives will
be investigated. We will view decision making from three levels: individual, group, and
organizational/strategic levels. In addition, we will consider the impact of uncertainty and ambiguity on

- 1-
decision making, examine the context in organizational decision making such as environment, structure
and process, explore the roles of information technology and international culture in decision making,
and discuss ethics issues related to decision making. Finally we will bring in some of the emerging
thoughts on decision making.

At the end of the course, students should have a good understanding of the main development in
the field and be able to form an integrated and yet creative line of thinking in organizational decision
making. This course will also provide students the opportunity to develop a research project in the field
through the discussion of various topics and the writing of a term paper.

Course Requirements

This course requires extensive readings, active discussions, and intelligent research work. The
final letter grade (A, B, C) will be based on the following three components, each of which will take the
form of an expanded letter grade (A+, A, A-, B+, B, B-, C+, C, C-, F).

1. Weekly Participation (35%)

Students are expected to come to class being prepared for and actively involved in discussing the
assigned readings, which will be selected from the list in the syllabus. For each of the weekly assigned
article, two to three students will be responsible for leading class discussions. Each discussion leader,
individually, should also submit to the instructor a two page double-spaced summary of main discussion
points at the class time. The quality of each student's discussion will be evaluated in the following
questions:

- Does the student demonstrate a basic understanding of the assigned reading materials?
- Can the student identify the common themes in the readings and use these themes to integrate
and compare the articles?
- Does the student use the readings as a base to develop new ideas or insights?
- Can the student formulate appropriate critiques of the readings and defend his/her position in
discussion with other class members?

A student’s weekly participation credit may be reduced if he/she misses portions of the class.

2. Term Paper (55%)

Each student is required to submit a written term paper on a self-selected topic in decision making.
It is due on April 13, 2006. This paper can be either theoretical, empirical, or something in between, but
must have the strong potential of becoming a full publishable paper with future additions. A theoretical
paper should follow the style of Academy of Management Review. The grading of the paper will be
based on the following criteria:

- Importance of the topic to the management field

- Relevance and thoroughness of the literature review
- Contribution of the theoretical framework
- Development of the hypotheses
- Implications of the paper
- Consistency and clarity of the writing
- Professionalism of manuscript preparations

An empirical paper should follow the style of Academy of Management Journal. The grading of

- 2-
the paper will be based on the following criteria.

- Importance of the topic to the management field

- Relevance and thoroughness of the literature review
- Development of the conceptual framework (including hypotheses)
- Soundness and feasibility in research design (including data sources, measures, and analytical
techniques)
- Thoughtfulness in results interpretations (for generated or expected results)
- Insights in discussions (unexpected findings, boundary conditions, future directions, etc.)
- Consistency and clarity of the writing

Some of the potential term paper topics may include, though not limited to, the followings:

- Strategic decision making in alliance formations

- Foreign direct investment and strategic decision making
- Understanding transaction cost theory from a decision making perspective
- The decision frames of agent and principal in agency theory
- Non-rational decision making in academic institutions
- The structural constraint of group decision making
- Top management succession as a form of organizational decision making
- Conscious and unconscious decision making in organizations
- Organizational design and decision making for critical or non-conventional events
- Whose reality? The consequences of social construction in organizations
- The role of electronic media in group decision making
- Organizational change as a rational/non-rational process of decision making
- Decision making in social networks: Constraints and opportunities

3. Presentation of Term Paper (10%)

In the last class of the semester, each student will also present his or her paper to the whole class
in fifteen minutes. The quality of the presentation will be based on the following criteria:

- Attractiveness and preparedness of the talk

- Clarity of the speaker
- Handling of the questions

The final grade will be based on the weighted combination of the above three requirements. After
the last class, there will be a designated office hour for students to receive feedback on their class
performance, including the graded term paper (please see the schedule part for time and location).

Academic Honesty

Throughout the semester, each student is expected to follow the university’s guideline on student
conduct with regard to cheating and other dishonorable or disruptive behaviors. Severe consequences
can occur if such rules are not followed.

- 3-
Class Arrangements

Class 1. 1/12/2006
Course description and expectation sharing

Class 2. 1/19/2006
Main perspectives on organizational decision making

Readings:

BK: Chapters 1-2. Introduction and overview; Understanding how decisions happen in
organizations.

RP: March, J. G. and Simon, H. A. 1958. Decision making theory. In James G. March and
Hebert A. Simon, Organizations, p. 137-150, 169-171. John Wiley & Sons, Inc. Also in
Oscar Grusky and George A. Miller (eds.) 1981. The sociology of organizations (2nd
ed.), p. 135-150. New York: Free Press.

RP: Bell, D. E., Raiffa, H. and Tversky, A. 1988. Descriptive, normative, and prescriptive
interactions in decision making. In David E. Bell, Howard Raiffa and Amos Tversky
(eds.) Decision making: Descriptive, normative, and prescriptive interactions, p.9-32.
Cambridge University Press.

RP: Langley, A., Mintzberg, H., Pitcher, P., Posada, E., and Saint-Macary, J. 1995.
Opening up decis ion making: The view from the black stool. Organization Science,
6(3): 260-279.

Class 3. 1/26/2006
Decision making as rational choices

Readings:

BK: Chapter 15. Bounded rationality, indeterminacy, and the managerial theory of the
firm.

RP: Halpern, J. J. and Stern, R. N. 1998. Introduction: Beneath the social science debate:
Economic and social notions of rationality. In Jennifer J. Halpern and Robert N. Stern
(Eds.) Debating rationality: Non-rational aspects of decision making, pp. 1-17.
Cornell University Press.

RP: Simon, H. A. 1978. Rational decision making in business organizations. Paper

presented at the 1978 Nobel Prize reception. Also in American Economic Review,
69(1979): 493-513.

RP: Simon, H. A. 1988. Rationality as a process and product of thought. In David E. Bell,
Howard Raiffa and Amos Tversky (eds.) Decision making: Descriptive, normative,
and prescriptive interactions, p.58-77. Cambridge University Press.

- 4-
Class 4. 2/2/2006
Decision making as rule/memory-based actions

Readings:

BK: Chapter 12. Organizational decision making as rule following.

RP: Cohen M. D. and Bacdayan, P. 1994. Organizational routines are stored as procedural
memory: Evidence from a laboratory study. Organization Science, 5(4): 554-568.

RP: Baum, J. A. C., Li, S. X., and Usher, J. M. 2000. Making the next move: How
experiential and vicarious learning shape the locations of chains' acquisition.
Administrative Science Quarterly, 45(4): 766-801.

Individual and group decision making

Readings:

RP: Argote, L., Devadas, R. and Melone, N. 1990. The base-rate fallacy: Contrasting
processes and outcomes of group and individual judgment. Organizational Behavior
and Human Decision Processes, 46: 296-310.

RP: Paese, P. W., Bieser, M. and Tubbs, M. E. 1993. Framing effects and choice shifts in
group decision making. Organizational Behavior and Human Decision Processes, 56:
149-165.

Class 5. 2/9/2006
Strategic decision making

Readings:

RP: Eisenhardt, K. M. and Zbaracki, M. 1992. Strategic decision making. Strategic

Management Journal, 13: 17-37.

RP: Schoemaker, P. J. H. 1993. Strategic decisions in organizations: Rational and

behavioural views. Journal of Management Studies, 30(1): 107-129.

RP: Hitt, M. A. and Tyler, B. B. 1991. Strategic decision models: Integrating different
perspectives. Strategic Management Journal, 12(5): 327-351.

RP: Nutt, P. C. 1998. Framing strategic decisions. Organization Science, 9(2): 195-216.

RP: Cray, David, Mallory, Geoffrey R., Butler, Richard J., Hickson, David, J. and Wilson,
David C. 1988. Sporadic, fluid and constricted processes: Three types of strategic
decision making in organizations. Journal of Management Studies, 25(1): 13-39.

Class 6. 2/16/2006

- 5-
 Ambiguity and uncertainty in decision making

Readings:

BK: Chapter 4. Organizational choice under ambiguity: Decision making in the chemical
industry following Bhopal.

RP: March, J. G. 1989. Bounded rationality, ambiguity, and the engineering of choice. In
James G. March (ed.) Decisions and organizations, p.266-293. New York: Blackwell.

RP: Mosakowski, E. 1997. Strategy making under causal ambiguity: Conceptual issues
and empirical evidence. Organization Science, 8(4): 414-442.

RP: Hodgkinson, G. P., Bown, N. J., Maule, A. J., Glaister, K. W., andPearman, A. D.
1999. Breaking the frame: An analysis of strategic cognition and decision making
under uncertainty. Strategic Management Journal, 20(10): 977-985.

Class 7. 2/23/2006
Non-rational aspect of decision making: Garbage can processes

Readings:

RP: Gibbons, R. 1998. Game theory and garbage cans: An introduction to the economics
of internal organization. In Jennifer J. Halpern and Robert N. Stern (Eds.) Debating
rationality: Non-rational aspects of decision making, pp. 36-52. Cornell University
Press.

RP: Cohen, M. D., March, J. G. and Olsen, J. P. 1972. A garbage can model of
organizational choice. Administrative Science Quarterly, 17(1): 1-25.

RP: Masuch, M. and LaPotin, P. 1989. Beyond Garbage Cans: An AI model of

organizational choice. Administrative Science Quarterly, 34(1): 38-67.

RP: Pinfield, L. T. 1986. A field evaluation of perspectives on organizational decision

making. Administrative Science Quarterly, 31: 365-388.

Class 8. 3/2/2006
Non-rational aspect of decision making: Power and politics

Readings:

BK: Chapter 6. The social ideologies of power in organizational decisions.

BK: Chapter 7. Managerial incentives in organizations: Economic, political and symbolic

perspectives.

RP: Pfeffer, J. and Salancik, G. R. 1974. Organizational decision making as a political

process: The case of a university budget. Administrative Science Quarterly, 19: 135-
151.

- 6-
 RP: Feldman, M. S. and March, J. G. 1981. Information in organizations as signal and
symbol. Administrative Science Quarterly, 26: 171-186.

RP: Feldman, S. P. 1988. Secrecy, information, and politics: An essay on organizational

decision making. Human Relations, 41(1): 73-90.

3/9/2006
Spring break. No class.

Class 9. 3/16/2006
Non-rational aspect of decision making: Biases and escalation of commitment

Readings:

BK: Chapter 9. The escalation of commitment: An update and appraisal

RP: Camberer, C. E. 1998. Behavioral economics and nonrational organizational decision

making. In Jennifer J. Halpern and Robert N. Stern (Eds.) Debating rationality: Non-
rational aspects of decision making, pp. 53-77. Cornell University Press.

RP: Whyte, G. 1993. Escalating commitment in individual and group decision making: A
prospect theory approach. Organizational Behavior and Human Decision Processes,
54: 430-455.

RP: Ross, J. and Staw, B. M. 1993. Organizational escalation and exit: Lessons from the
Shoreham Nuclear Power Plant. Academy of Management Journal, 36(4): 701-732.

RP: Tetlock, P. E. 2000. Cognitive biases and organizational correctives: Do both disease
and cure depend on the politics of the beholder? Administrative Science Quarterly,
45(2): 293-326.

Class 10. 3/23/2006

Sensemaking and social construction of decisions

Readings:

RP: Weick, K. E. 1995. The nature of sensemaking. In Karl E. Weick, Sensemaking in

organizations, p.1-82. Thousand Oaks, CA: Sage Publications, Inc.

RP: Harris, S. G. 1994. Organizational culture and individual sensemaking: A schema-

based perspective. Organization Science, 5(3): 309-321.

RP: Weick, K. E. 1979. Cognitive processes in organizations. Research in Organizational

Behavior, 1: 41-74.

RP: Laroche, H. 1995. From decision to action in organizations: Decision-making as a

social representation. Organization Science, 6(1): 62-75.

- 7-
 RP: Heracleous, L. 2001. Organizational change as discourse: Communicative actions and
deep structures in the context of information technology implementation. Academy
of Management Journal, 44(4): 755-778.

Class 11. 3/30/2006

Information technology and decision making

Readings:

RP: Nault, B. R. 1998. Information technology and organization design: Locating

decisions and information. Management Science, 44(10): 1321-1335.

RP: Molloy, S. and Schwenk, C. R. 1995. The effects of information technology on

strategic decision making. Journal of Management Studies, 32(3): 283-311.

RP: Leidner, D. E. and Elam, J. J. 1995. The impact of executive information systems on
organizational design, intelligence, and decision making. Organization Science, 6(6):
645-664.

Ethics in decision making

Readings:

RP: Trevino, L. K. 1986. Ethical decision making in organizations: A person-situation

interaction model. Academy of Management Review, 11(3): 601-617.

RP: Jones, T. M. 1991. Ethical decision making by individuals in organizations: An issue-

contingent model. Academy of Management Review, 16(2): 366-395.

RP: Jones, T. M. and Ryan, L. V. 1997. The link between ethical judgment and action in
organizations: A moral approbation approach. Organization Science, 8(6): 663-680.

Class 12 4/6/2006
Decision making in international organizations

Readings:

RP: Lu, Y. and Heard, R. 1995. Socialized economic action: A comparison of strategic
investment decisions in China and Britain. Organization Studies, 16(3): 395-424.

RP: Tallman, S. B. and Shenker, O. 1994. A managerial decision model of international

cooperative venture formation. Journal of International Business Studies, 25(1): 91-
113.

RP: Barkema, H. G. and Vermeulen, F. 1998. International expansion through start-up or

acquisition: A learning perspective. Academy of Management Journal, 41(1): 7-26.

- 8-
 RP: White, S. 2000. Competition, capabilities, and the make, buy, or ally decisions of
Chinese state-owned firms. Academy of Management Journal, 43(3): 324-341.

RP: Hitt, M. A., Dacin, M. T., Levitas, E., Arregle, J., and Borza, A. 2000. Partner selection
in emerging and developed market contexts: Resource-based and organizational
learning perspectives. Academy of Management Journal, 43(3): 449-467.

Class 13. 4/13/2006

Emerging perspectives on organizational decision making
Term Paper Due

Readings:

BK: Chapter 13. Naturalistic decision making and the new organizational context.

BK: Chapter 16. The scarecrow's search: A cognitive psychologist's perspective on

organizational decision making.

RP: Krackhardt, D. 1998. Endogenous preferences: A structural approach. In Jennifer J.

Halpern and Robert N. Stern (Eds.) Debating rationality: Non-rational aspects of
decision making, pp. 239-247. Cornell University Press.

RP: Elsbach, K. D. and Barr, P. S. 1999. The effects of mood on individuals' use of
structured decision protocols. Organization Science, 10(2): 181-198.

RP: Zhiang Lin, Haibin Yang, and Irem Demirkan, (2005), “Exploration and exploitation in
strategic alliance formation decisions: Antecedents and consequences,” Working
Paper, University of Texas at Dallas.

Class 14. 4/20/2006

Term paper presentation—18 minutes each

4/21/2006 (10 –11 PM in SM 4.405)

Office hour for grade checking, questions, and further discussions

- 9-