Evidence-based Drives on Organizational Decision-Making: Literature Review and Practical Implications
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Dr. Nguyen Xuan Tho Faculty of Business Administration, Greenwich Vietnam, FPT University-Danang Campus. Corresponding Email: thonx5@fe.edu.vn Nguyen Quynh Anh Business student, Greenwich Vietnam, FPT University-Danang Campus, Son Tra Dist., Danang City, Vietnam Nguyen Le Khanh Chau Business student, Greenwich Vietnam, FPT University-Danang Campus, Son Tra Dist., Danang City, Vietnam Nguyen Le Bao Chau Business student, Greenwich Vietnam, FPT University-Danang Campus, Son Tra Dist., Danang City, Vietnam
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Abstract
This article provides a comprehensive literature review on organizational decision-making and offers practical implications for effective decision-making in business organizations. The review examines theories and frameworks applied in decision-making processes, including evidence-based consideration. Furthermore, the importance of data, evidence, and information from various sources is emphasized, including practitioner evidence, stakeholder evidence, organizational data, and scientific evidence derived from peer-reviewed empirical studies. Practical implications for making effective decisions in business organizations are outlined, focusing on external, organizational, managerial, and behavioral factors. The influence of factors such as market competition, economic conditions, technological advancements, regulatory environment, consumer trends, organizational culture and structure, leadership and management style, financial resources, and human resources is examined. The article highlights the significance of considering these factors and implementing appropriate strategies to enhance decision-making effectiveness. Indeed, by considering the theories and frameworks discussed and incorporating practical implications, business organizations can make informed and effective decisions, leading to improved performance and competitive advantage in today's dynamic business environment.
Keywords: Organizational decision-making, Evidence-based considerations, External factors, Organizational factors, Managerial factors, Behavioral factors.
Making decisions is undoubtedly the most important managerial activity for managers and leaders in business operations (Baba & HakemZadeh, 2012). According to a multitude of management theorists (Drucker, 2010; Mintzberg, 2008; Simon, 1997; Lunenburg, 2011), decision-making is considered the most crucial of all management operations. In particular, for a number of decades, decision-making has been a central theme in the field of organizational research (March and Simon, 1958; Shapira, 2002; Singh, 1986; Shrestha, Krishna & von Krogh, 2021). Managers frequently weigh theories and practices while making choices in order to provide the best option for the organization given the circumstances at hand.
In organizational and managerial studies, there is a growing body of literature on decision-making that emphasizes evidence-based management. For several years, academics have been interested in both providing methods for how decisions should be made and studying how decisions occur within businesses (Butler, 1990; March, 1988; March, 1991; Mintzberg and Waters, 1990; Nutt, 2008). Although it is not always evident where decisions are made inside organizations, decision processes are generally believed to entail both a commitment to and a stimulus for action (Mintzberg, Raisinghami, & Theoret, 1976; Mintzberg & Waters, 1990).
Many significant concerns about the use of evidence-based management have been made in the last couple of decades, and the investigation of techniques based on evidence has grown in prevalence (Holloway, 2007; Reid & Spinks, 2007; Baba & HakemZadeh, 2012; Wright et al., 2016). The development of an evidence-based approach to managerial decision-making has garnered significant attention over the ten most recent years (Pfeffer & Sutton, 2006; Rousseau, 2012; Rousseau, 2006; Tranfield, Denyer & Smart, 2003; Wright et al., 2016). Some academics, on the other hand, provide four specific criticisms and are less optimistic about the application of evidence-based management to real-world management decision-making. First of all, despite disagreements on what "counts" as valid evidence in management research, evidence-based management prioritizes reason and science as the foundation for decision-making (Arndt & Bigelow, 2009; Learmonth, 2006; Tourish, 2013). Second, it was necessary to acknowledge that evidence alone is frequently insufficient and partial, serving merely to confine the range of possibilities that may be considered when making decisions, given the differing characteristics of management studies research issues and techniques (Tranfield et al., 2003). Third, some scholars have contended that the empirical studies concerning the efficacy of evidence-based management are inadequately developed (Arndt & Bigelow, 2009; Swan et al., 2012) and provide insufficient understanding of the subtleties of how evidence-based management functions as a decision-making process in various organizational settings (Reay, Berta & Kohn, 2009; Walshe & Rundall, 2001). Lastly, there are worries that the contextual competence of the decision-makers has been overlooked in evidence-based management's adoption of concepts from evidence-based healthcare (Morrell, 2008; Wright et al., 2016).
This article underscores the need for a comprehensive understanding of organizational decision-making. The first aim is to mention evidence-based consideration, which helps people in enterprises clearly understand the situation and make decisions based on evidence. This part of the report is divided into two stages, including the difference between data, information, and evidence and the four sources of evidence in decision-making. Following that this report highlights the implications of making effective decisions in business organizations. Organizations may increase their ability to solve problems and perform better by improving their decision-making processes through an awareness of and ability to navigate various internal, external, managerial, and behavioral elements. It is crucial to keep updated on these variables and modify tactics as needed to ensure that choices align with the organization's objectives and the state of the business operation.
As can be seen from Figure 1, data represents the beginning phase of Ackoff's suggested evolution from data to knowledge in 1988. According to Mensah and Goderre (2013), data was presented as unprocessed facts, statistics, and numerical values without context. Data have been proposed to be symbols in that they are recovered, gathered, or mimicked (Dammann, 2018). These comprise numerical values obtained from measurements or text mining, pictures, audio files, survey findings, models, etc. Typically, they can be presented as figures or tabulated and shown as graphs. Data are, more simply, the values of variables, either quantitative or qualitative (Dammann, 2018).
Fig.1. From Data to Knowledge Process
(Source: Mensah & Goderre, 2013)
According to Mensah and Goderre (2013), information was suggested as the second phase through data gathering, consolidation, evaluation, and delivery that fosters comprehension. This concept does not define information; rather, it explains how individuals derive information from facts. It was considered information to be context-sensitive stuff. Analyzed data that makes their meaning evident is what is referred to as information. Although not all data is information, once gathered and contextualized, it does constitute information (Dammbann, 2018).
The evidence was arranged in the third phase, which was characterized as information about the validity or falsehood of a claim (Audi, 1999). Evidence is information that may be utilized to validate a theory when put to the test. In other words, while all information is not evidence, all evidence is information. Comparing data to support opposing hypotheses aids in defining what constitutes evidence, producing the knowledge that an overall assertion is true. Information that doubts a proposition's veracity when measured against the norm is generally considered evidence (Dammann, 2018).
Making decisions based on the best available data from many sources is known as evidence-based choice, and it entails using this evidence carefully, clearly, and wisely. The possibility of making a decision that works will rise if evidence from many sources is used and adequately evaluated (Barends, 2015). Evidence-based practice's basic tenet is that the best available data and critical thinking should inform all decisions. Even though every management practitioner bases their judgments on evidence, many need to give the evidence's quality more thought. As a result, incorrect conclusions are made based on erroneous notions, fads, and beliefs promoted by management gurus (Barends, Rousseau & Briener, 2014). Scientific evidence, organizational evidence, experiential evidence, and stakeholder evidence are, therefore, the four types of evidence for decisions made by managers (Janatie et al., 2017; Janati et al., 2018a; Janati et al., 2018b; Hasanpoor et al., 2018).
Scientific studies published in scholarly publications serve as the primary source of evidence (Barends et al., 2014). According to Barends et al. (2014), one of the most significant sources is scientific evidence, which consists of conclusions drawn from books, journals, papers, and scientific research. According to Ntshotsho et al. (2015), decision-makers can obtain information from various sources, including qualitative and quantitative data. One such source is scientific evidence. Given that many of the common issues faced by managers, such as how to resolve conflict, improve communication, and make better decisions, are similar to those encountered in a variety of contexts, there is also a wealth of pertinent research from fields other than management (Ntshotsho et al., 2015).
In the tourist industry, for instance, the marketing department manager may make very precise and well-researched judgments by using online scientific databases on the visiting patterns of both local and foreign clients in 2023 to forecast their travel patterns in 2024. Furthermore, logical tactics that understand contemporary societal trends are developed by the company's management with the assistance of scientific information derived from the examination of prior research.
Organizational evidence is an additional source of assistance (Barends et al., 2014). In addition to "soft" components like opinions about the atmosphere of the company or beliefs regarding senior management, organizational evidence can also take the form of "hard" statistics like employee turnover rates, health errors, or productivity levels (Barends et al., 2014). According to Barends et al. (2014), organizational evidence is crucial for determining which issues need managers' attention. Determining potential causes, workable remedies, and what is required to implement these answers are also critical (Barends et al., 2014).
In the real world, for example, employee retention rates can illustrate a company's ability to retain talent for various reasons, including organizational cultures, pay, benefits, and other incentives that encourage employees to commit their skills to the company and vice versa. As a result, human resources managers make decisions and judgments to design a training, evaluation, and reward system for employees that are as cost-effective and compassionate as possible based on annual reports and an internal survey for rentation factors.
Experiential evidence, which comes from the expertise and assessment of directors, specialists, senior executives, and other practitioners, is a third type of evidence. Professional experience, as opposed to intuition, opinion, or belief, is built up over time from contemplation of the results of comparable activities performed in comparable circumstances. This category of proof is occasionally denoted as "tacit" knowledge. When it comes to reflecting on the specialized knowledge gained via repeated experience and the execution of specialized tasks, professional experience is different from insight and private judgment (Barends et al., 2014).
For instance, in addressing this often-cited problem in business education, managers should seek advice from leading experts in the business and education fields through face-to-face or offline sessions. This helps managers have a more objective perspective and make more accurate and stronger decisions for promoting business as well as enhancing training quality.
Stakeholder evidence
Evidence from stakeholders makes up a fourth source. Any person or group that might be impacted by the choices made by an organization and its outcomes is considered a stakeholder (Barends et al., 2014). Members of the Board, leaders, and workers are examples of internal stakeholders. External stakeholders might also be impacted, including suppliers, consumers, shareholders, the government, and the general public. Stakeholder evidence collection is crucial for more reasons than simply ethical ones. Knowing the values and concerns of stakeholders also gives one a framework for evaluating data from various perspectives (Barends et al., 2014).Strategic decision-making may be aided by gathering information from various stakeholders, including rivals, which might yield insightful information.
It is critical for firms to keep ahead of the competition in Vietnam's competitive food and beverage industry. Strategic decision-making may be aided by the gathering of information from a variety of stakeholders, including rivals, which might yield insightful information. Vietnam's consumer base is conscious of the need to preserve the environment, which influences their choice of products (Chauke & Duh, 2019; Lee, 2016; Lian, 2017; Nguyen et al., 2019; Bui & Ngo, 2022). Here, consumers favor using reused or recycled goods (Lee, 2016; Bui & Ngo, 2022). Since then, a large number of businesses in Vietnam's food and beverage sector have chosen to manufacture items like bottles or recycle plastic. The case study indicates that stakeholder evidence plays a crucial role in organizational decision-making. Managers can meet changing market demands by analyzing customer preferences and adapting their product offerings. This approach ultimately leads to the company's revitalization in the health-conscious Vietnamese market.
As mentioned above, evidence-based is involved in decision-making in the firm whereas managers make full use of evidence they collect from inside and outside the organization. Hence, the practical implications concentrate on finding the factors that influence organizational decisions and give recommendations for leaders and managers to apply these implications to real situations. These are divided into three elements: external factors, organizational and managerial factors, and behavioral factors that influence organizational decisions.
Bourgeois (1984) defined decision-making as the top management or dominant coalition's ability to choose courses of action that align the organization's resources with its environmental opportunities while also serving management's values and preferences. Indeed, confronting external operations represents their top managers' organizational decision-making and choices (Hambrick & Mason, 1984; Chaganti & Sambharya, 1987). Organizational management research examines strategic decision-making at the human level, examining whether top managers' decision-making styles impact organizational performance. The standard decision-making approach depends on external models of selection.
External factors influencing strategic decision-making include political, economic, social, technological, legal, and environmental which was in the PESTEL framework first proposed by Aguilar (1967). In addition, to maximize possibilities and reduce risks to the company's business operations, the PESTEL framework examines the outside economic setting to comprehend the "wider context" in which the organization works (Issa, Chang & Issa, 2014). The abovementioned factors add ambiguity and intricacy to decision-making processes (Gloria et al., 2008). Decision-makers must examine the influence of these external factors on their firms and devise effective strategies to handle the challenges and possibilities they bring. Furthermore, industry characteristics such as market structure, demand, government legislation, and task environment all affect strategic decisions (Phulpagar & Maddulety, 2013). The external environment significantly impacts strategic selections because organizations must match their abilities and internal design with external opportunities and demands to gain competitive advantages (Aikaterini et al., 2019).
The political aspect is focused on laws and rules that organizations have to follow from the government. Organizations need to take national laws and regulations into account from a political standpoint (Issa, Chang & Issa, 2014). Çitilci and Akbalık (2020) characterize political elements as things like trade barriers, government policies, tax legislation, elections, risks related to politics, and the security or insecurity of countries.
Political factors can significantly affect decision-making in business. Taking the Ukraine and Russia conflict as a case study, Since Ukraine and Russia had a dispute over political issues, this led to a de-internationalization process for many businesses that refocused on their domestic market (Ratten, 2023).Therefore, multinational companies have gradually fallen into a deadlock for importing and selling goods or even purchasing raw materials for production because the main transportation routes that were previously limited are now gradually limited by this conflict. Managers and leaders in these enterprises should be aware of these factors and consider them in their decision-making process. Utilizing experiential evidence, such as past experiences dealing with similar political scenarios, can help managers form strategic responses. Stakeholder evidence, including the views and opinions of key stakeholders like consumers, shareholders, and employees, can also provide valuable insights into how political changes are perceived and their potential impacts. Organizational evidence, including internal data and analysis, can offer an understanding of how these political factors might affect the company's operations, financial health, or strategic positioning. By effectively using these different types of evidence, managers can enhance their decision-making process, allowing them to navigate the complex political landscape more effectively and make decisions that are in the best interest of the organization.
The organization's cost-related issues are the focus of the economic element (Witcher & Chau, 2010; Issa et al., 2014). Economic variables include things like growth, salaries and income tax, rates of interest, currency exchange rates, inflation, bank monetary policy, and fiscal management (Çitilci & Akbalık, 2020).
Economic factors play a pivotal role in decision-making within businesses. For instance, inflation, a global economic phenomenon, can significantly affect a business's operations and strategic decisions. Inflation can impact the cost of goods, change consumer spending behavior, and alter the competitive dynamics in an industry. In such a scenario, managers can leverage various types of evidence to inform their decisions. Experiential evidence, such as past experiences dealing with inflationary periods, can provide valuable insights into the possible effects and strategies that could be employed. Stakeholder evidence, including input from suppliers, customers, and employees, can offer different perspectives on the potential impacts and effective responses to inflation. Organizational evidence, such as internal financial data and operational metrics, can help quantify the direct impact of inflation on the business. By utilizing these different types of evidence, managers can navigate through economic challenges more effectively, making informed decisions that protect and enhance the business's position.
The social aspect is defined as a population's features (demographics, age distribution, etc.). Gaining insight into a population's purchasing patterns is crucial to controlling a market. Furthermore, the corporation may further enhance its research of the particular demands of the persons involved by taking into account historical factors such as origins and traditions, as well as religion and cultural considerations reflected in manners, the press, and ways of interaction (Buye, 2021).
It cannot be denied that social factors can be one of the powerful keys that help the firm develop sustainability in an ecosystem. For instance, in order to promote the health and wellbeing of adult transgender and gender diverse clients, clinicians, researchers, and a growing number of transgender and gender diverse persons have been working diligently and cooperatively to create best practices since the late 1970s (Gerritse et al., 2023). These initiatives have produced consensus on the guiding ethical principles for the delivery of gender-affirming medical treatment as well as standards of care (Gerritse et al., 2023). Despite these initiatives, making decisions in gender-affirming healthcare presents a number of ethical difficulties, such as when stakeholders disagree or lack knowledge of what is morally correct or desirable (Molewijk et al., 2015). In this context, managers should be very careful while communicating with these people and avoid hurting them by using scientific evidence and stakeholder evidence. What makes the managers successful is that they need to find solutions for open and transparent communication based on trust, honesty, and acceptance emerged as contextual conditions for good decision-making.
The technical aspect is typified by the information that is produced about technological advancements, which helps firms be ready to adapt and function with the most up-to-date technologies. Concerning technical development, newly discovered technologies will likely lower production costs while increasing productivity. The organization may face opportunities or risks as a result of the changes in the technology environment (Buye, 2021).
As an example, Vietnam as now is the nation has experienced rapid motorization in recent decades, along with expansion in the economy and urbanization. The fast expansion is linked to elevated rates of demand for transportation and exerts a noteworthy influence on transportation energy sources (de Sousa & Castañeda-Ayarza, 2022). The government has been working on building a sky train system to benefit the public in recent years. Decision-making management by managers of companies involved in the operation of these trains is then required. Managers should learn and get used to applying technology in management process with using scientific evidence on studies, research, since then, they can understand how technology work and give the right decisions to manage the tasks and employees. Moreover, managers should update the lastest information on technology innovations and apply to decision-making processes which makes it smoother, faster, and more effective.
Çitilci & Akbalık (2020) state that environmental factors might include raw materials, pollution, climate, weather, and nature. Together with raw materials and other environmental assets like the soil and physical space the organization operates on, it also encompasses nature and the physical environment. PESTLE analysis looks at the natural world to provide data on raw materials, pollution, and laws governing the preservation of natural resources. The organization's operations and reputation may be adversely affected by pollution produced by it or by others, particularly if those operations cause environmental harm (Buye, 2021).
Given the fact that, as an instance, pollutions always be concerned by the government, citizens and firms all over the world due to the horrible effects these issues can cause to the human living environment. Therefore, enterprises nowadays are improving their social responsibilities to build reputation. Managers in manufacturing organizations should be aware of investment in machines that could eliminate the factors that cause pollution based on scientific evidence through research.
Çitilci & Akbalık (2020) suggest that legal issues may encompass subheadings such as labor laws, legislation, consumer rights, and so on. The legal framework of a country is composed of its laws and regulations. PESTLE analysis offers details on rules and regulations that might affect how a business manufactures and sells its products. These laws might affect how organizations function in a positive or negative way. Among the elements that organizations must assess and acknowledge is the regulatory framework (Buye, 2021).
Although it is a delicate subject, legal matters significantly affect managers and company executives. Managers must give the subject of consumer rights particular consideration while working in businesses like hotels, restaurants, supermarkets, and hospitals that offer goods and services. Because several people frequently participate in the decision-making process in business-to-business transactions, decision-making in these contexts may be analyzed via the lens of the collaborative journey of the client (Sheth, 1973; Hamilton et al., 2021). Managers should thus prepare to anticipate consumer behavior, teach employees how to interact with clients, and make judgments regarding the process of assessing experience and satisfaction. Legal regulations will not be a barrier to corporate operations after that.
While external factors have the intent to impact the environment around the fỉm, organizational factors influence crucial levels of company operation. A few of the major factors that can influence a business's pursuit of the corporate decision-making process were discussed by Hornsby, Kuratkoa, and Zahra (2002). These factors include internal organizational factors like the business's incentive and control systems (Sathe, 1985), culture (Kanter, 1985; Hisrich & Peters, 1986; Brazeal, 1993), the organizational framework (Covin and Slevin, 1991; Naman and Slevin, 1993), and managerial support (Stevenson & Jarillo, 1990; Kuratko et al., 1993). Howard-Grenville et al. (2008) emphasized five important internal characteristics as several aspects of earlier work: incentives program, organizational culture, business identification, firm self-monitoring, and personal interactions and loyalties.
Organizational culture, as defined by Harris and Hartman (2002), consists of the norms, values, and attitudes of the individuals that comprise an organization. Individuals may learn key organizational values, appropriate behavior, and how to view the world from an organization's culture. A framework of common values and ideas that forms inside an organization and directs its members' behavior is known as the workplace atmosphere, often known as corporate culture (Kinicki & Williams, 2011). Jalal (2022) asserted that cultural importance and skills impact leadership and decision-making. Decision-making is thought to be impacted by communication as well. Because humans are social creatures, they require the presence of other humans in order to interact, form groups, and support one another in meeting their own desires (Mayasari, Akbar & Elina, 2019). All of those variables of an organization's culture possess the potential to affect how leaders and managers respond to internal business issues (Howard-Grenville et al., 2008).
Managers should think about creating a supportive organizational culture, which calls for a culture of consistency, engagement, mission, and flexibility, according to Le, Nguyen and Hoang (2020). For instance, in the educational sector, regularity may provide staff members and teachers with an understandable job framework. Businesses must use technology to create operational processes in light of the 4.0 industrial revolution to ensure that work is integrated and coordinated to benefit the whole firm and accomplish shared objectives. This problem promotes internal coherence. In addition, stable organizations are those with distinct purposes that prioritize internal conformity. Furthermore, there are significant ramifications for daily business operations regarding how involved and dedicated employees at all levels are to the company's objectives. Leaders and managers must manage the corporate culture in light of how it affects workers and business performance. In light of this, the company's ability to adjust and understand what its consumers want and its capacity to meet demands from other sources are equally critical. Managers should cultivate an adaptation culture to boost employee happiness and academic achievement (Vo, 2018; Le et al., 2020).
Incentive programs originated from the organization's formal structure, which enabled particular reward systems, including official and informal inducements, and created pathways for interaction and power. According to Howard-Grenville et al. (2008), official and unofficial structures impact decision-making processes, decision-makers, and the level of autonomy managers and facilities have. One feature of rational choice theory, as demonstrated by Tamvada and Chowdhury (2023), is that incentives force leaders to take actions that increase profits for their companies rather than serving the public interest (Zey, 1998; Tamvada & Chowdhury, 2023). It is believed the healthcare sector's most pressing issue in Vietnam is the incentives program. Then, when using these to solve better problems relating to restricting incentive programs to CEOs and higher-ups who earn extraordinary salaries and bonuses directly correlated to firms' profitability, two resolutions assist leaders at healthcare facilities (Tamvada & Chowdhury, 2023).
The first way to incentivize employees working in the medical field to enhance society's health and well-being is to introduce counterbalancing incentives by providing subsidies and incentives to the sector based on societal health indicators (Nguyen et al., 2015; Tamvada & Chowdhury, 2023). Financial incentives have altered patient relations, morality, and professionalism, lowered treatment quality, and increased medical expenses, especially for people who serve in the public healthcare sector (Forsberg, 2013). The distribution of these subsidies and assessing the returns on investment to manage incentive structures should be primarily handled by the Ministry of Health and the Government of Vietnam (Tamvada & Chowdhury, 2023). But to maintain impartiality, profit or expense ratio limitations, such as those governing CEO/worker wage ratios, should be created and extensively disseminated so that interested parties may closely examine them for public and private players (Tamvada & Chowdhury, 2023).
Secondly, incentives that result in adverse externalities are eliminated by monitoring, cataloging, and regulating exploitative conduct in every industry that gains from the epidemic, including COVID-19. Indeed, this may be achieved by technological advancements or through metrics like the ones mentioned above, where pertinent stakeholder groups can review readily accessible information on the exploitative conduct of actors (Tamvada & Chowdhury, 2023).
Organizational identity is described as that which is essential, permanent, and unique in an organization as viewed by its members; organizational culture, on the other hand, refers to the patterns of daily activities within an organization (Albert & Whetten, 1985; Howard-Grenville et al., 2008). Identity develops through encounters with the outside world, as opposed to culture, which is defined as patterns of meaning resulting from regular interactions inside an organization (Hatch & Schulz, 2002; Howard-Grenville et al., 2008). Studies conducted on business social responsibility indicated that workers of some organizations are more aware of their corporate identification than those of rivals (Bhattacharya & Sen, 2003; Howard-Grenville et al., 2008).
A consumer products business may, for instance, place significant emphasis on maintaining its image of green marketing as a means of showcasing key aspects of its brand. With its ability to shape consumer views and the company's market position, this identity is an essential asset. Thus, it becomes strategically important to keep up this green image (Howard-Grenville et al., 2008). In this situation, managers play a critical role. They should make important choices about product development, branding, and communications that are consistent with the principles of green marketing; they are the company's spokespersons. These choices not only shape the company's image among consumers but also establish the organization's internal culture.
Firm self-monitoring is defined as making decisions about how to present itself to external parties based on how the organization perceives these parties and how important it is to maintain socially acceptable representations. According to Howard-Grenville et al. (2008), it might manifest as the extent of transparency, confidence, and reciprocity that an organization's members have with important external entities, such as populations, activist entities, and regulatory bodies.
In many industries, such as manufacturing, food processing, or fast-moving consumer goods, managers are essential in starting organizational self-monitoring decisions. Several businesses have made public declarations regarding their beliefs and commitments to preventing environmental pollution. However, industry partners that sell to the same market have said nothing about this matter. Managers should evaluate how the business affects the environment and develop plans of action that support sustainable practices through reading scientific and experienitial evidence. This might entail investing in greener technology, putting waste management systems in place, or switching to more environmentally friendly procurement practices. By doing this, they improve their company's standing as an ethical business while helping preserve the environment. Other industry partners' lack of response on the subject might be perceived as a lost chance to establish customer confidence and show corporate responsibility.
Personal interactions and loyalties are characterized by how they formulate and address environmental issues (Van Maanen & Barley, 1984; Howard-Grenville et al., 2008). A manager's perception of the advantages and disadvantages of environmental actions beyond compliance may also be influenced by entirely subjective, individual variables. It is generally widely acknowledged that the staff bring their own views and ideals to work, and a sizable portion of the workforce identifies as environmentalists (Morrison, 1991). According to empirical research, the extent and tenor of employee-generated environmental initiative responses were impacted by employees' values and how well they aligned with the company's values (Bansal, 2003; Howard-Grenville et al., 2008). Others have argued that managers' own environmental beliefs might influence how committed their companies are to solving environmental problems (Howard-Grenville et al., 2008).
In order to effectively manage risks and unexpected scenarios arising from their personal commitments and affiliations in company decision-making, managers need to be well-prepared by analysis of organizational and stakeholder evidence. This preparation entails acquiring the abilities, know-how, and practical experience required to make wise choices in unpredictable situations. They should be able to strike a balance between their personal convictions and the demands of the organization, as well as comprehend the possible effects of their connections on the objectives and operations of the latter. This involves having the capacity to resolve moral conundrums, control conflicts of interest, and guarantee decision transparency. By doing this, managers may make choices that are optimal for the business while simultaneously upholding their own moral standards.
Making decisions is one of the modern businesses' most important management aspects due to their direct impact on the entity's success or failure. Understanding the elements impacting decision-making is critical when uncertainty is significant (Kozioł-Nadolna & Beyer, 2021). Internal organizational elements are crucial to corporate decision-making, which aids managers and leaders in developing a robust resilience plan for business operations, much as theories have played a role in providing background information for decision-making.
Leadership and management are the blood and nutrition of organizations; managers and leaders have the power and responsibilities to make decisions in the firm. Due to the importance of leadership and management, there are three key factors that help to assess the performance of managers and leaders in decision-making, including firm-specific resources and capabilities, management characteristics, and management attitude and perceptions (Suárez‐Ortega & Álamo‐Vera, 2005).
Leonidou and Katsikeas (1996) posited that structural features of companies function as intervening variables that either facilitate or obstruct the effective activation of latent export impulses. Even though a lot of firm-specific factors have been researched in the literature, more focus has been placed on company size (Cavusgil, 1984a, b; Axinn, 1985; Bonaccorsi, 1992; Calof, 1994), distinctive strengths (Cavusgil & Nevin, 1981; Christensen, Da Rocha & Gertner, 1987), and experience in developing geographic markets (Johanson & Wiedersheim-Paul, 1975; Cavusgil, 1984b; Axinn, 1985). Besides, human resources, financial resources and physical resources are also the points affect decision-making (Barney, 1991).
Managers can take into consideration to make evidence-based decisions effectively based on various factors, such as the size of their firms, the possession of distinctive capabilities, and the firms' experience in the geographic market. The size of a firm can provide managers with valuable insights and data that can be analyzed to make informed decisions. In addition to firm size, the possession of distinctive capabilities can also contribute to evidence-based decision-making. Distinctive capabilities refer to unique strengths or resources that set a firm apart from its competitors. By leveraging these distinctive capabilities, managers can gather evidence on how these resources can be utilized to gain a competitive advantage or meet specific market demands. Evidence-based decision-making allows managers to assess the effectiveness of these capabilities and make informed choices on how to best utilize them. Furthermore, a firm's experience in the geographic market can provide valuable evidence for decision-making. Over time, firms accumulate knowledge and insights about the specific dynamics, preferences, and challenges of a particular market. By analyzing past performance, market trends, and customer feedback, managers can gather evidence on what strategies have worked in the past and what adjustments might be needed in the future. In conclusion, managers can make evidence-based decisions by considering factors such as firm size, possession of distinctive capabilities, and experience in the geographic market. By analyzing data and evidence related to these factors, managers can make informed choices that are grounded in reliable information. This approach increases the likelihood of making successful decisions that align with the firm's goals and maximize its competitive advantage.
Managers play a crucial role in maximizing the utilization of human resources, financial resources, and physical resources within an organization. Firstly, when it comes to human resources, managers strive to effectively recruit, train, and develop employees to ensure their skills and talents are utilized to the fullest extent. They focus on employee engagement, motivation, and performance management to enhance productivity and achieve organizational goals. Secondly, managers make strategic decisions regarding financial resources, such as budget allocation and investment strategies, to optimize financial performance. They analyze financial data, forecast trends, and make informed decisions to ensure the efficient use of financial resources. Lastly, managers assess and manage physical resources, such as infrastructure, equipment, and technology, to enhance operational efficiency. They make decisions related to maintenance, upgrades, and utilization of physical resources, ensuring the smooth functioning of operations. Overall, managers take into consideration these resources to inform their decision-making processes and drive organizational success.
For the business, the top management team is essential.Planning, leading, overseeing, and modifying strategic plans are among its concerns (Al-Matar et al., 2023). As companies get more complex, the role of the company's top management is becoming more and more important (Al-Matari, 2022; Ginesti, 2019; Kolev & McNamara, 2022; Parola, Ellis & Golden, 2015; Zhou et al., 2022). More specifically, a lot of focus has been on how the variety of top management influences a range of company decisions and outcomes (Yang & Wang, 2014). Hence, management characteristics are crucial with business operations. Perlmutter's (1969) groundbreaking work and the Uppsala school's idea of psychological distance (Johanson & Wiedersheim-Paul, 1975) both underline the importance the firm's management team played in the internationalization process. Using four direct indicators, "psychic distance, management objective characteristics, management subjective characteristics, and managerial attitude toward export," according to Dictl et al. (1983), operationalized management's international orientation in the 1980s (Suárez-Ortega & Álamo-Vera, 2005).
Managers should effectively manage their capabilities of psychic distance by enhancing their understanding of cultural, market dynamics, and legal frameworks in target markets through scientific evidence. This can be achieved through conducting thorough market research, engaging in cross-cultural training programs, and establishing strong relationships with local partners or consultants. In terms of management objective characteristics, managers should set clear and realistic export goals, develop strategies to enter new markets, and ensure alignment with the overall business objectives. Additionally, managers should be aware of their subjective characteristics such as risk perception, self-confidence, and adaptability, as these can influence their decision-making and approach towards export. Lastly, a positive and open-minded managerial attitude about export can foster a proactive mindset, encourage experimentation, and support the development of effective export strategies.
Because of their significance as important resources in the enterprises' export growth process and the distinct theoretical foundation for perceptions, managers' attitudes and perceptions, in particular, call for an individual examination (Suárez-Ortega & Álamo-Vera, 2005).
To effectively manage the attitudes and perceptions of employees, customers, and top managers in an organization, managers must adopt a proactive approach that fosters open communication, trust, and a positive work environment. Firstly, managers should actively listen to and address the concerns and feedback of employees, ensuring that their opinions are valued and incorporated into decision-making processes. Secondly, managers should implement regular training and development programs aimed at enhancing employee skills and empowering them to deliver exceptional customer service. Additionally, managers should promote a culture of transparency and fairness, ensuring that top managers are accessible and approachable to all employees. By actively managing these attitudes and perceptions, managers can cultivate a motivated and engaged workforce, build strong customer relationships, and foster a collaborative and harmonious organizational culture.
In order to comprehend the elements impacting user intentions and behavior, behavioral theories have been heavily referenced in the literature on buying habits (Sahu, Padhy & Dhir, 2020). Several significant aspects impact the process of making decisions. Individual variations, previous experiences, a range of cognitive biases, unrecoverable expenses, are all significant contributors. All of these factors have an effect on the process and results of decision-making (Sahu, Padhy & Dhir, 2020).
Previous experiences might impact judgments taken in the future. People's decisions now influence their decisions tomorrow, claimed by Juliusson, Karlsson and Garling (2005). It seems sense that if a person's decision results in a good end, they will probably choose the same course of action in a similar situation. On the other hand, individuals are hesitant to repeat their mistakes (Sagi & Friedland, 2007). This is significant because it implies that conclusions drawn from past experiences may not necessarily be the best ones for the future. Highly successful people use an unconventional approach to financial decision-making: they analyze choices without considering past performance. Rather than relying on historical sunk outcomes when making investment decisions (Juliusson et al., 2005; Callaghan, 2010).
Using organizational and stakeholder evidence, managers may leverage their prior expertise to improve operations inside the business. The process of gathering organizational evidence includes examining historical performance data, determining effective tactics, and putting them into practice in the present. This facilitates decision-making, process optimization, and operational streamlining for managers. Stakeholder evidence, on the other hand, entails identifying areas for improvement by obtaining input from relevant stakeholders like customers, workers, and others. Managers are able to make well-rounded judgments that satisfy the demands of both internal and external parties when they take into account the opinions and wants of all stakeholders. Managers may use their prior expertise to promote continuous improvement and accomplish corporate goals by integrating stakeholder and organizational evidence.
Apart from previous experiences, there are multiple cognitive biases that impact the process of making decisions. Thinking patterns that result from observations and generalizations are known as cognitive biases, and they can cause erroneous judgments, flawed reasoning, and memory problems (Evans, Barston, & Pollard, 1983; West, Toplak, & Stanovich, 2008). Cognitive biases affect people's ability to make decisions by making them too reliant on or giving greater weight to predicted observations and prior knowledge while discounting facts or perceptions that they believe to be ambiguous or fail to consider the whole picture. Even though this impact can occasionally result in bad conclusions, cognitive biases allow people to make effective decisions with the use of strategies (Shah & Oppenheimer, 2008; Callaghan, 2010).
Through the application of empirical and scientific facts, managers may successfully control cognitive biases to improve organizational function. First of all, utilizing scientific evidence entails implementing evidence-based management strategies that are backed by thorough investigation and factual information. This might involve putting into practice frameworks for decision-making that promote critical thinking, looking for different viewpoints, and questioning presumptions. Additionally, by promoting a culture of learning and experimenting inside the company, managers may make use of experience-based evidence. This entails giving staff members the chance to reflect on their experiences, impart their wisdom, and gain knowledge from both achievements and setbacks. Managers may reduce the effects of cognitive biases, encourage a more objective decision-making process, and eventually improve overall organizational performance by integrating empirical and scientific knowledge.
An increase in commitment and sunk outcomes—unrecoverable costs—can also have an impact on decision-making, in addition to prior experiences and cognitive biases. According to Juliusson et al. (2005), people tend to make riskier decisions when they feel accountable for the time, money, and effort invested in a project. This implies that people invest a greater number of resources into the choice to which they feel committed. Therefore, a person's decision-making process may occasionally be impacted by "how far in the hole" they consider themselves to be (Juliusson et al., 2005; Callaghan, 2010).
When people feel obligated to continue making dangerous decisions because they feel responsible for the time, money, effort, and sunk costs of a project, managers frequently find themselves in a difficult position. Managers might employ a variety of tactics to counter this strategy to clearly convey the idea of sunk costs and how they have no effect on decisions made in the future. People will be able to comprehend that decisions made in the past should not affect those made now. Managers may also promote a culture of failure-learning, in which errors are viewed as educational opportunities rather than personal failings. In order to lessen the impact of sunk costs on decision-making and encourage a more logical and efficient process, managers should establish an atmosphere that encourages candid communication, introspection, and flexibility.
Decision-making may also be influenced by certain individual variations. Age, socioeconomic position , and cognitive ability have all been linked to decision-making in the past (de Bruin, Parker, & Fischoff, 2007; Finucane et al., 2005). Finucane et al. found a considerable variation in decision-making competence with age; that is, decision-making competence may decrease along with the aging-related deterioration in cognitive functioning. Furthermore, it's possible that older individuals overestimate their capacity for decision-making, which limits their ability to use approaches (de Bruin et al., 2007).
Using a customized approach, managers implement solutions to meet individual variances in corporate decision-making. They understand that every worker has different views, talents, and preferences, all of which may affect how they make decisions. Open lines of communication, such as one-on-one meetings, are facilitated by managers to better understand individual differences. By encouraging staff members to express their thoughts, worries, and recommendations, they foster a welcoming and cooperative workplace. In order to improve employees' ability to make decisions, managers also offer opportunities for training and development, customizing the approach to meet the needs of each individual. Managers provide a diverse and well-rounded decision-making process inside the business by identifying and addressing individual variances.
This literature review has explored various theories and concepts relevant to evidence-based organizational decision-making. The practical implications derived from this review offer valuable insights into making effective decisions within business organizations. Organizations can implement strategies to mitigate biases and enhance decision quality by understanding evidence-based considerations, which play a crucial role in decision-making. The four sources of evidence – practitioner evidence, stakeholder evidence, organizational data, and scientific evidence from peer-reviewed empirical studies – offer different perspectives and insights. By incorporating these sources, decision-makers gain the ability to make knowledgeable decisions founded on a thorough comprehension of the circumstances at hand.
Regarding practical implications, external and organizational factors have been identified as influential elements in corporate decision-making. External factors such as market conditions, regulatory frameworks, and technological advancements can significantly impact decision outcomes. Simultaneously, internal factors such as organizational culture, leadership styles, and group dynamics shape the decision-making process within organizations. Recognizing and considering these factors allows organizations to adapt and respond effectively to challenges and opportunities. Additionally, managerial and behavioral factors have been underscored as crucial influencers in decision-making. Administrative factors encompass the skills, knowledge, and experience of decision-makers and their ability to gather and analyze information. Behavioral factors, including individual and group dynamics, cognitive biases, and decision-making styles, significantly impact the quality and effectiveness of decisions. Organizations can optimize these factors and enhance decision-making outcomes by fostering a conducive decision-making environment.
In conclusion, this scholarly examination offers a thorough and all-encompassing analysis of organizational decision-making processes. It achieves this by synthesizing diverse theories, evidence-based considerations, and practical implications to understand the topic comprehensively. By integrating rational and behavioral perspectives and evidence-based practices, organizations can enhance their decision-making processes and ultimately achieve better outcomes. Understanding the complexities and nuances of decision-making is crucial for organizations to successfully navigate the dynamic and competitive business landscape. By applying the discernments and suggestions derived from this review, organizations can make informed decisions that are congruent with their strategic goals and propel sustained prosperity in the long run.
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