Flexibility in Strategic Decision Making: Informational and Ideological Perspectives

Abstract

Adaptation is a crucial challenge for organizations, and an important theme in the strategy and organization theory literature. We still have much to learn, however, about the strategic processes by which adaptation is achieved. In this paper we focus on a basic element in the adaptation process, i.e. flexibility within the strategic decision‐making process. We concentrate on strategic decisions because these choices are the most important adaptations the firm makes. We suggest that the core of all organizational adaptation is a decision‐making process. Unless the decision‐making process itself is flexible, it is unlikely the organization can be flexible enough to adapt. We derive hypotheses concerning the factors that lead to flexibility (versus rigidity) from both information processing and ideological perspectives, and test them in a study involving 57 strategic decisions in 25 companies. Our results identify three contextual factors related to both perspectives ‐‐ including competitive threat, slack and uncertainty ‐‐ that are helpful in understanding flexibility in strategy decision making. While managers appear to be more flexible when decisions are uncertain, we found that in the very conditions where managers need the most flexibility (high competitive threat and low slack), they are least likely to be flexible.