In examining organizational decision making, we shall draw heavily on the earlier chapters dealing with individual and group decisions. After all, organizations do not make decisions, people do. Indeed, it might be argued that understanding how people make decisions and how groups function is sufficient to understand and improve organizational decision making. We take a different view. Although individual and group decision making is nested within organizational decision making, and is indeed important to its understanding, it is not sufficient to describe how organizations arrive at decisions. As foreshadowed in Chapters 1 and 2, an additional set of concepts, principles, and frameworks is needed to understand and improve organizational decisions.
Our focus in this chapter is on decision making by organizations (taking a global and distant perspective), as well as decision making within organizations. The latter perspective examines how the larger organizational context affects people's perceptions of and approaches to decision problems. To address these issues we need to have some understanding of organizations in general. However, the literature on organizations is vast and cannot possibly be reviewed in a few pages. For this reason, we identify in this chapter only the most important concepts and terms needed for our decision process perspective. Multiple perspectives will be offered, including contributions from economics, organization theory, and political science. As before, both descriptive and prescriptive aspects will be addressed.