| Summary: | This thesis addresses a long standing debate in the field of strategic decision research between theories of rationality (decision models which call for adoption of comprehensive information search to achieve best possible outcomes) and theories of· bounded rationality (decision models which address decision makers' limited capacity in information processing). Empirical studies have produced inconclusive findings under conditions of rapid and unpredictable environmental change (turbulence). The various debates and controversies have been compounded by repeated failures to specify limits of proposed mechanisms, and by lack of clarity in terminology. The thesis therefore implemented a research agenda based on Lord and Maher's (1990, 1993) integrative framework. This served as a sensitising device for studying empirically observed behaviours in three major experiments. The framework is developed around three dimensions: rationality (incorporating rational models and bounded rational variants); expertness (adoption of expert judgement); and cyberneticness (trial-and-error learning). An experimental research design allowing for longitudinal observation was adopted to explore the relationships between decision processes and effectiveness under different environmental conditions. Decision environments were split into discontinuous and continuous ones, differentiated by the presence or absence of unexpected jolts. Locating changes in decision style and effectiveness in the discontinuous environments lies at the core of this research. The decision to focus on laboratory experiments has the advantage of providing the exclusive opportunities for close observation of multiple decisions in a short time-scale. However, this reduces the capacity of the study to provide direct links with real-life strategic decision situations. The results are therefore suggestive rather than definitive and are offered for cross-validation in more open decision environments. Within the laboratory settings, MBA students and senior executives participating in strategic decision making were observed. Qualitative data were collected from 124 decision tasks. A total of 330 questionnaires were further collected for the quantitative data analysis. Preliminary analysis results from the qualitative data were supported by those from the quantitative data. This exploratory research paved the way for further research in this field with similar research designs. The core finding was that a specific kind of rationality was identified· as effective in discontinuous environments. This decision mode is characterised by a combination of activities directed toward a wide search for information and possibilities (rationality), and testing out the search results (cyberneticness). This mode was labelled as Promethean rationality. Traditionally, based on a cross-sectional view, rationality and cyberneticness in decision making have. been seen as mutually exclusive (e.g., Kleinmuntz and Thomas, 1987; Steinbruner, 1974). In light of the discovery of this mode, assumptions in the literature may need re-examination. Additional findings are reported under conditions of environmental continuity. Again Promethean rationality was found to be effective. Also, a decision mode involving a combination of rationality and utilisation of expert judgement (labelled as Confucian rationality) was found to persist, and was identified as effective. Confucian rationality was found under these conditions to support what was partially expected in the 12- literature. In the past, the combination was stressed as important (e.g., Eisenhardt, 1989; Fredrickson, 1985; Simon, 1987). The fact that Promethean rationality was effective under two types of environmental conditions and previously undetected in the more critical conditions gives it higher potential for theory development than Confucian rationality. Identification of the effectiveness of Confucian rationality under. environmental continuity could be a useful 'by-product' which adds value to this research. The bounded nature of the experimental trials precludes any 'safe' extrapolation of these claims with confidence to real-life situations. However, it does permit the development of insights ('intuitions') regarding the kind of real-life situations most likely to be fruitful in the search for understanding of the experimental modes identified here.
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