Decision Processes for Developing Strategic Applications of Information Systems: A Contingency Approach*

Strategic applications of information systems (IS) are considered by IS researchers to be determined by contextual factors such as environmental uncertainty, and influenced by attributes of the processes preceding them, such as planning and top management support. For better management of the process leading to these applications, it is essential to understand the relationship between process attributes and contextual factors. Utilizing a contingency approach, this article takes a step toward such an understanding. Based on successful strategic IS applications from 81 large companies, it examines the relationship between the context of these applications and the decision-making process leading to them. The results indicate that the external environment is related to whether a rational or political decision-making process is used. The IS function seems to influence the use of the decision process implied by IS researchers, one in which the top management champions the strategic application, while the IS managers contribute by conducting in-depth analysis. However, the organization structure was not related to any decision process attribute. The implications of these findings for future research and practice are also discussed.     

Planning Forward by Looking Backward: Retrospective Thinking in Strategic Decision Making*

Retrospective thinking occurs whenever one remembers something from the past, but one can also think retrospectively about hypothetical future events, by imagining that the event has already transpired and then working backward in the mind from the future toward the present. Designers, artists, planners, and other creative individuals utilize retrospective thinking when they mentally envision the object they wish to create and then thinkabout how it might be constructed. Some theorists and some previous research have suggested that forward and backward thinking are different cognitive processes, but there has been little investigation on the nature of these differences. This article examines the literature and describes a laboratory study designed to investigate retrospective thinking as a technique for increased idea generation. Subjects (n=64) were professional planners and managers with an average business experience of over 20 years. In a planning task, significantly more ideas were generated in the retrospective thinking mode than in the prospective mode, but the ideas were not found to be of greater quality. Evidence emerged that a subset of subjects were better able to make use of the retrospective technique, suggesting that selection along with training may be appropriate for the technique's mosteffective use.     

Strategic Assessment Model (SAM): A Multiple Criteria Decision Support System for Evaluation of Strategic Alternatives*

The evaluation of strategic alternatives is a particularly difficult task. This difficulty is due to the complexities inherent in the evaluation process and the lack of structured information. The evaluation process must consider a multitude of relevant information from both the internal and external environments of the organization. Various analytical and normative models have helped decision makers utilize large volumes of information in strategic evaluation; however, most of these models have some limitations. We present a multiple criteria decision support system, called strategic assessment model (SAM), that addresses some of the limitations inherent in the existing models. SAM captures the decision maker's beliefs through a series of sequential, rational, and analytical processes. The environmental forces—decomposed into internal, task, general opportunities, and threats—are used along with the analytic hierarchy process (AHP), subjective probabilities, the entropy concept, and utility theory to enhance the decision maker's intuition in evaluating a set of strategic alternatives.     

Manufacturing Strategy: Testing the Cumulative Model in a Multiple Country Context*

This study statistically tests the cumulative model for the building of manufacturing capabilities by comparing and contrasting the manufacturing strategies of 265 North. American, 129 European, and 167 Korean factories by region. The cumulative model suggests that better performing competitors build one manufacturing capability upon another in a sequential, cumulative fashion—starting first with quality, followed by dependability, delivery, cost efficiency, flexibility, and lastly, innovation. The primary findings of this exploratory study are as follows: (1) the data yielded some evidence for the cumulative model, with the Korean data being the most supportive of the model; (2) North American, European, and Korean managers take different approaches to improved competitiveness; and (3) rather than focusing on one or two capabilities, better performing firms generally compete on the basis of multiple capabilities. That quality is not only at the base of the cumulative model but is often among the multiple capabilities shows the importance of quality management globally.     

Formulation Tactics and the Success of Organizational Decision Making*

One hundred and seventy-seven cases profiling organizational decisions were analyzed to determine how managers carry out formulation as they initiate a decision-making process. Analysis revealed that formulation was carried out by applying problem, idea, target, and reframing tactics. Decision adoption rates, decision value, and time to carry out the decision-making process were used to determine the success of these tactics, controlling for situational effects of importance, urgency, resources, and management level. Reframing was found to be the most successful tactic under all conditions, but was the least frequently used by decision makers. Problem and idea tactics were the least successful and success did not improve with additional resources, but these tactics were used more often than the other tactics. Problem tactics were even less successful when applied to urgent and important decisions. Target tactics were surprisingly effective for crises and important decisions. Decision makers seem prone to use ineffective formulation tactics and give little consideration to the opportunities or constraints imposed by the situation as a tactic is selected.     

Decision Making in an Automated Environment: The Effects of Anonymity and Proximity with a Group Decision Support System*

Recent advances in information systems technology have made it possible to support the work of interacting groups using networked personal computers. A laboratory experiment was conducted using a group decision support system to evaluate effects of anonymity and proximity on group process in automated group problem solving. Twenty groups of four persons each performed an idea-generating task using an interactive electronic brainstorming program. This experiment's main findings were: (1) Group members working anonymously and apart generated more comments. (2) Working in the same room increased satisfaction. (3) Highest levels of perceived system effectiveness were reported under anonymity.     

The Application of Neural Networks and a Qualitative Response Model to the Auditor's Going Concern Uncertainty Decision*

An auditor gives a going concern uncertainty opinion when the client company is at risk of failure or exhibits other signs of distress that threaten its ability to continue as a going concern. The decision to issue a going concern opinion is an unstructured task that requires the use of the auditor's judgment. In cases where judgment is required, the auditor may benefit from the use of statistical analysis or other forms of decision models to support the final decision. This study uses the generalized reduced gradient (GRG2) optimizer for neural network learning, a backpropagation neural network, and a logit model to predict which firms would receive audit reports reflecting a going concern uncertainty modification. The GRG2 optimizer has previously been used as a more efficient optimizer for solving business problems. The neural network model formulated using GRG2 has the highest prediction accuracy of 95 percent. It performs best when tested with a small number of variables on a group of data sets, each containing 70 observations. While the logit procedure fails to converge when using our eight variable model, the GRG2 based neural network analysis provides consistent results using either eight or four variable models. The GRG2 based neural network is proposed as a robust alternative model for auditors to support their assessment of going concern uncertainty affecting the client company.     

The Relationship between Procedural Rationality and Political Behavior in Strategic Decision Making

Despite the central place of rationality and political behavior in the decision-making literature, we know little about the relationship between these two dimensions. Can decisions be made using both rational and political methods, or must managers use one approach or the other? These questions were addressed in a study of 61 strategic decisions in 24 companies using a multiple-informant, structured interview protocol. Results indicate that procedural rationality and political behavior are independent dimensions of the strategic decision-making process. The implications of our findings for future strategic decision-making research are discussed.     

Decision Sciences Research in China: A Critical Review and Research Agenda—Foundations and Overview*

This article focuses on decision sciences research in China, providing an overview of current research and developing a foundation for future China‐based research. China provides a unique research opportunity for decision sciences researchers, owing to its recent history, rapid economic development, and strong national culture. We examine recent economic reforms and their impact on the development of research questions in the decision sciences, as well as discuss characteristics of the diverse regions in China and their potential as sites for various types of research. We provide a brief overview of recent China‐based research on decision sciences issues relating to national culture, supply chain management, quality management, production planning and control, operations strategy, and new product development and discuss some of the unique methodological challenges inherent in China‐based research. We conclude by looking forward to emerging research opportunities in China.     

The Effectiveness of Graphical Presentation for Information Extraction: A Cumulative Experimental Approach*

Three laboratory experiments were conducted to assess the relative strengths and weaknesses of bar, symbol, and line graphs for performing a variety of elementary information extraction tasks using two dependent variables, time and accuracy. The findings indicate that the degree of support provided by a particular graph format for a particular data extraction task depends on the matching of format and task in terms of their anchoring characteristics. Anchoring, in this context, refers to the phenomenon that specific and diverse parts of a graph are segmented by the reader to act as salient and relevant cues, or anchors, when different classes of information are to be extracted from the graph. A data extraction task has high x-value (y-value) anchoring if the x-axis (y-axis) component is represented in the question as either a given value or an unknown value. Conversely, a task has low x-value (y-value) anchoring if the x-axis (y-axis) component is not represented in the question as either a given value or as an unknown value. Data extraction accuracy was not significantly affected by presentation format. Bars provided the best time performance for data extraction tasks having high anchoring on both axes but were not appropriate for tasks having low anchoring on either the y axis or both the x and y axes. Line graphs tended to be worse in terms of time performance for tasks having high anchoring on both axes although they were as fast or better than other representations for tasks having low anchoring on both axes. Symbol plots appeared to possess anchoring characteristics associated with both bars and line graphs. Symbols (as with bars) tended to produce a time performance superior to that of line graphs for tasks having high anchoring on both axes; and (as with line graphs) symbols allowed faster results than bar graphs for tasks having low anchoring on either the y axis or both the x and y axes.     

An Investigation of Scheduling Policies in a Dual-Constrained Manufacturing Cell*

In previous group scheduling studies, labor has essentially been ignored by assuming that enough labor is assigned to each machine in the cell. In reality, however, management usually does not have the resources to employ a laborer at each machine in the cell (i.e., machines need to share labor). Both labor scheduling and group scheduling heuristics need to be administered to manage the cell effectively. This study develops and examines scheduling procedures for a dual-constrained (i.e., machine and labor) manufacturing cell. Eleven decision rules are developed and tested under 16 different experimental conditions. The experimental factors used are interarrival time distribution, cell load, setup-to-run-time ratio, and transfer-to-run-time ratio. Results show that interarrival time distribution and cell load have the greatest impact on the performance of the cell. This suggests that effective production planning aimed at reducing job arrival variation and leveling the cell load can substantially improve cell performance. Among the experimental factors, setup and transfer-to-run-time ratio factors had the strongest influence on the rankings of the decision rules. These rankings were fairly robust across all experimental conditions and performance measures. The results also indicated that the inclusion of labor as a contraint in the cell had a significant impact on the performance of several group scheduling heuristics. Finally, it was shown that the best performing decision rules consider both transfer time and subfamily setup times.     

Order Management in the Customization‐Responsiveness Squeeze*

Make‐to‐order (MTO) products may be either customized or standard, and customization can occur either at the configuration or component level. Consequently, MTO production processes can be divided into three customization gestalts: non‐customizers, custom assemblers, and custom producers. In this article, we examine how the multilevel nature of customization affects order management in processes that produce complex MTO products. We first empirically validate the existence of the three customization gestalts and subsequently, analyze the order management challenges and solutions in each gestalt in a sample of 163 MTO production processes embedded in seven different supply chains. In the analyses, we follow a mixed‐methods approach, combining a quantitative survey with qualitative interview data. The results show that important contingencies make different order management practices effective in different gestalts. Further qualitative inquiry reveals that some seemingly old‐fashioned practices, such as available‐to‐promise verifications, are effective but commonly neglected in many organizations. The results also challenge some of the conventional wisdom about custom assembly (and indirectly, mass customization). For example, the systematic configuration management methods—conventionally associated with project business environments—appear to be equally important in custom assembly.     

Causal Linkages in Supply Chain Management: An Exploratory Study of North American Manufacturing Firms

In this paper we investigate the key causal linkages in supply chain management. We propose a conceptual framework and test this framework on data from 215 North American manufacturing firms using structural equation modeling techniques. Three major research issues are addressed in this study: Do sourcing decisions affect the degree to which firms achieve manufacturing goals of cost, flexibility, dependability, and quality? Does the degree of manufacturing goal achievement lead to higher customer responsiveness? Does the degree of manufacturing goal achievement lead to higher internal manufacturing performance? The study examines the relationship among sourcing decisions, manufacturing goals, customer responsiveness, and manufacturing performance. The results support the notion that an integrated supply chain involves aligning sourcing decisions to achieve manufacturing goals that are set to respond favorably to the needs of customers.     

The Value to the Customer of RFID in Service Applications*

This article examines how customer value may be affected by deploying radio frequency identification (RFID) technologies within service environments. Business articles promote operational cost savings and improved inventory management as key benefits of deploying RFID. In response, service firms are using RFID to reengineer service transactions and customer touchpoints. Customers may view these RFID applications to offer both benefits and drawbacks. This article demonstrates that individuals will recognize far more value from RFID service applications than just cost savings and inventory availability. The article analyzes qualitative survey responses on the value gained from RFID to identify a broad list of value objectives—benefits and drawbacks—associated with RFID service applications. The article contributes to academic literature by providing salient value dimensions for return on investment models of service RFID applications and for future empirical analyses of means‐ends and value‐profit chain models. Managers can use the list of dimensions to develop rich business cases for evaluating the benefits and costs from enhancing service operations with RFID. The identified drawbacks also provide managers with a resource for understanding potential risks of RFID applications.     

A Simulation of Partial Information Use in Decision Making: Implications for DSS Design

Information matrices are often the output produced by a decision support system. These matrices are a common method for expressing a decision situation under different decision-making scenarios. The decisions involved in designing a decision support system to generate the information matrix are important and involve several cost and benefit components. A designer needs guidance in making effective design decisions in this context. Such guidance can be provided by considering the relationships among specific design decisions, costs, and benefits. The general objective of this study is to provide a comprehensive framework for this purpose. This study is the first to develop and present a comprehensive cost-benefit framework for evaluating design decisions for a variety of scenarios. The specific objective of this research is to provide guidance regarding the number of available information dimensions to incorporate in a computer-based decision aid. Simulation experiments are conducted with a completely specified model based on the cost-benefit framework (including needed assumptions) to evaluate how many information dimensions to include for a specific information matrix size to achieve a balance between information use costs and decision quality. Based upon extensive simulation analyses for a hypothetical decision maker, the practical guideline found for designers is to include only the top half of the relevant information dimensions in any specific decision support system. Over a large number of repeating choice decisions, the savings in cognitive effort and information gathering costs clearly offset relatively minor losses in decision quality.     

A Comparative Analysis of Quality Practice in Manufacturing Firms in the U.S. and Taiwan*

The aim of this paper is to determine if there is a causal relationship between multivariate constructs for quality (i.e., customer satisfaction, employee satisfaction, and employee service quality) and organizational performance. The presence of such relationships, as well as the identification of key indicators within each quality construct for different types of firms, are explored in this empirical study on the perceptions of middle managers in Taiwan and the United States. The study found a significant causal relationship between the quality constructs and organizational performance. These relationships are different, however, for the four types of firms based on age and size. Also, within the same firm types, there are differences among countries. For example, for older firms, Taiwanese managers tend to perceive customer satisfaction as the most important quality construct in improving organizational performance, while U.S. managers tend to perceive employee satisfaction as the most important. For younger firms, U.S. managers perceive customer satisfaction as influencing organizational performance, while Taiwanese managers perceive both customer satisfaction and employee satisfaction as doing so. A further breakdown of the quality constructs identified the key indicators within each construct that separates “better performers'’from “lesser performers'’in both countries for the four types of firms. These indicators are dissimilar, thus suggesting that focus on quality constructs may lead to improvements in organizational performance by focusing on different indicators in different environments. These results have implications for the adoption and implementation of quality practices in different countries.     

The Bounded Rationality Bias in Managerial Valuation of Real Options: Theory and Evidence from IT Projects*

Although real options theory normatively suggests that managers should associate real options with project value, little field research has been conducted to test whether they suffer from systematic biases in doing so. We draw on the notion of bounded rationality in managerial decision making to explore this understudied phenomenon. Using data collected from managers in 88 firms, we show that managers exhibit what we label the bounded rationality bias in their assessments: They associate real options with value only when a project's easily quantifiable benefits are low, but fail to do so when they are high. The study also contributes the first set of empirical measures for all six types of real options. The study contributes to managerial practice by identifying the conditions under which managers must be vigilant about inadvertently neglecting real options and by providing a simple approach for assessing real options in technology development projects.     

The Effects of Information Overload on Software Project Risk Assessment*

Managers are responsible for providing effective information technology governance of the software development process. Ineffective governance leads to serious resource misallocations and negative consequences concerning Sarbanes‐Oxley compliance. In order for managers to make informed decisions about software development projects, they often need more information than is available through normal information channels, that is, they need an in‐depth review of the at‐risk project. Such in‐depth reviews, however, are costly. Hence, accurate identification of at‐risk projects for in‐depth review is critical to management's ability to govern. This research considers how two factors, information load and time pressure, affect the quality of the project‐selection process. We examine quality by observing the decision strategies involved and then relating these strategies to subsequent decision making. An experiment was conducted with experienced information systems auditors using a combination of policy‐capturing and computerized process‐tracing techniques. The participants in our study cope with information overload by accelerating their decision‐making process and adopting noncompensatory decision processes. Contrary to prior research, our process‐tracing analysis suggests that participants rarely filter information, thus implying that decision makers are unable to process all the information. Coping by resorting to noncompensatory strategies did not decrease decision quality unless combined with accelerated information processing. Participants also increase their weight on the software project risk factors that they repeatedly access and that they view for longer periods of time. The theoretical contributions and practical implications regarding what actions managers can take to reduce the negative impact of information overload are discussed.