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Establishing the Science of Fast and Frugal Management: Empirical Evidence on the Value of Management Heuristics
Type
fundamental research project
Start Date
01 December 2012
End Date
30 November 2014
Status
ongoing
Keywords
management heuristics
cognition
decision-making
Description
Recent research in strategic management reveals that managers utilize heuristics, "cognitive shortcuts", for important strategic questions (Bingham & Eisenhardt, 2011). Rather than using complex analysis, the application of heuristics reduces time and information processing through simple rules of thumb. Thereby, heuristics in management are supposed to lead to superior performance compared to complex analysis (Bingham & Eisenhardt, 2011). This is of particular interest in entrepreneurial settings where opportunity costs of complex decision-making are evident. However, surprisingly little research actually addresses the distinct value of management heuristics. This project contributes a manual for research on management heuristics and serves as a forerunner for establishing the science of fast and frugal management. It builds on literature in Psychology, which investigates the accuracy of heuristics on an individual level. A second pillar of this research is preliminary, explorative research, in particular in-depth interviews with clean-tech practitioners on their decision-making practices. Integrating both we showcase the science of fast and frugal management and outline basic principles and methodological approaches for an investigation of the value of heuristics for organization and management theory. In particular we conduct three sub-projects, each of which will be conceptualized as one paper: First, building on the work of this proposal we aim at establishing a manual on how to conduct research on management heuristics. Second, derived from interview data we introduce and propose to investigate a new management heuristic, the "response time heuristic" and its accuracy for forecasting sales. Finally, the interview data shows that the mode of managerial decision (be it analytical vs. heuristic based) provides value through "side-effects" such has having impact on managerial decision self-efficacy and speed of decision. We designed an experiment to investigate these "side-effects" and pretested it with Master students within two Swiss summer schools. The third sub-project builds on that data and elaborates on "side-effects" of management heuristics. The project wraps-up presenting significance for research, practice and teaching at the University of St. Gallen.
Member contributor(s)
Funder(s)
Topic(s)
management heuristics
cognition
decision-making
Method(s)
div.
Range
Institute/School
Range (De)
Institut/School
Division(s)
Eprints ID
219744
4 results
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1 - 4 of 4
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PublicationWhen Intuitions Collide in the Pursuit of Sustainability: Heuristics in Firms and their DynamicsHeuristics are essential for adaptive behavior of individuals (Gigerenzer, Hertwig, & Pachur, 2011). In the light of sustainable change adaptive behavior is also of interest for firms. It appears that firms learn and make use of heuristics (Bingham & Eisenhardt, 2011). However, organizations are formed by groups of individuals and it is unclear how heuristics emerge within groups. Moreover, scholars lately highlight the existence of multiple and paradoxical rationalities within organizations (Smith & Lewis, 2011). How do multiple intuitions in groups affect our view on heuristics in firms? We theorize on heuristics in firms and their dynamics from a complexity theory lens. We develop a model that predicts four scenarios of what happens to heuristics, when intuitions collide: stabilizing, reinforcement, neutralization and evolution.Type: conference paper
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PublicationType: conference paper
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PublicationBusiness modeling as configuring heuristics : editors C. Baden-Fuller and V. MangematinWhile recent research has referred to a cognitive view on ‘business modeling', it remains unclear in specifying the cognitive foundations of how such modeling happens. This paper proposes building on heuristics as models of individual cognition, which have proved effective foundations of adaptive individual and managerial behaviors. By also drawing on gestalt theory to specify principles of modeling as rule-based form giving, we propose business modeling as a managerial cognitive process of configuring heuristics. The paper makes three contributions. First, we introduce heuristics to the business modeling literature, and so provide an established theory of adaptive individual behavior that strengthens the cognitive foundations of business modeling. Second, we conceptualize and theorize on the cognitive activity of business modeling as an iterative process of configuring heuristics by applying gestalt principles. Although the literature on business models has referred to the theories of configurations and gestalt, it has been left to this work to make the theoretical linkages between heuristics, gestalt theory and business modeling explicit. Third, our work contributes to the micro-foundations of the cognitive processes underlying business modeling and thus to broader accounts of adaptive managerial behaviors. --- This article is © Emerald Group Publishing, and permission has been granted for this version to appear here (https://www.alexandria.unisg.ch/Publikationen/240581). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.Type: journal articleJournal: Advances in Strategic ManagementVolume: 33
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