Lecture 4
Decision Making, Entrepreneurship,
Creativity and Organizational
Culture
S. Chan
Head, Department of Business Administration
http://home.chuhai.hk/~charmaine/
charmaine@chuhai.edu.hk
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Managerial Decision Making
Decision Making
 The process by which managers respond to
opportunities and threats by analyzing options,
and making determinations about specific
organizational goals and courses of action
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Decision Making
Programmed Decision
 Routine, virtually automatic decision making that
follows established rules or guidelines.
• Managers have made the same decision many
times before
• There are rules or guidelines to follow based on
experience with past decisions
• Little ambiguity involved
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Decision Making
Non-Programmed Decisions
 Nonroutine decision making that occurs in
response to unusual, unpredictable opportunities
and threats.
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Decision Making
Intuition
 feelings, beliefs, and
hunches that come
readily to mind,
require little effort
and information
gathering and result
in on-the-spot
decisions
Reasoned judgment
 decisions that take
time and effort to
make and result from
careful information
gathering, generation
of alternatives, and
evaluation of
alternatives
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Why Information Is Incomplete
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Causes of Incomplete Information
Risk
 The degree of probability that the possible
outcomes of a particular course of action will
occur
Uncertainty
 the probabilities of alternative outcomes cannot
be determined and future outcomes are unknown
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Causes of Incomplete Information
 Ambiguous
information
 Information that can
be interpreted in
multiple and often
conflicting ways
Young Woman or
Old Woman
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Causes of Incomplete Information
Time constraints and information costs
 managers have neither the time nor money to
search for all possible alternatives and evaluate
potential consequences
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Six Steps in Decision Making
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Decision Making Steps
Step 1. Recognize Need for a Decision
Sparked by an event such as environment
changes.
Managers must first realize that a decision
must be made.
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Decision Making Steps
Step 2. Generate Alternatives
Managers must develop feasible alternative
courses of action
 If good alternatives are missed, the resulting
decision is poor
 It is hard to develop creative alternatives, so
managers need to look for new ideas
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Decision Making Steps
Step 3. Assess Alternatives
What are the advantages and disadvantages
of each alternative?
Managers should specify criteria, then
evaluate.
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Decision Making Steps
Step 4. Choose Among Alternatives
Rank the various alternatives and make a
decision
 Tendency is for managers to ignore critical
information, even when available
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Decision Making Steps
Step 5. Implement Chosen Alternative
Managers must now carry out the alternative
Often a decision is made and not
implemented
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Decision Making Steps
Step 6. Learn From Feedback
Compare what happened to what was
expected to happen
Explore why any expectations for the
decision were not met
Derive guidelines that will help in future
decision making
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Creativity
Creativity
 A decision maker’s ability to discover original and novel
ideas that lead to feasible alternative courses of action
Ways to promote individual creativity
 Provide opportunities and freedom to generate
new ideas
 Provide constructive feedback
 Promote the importance of looking for
alternative solutions
 Recognize and reward creativity
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Promoting Group Creativity
Brainstorming
 Managers meet face-to-face to generate and
debate many alternatives.
 Group members are not allowed to evaluate
alternatives until all alternatives are listed.
 When all are listed, then the pros and cons of
each are discussed and a short list created.
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Entrepreneurship and Creativity
 Entrepreneurs
 an individual who notices opportunities and decides
how to mobilize the resources necessary to produce
new and improved goods and services
 Mobilization of resources to take advantage of an
opportunity to provide customers with new and
improved goods and services
 Intrapreneur
 a manager, scientist, or researcher who works inside
an organization and notices opportunities to develop
new or improved products and better ways to make
them
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Organizational Culture
 Organizational Culture
 Shared set of beliefs, expectations, values, norms, and
work routines that influence how members of an
organization relate to one another and cooperate to
achieve organizational goals
 Strong culture: Members share an INTENSE
COMMITMENT to cultural values, beliefs and use them to
achieve their goals.
 Weak culture: Members are not strongly committed to
shared values and beliefs.
 Generally strong culture is relatively difficult to be
changed and is less responsive to flexibility and diversity
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Organizational Culture
Attraction-Selection-Attrition Framework
 A model that explains how personality may
influence organizational culture.
 Founders of firms tend to hire employees whose
personalities that are similar to their own
 Employees who do not fit in tend to leave the
organization over time
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Factors that Maintain and Transmit
Organizational Culture
Organizational culture is maintained and transmitted to
members through the values of the founder, the process of
socialization, ceremonies and rites, and stories and languages.
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Factors that Maintain and Transmit
Organizational Culture
Organizational socialization
 process by which newcomer’s learn an
organization’s values and norms and acquire the
work behaviors necessary to perform jobs
effectively
Ceremonies and rites
 Process of developing organizational formal
events that recognize incidents of importance to
the organization
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Factors that Maintain and Transmit
Organizational Culture
Founders’ values
 Have important and long lasting effects to the
development of organizational culture
 Have a substantial influence on the values, norms
and standards of behavior that develop over time
within the organization.
 Founders’ values also affect the selection of
appropriate staff who can maintain and develop
similar culture.
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Factors that Maintain and Transmit
Organizational Culture
 Stories and Languages
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Stories about organizational heroes and villains and their
actions provide important clues about values and norms.
Stories can reveal the kinds of behaviors that are valued
by the organization and the kinds of practices that are
frowned on.
Languages used in organization, such as slang or jargon,
are organization-specific words and phrases, which also
provides important clues about norms and values.
Organizational languages also encompasses how people
dress, the office they occupy, the cars they drive and the
degree of formality they use when they address one
another.
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