Number of alternatives and efficiency in different types of top-management decisions

Abstract What are the causes of the efficiency of complex strategic decisions? To answer this question, the impact of information searching, alternative designing, and complexity of a decision problem on its decision quality are analyzed in a longitudinal study of 83 top-management decisions, made the by executive board of a medium-sized firm (1380 employees). Decision quality is negatively influenced by the complexity of the decision problem. Alternative designing has a strong positive impact on decision quality. Information search shows no significant relationship to decision quality. The results indicate that designing of alternatives is an important instrument to counter the challenges of complex strategic decision-problems. However, one should not simply maximize the number of alternatives. There seems to be a very small optimal number beyond which decision quality will decrease. Besides, alternative designing has to be coordinated with other problem-solving activities, namely goal formation, process organization, and information searching.

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