Decision making is considered to be the most essential function of a manager in all organizations. The decision making process of an organization is affected by a number of contextual factors. Environmental forces, organization structure and governance, size, technology and risks are some of the contextual factors that specify the level of decision making required in the organization. It plays an important role as the organization has to take into account the changes taking place in the dynamic environment for attaining a competitive position in the market. These factors are taken into consideration by the managers in the process of decision making so that overall organizational performance can be enhanced by improving employee motivation and facilitating knowing sharing. This assignment highlights how business decision making is affected by the contextual factors. It also makes some discussions regarding new findings and their meaning for the managers in the organization.
This article focuses on the contextual factor that is organizational governance. Organizational governance can be defined as the set of rules, direction and purpose that offers a high degree of control to the owners and provides a clear idea of their role to the employees. Also, organizational governance provides an informed view regarding the operations of the organization to the outsiders.
This article provided certain new findings relating to the contextual factor namely organizational governance. The findings of this article provide that managerial underperformance is addressed by attempts of hostile takeovers which are also considered as an important external governance mechanism. Irrespective of the actual completion of the acquisition by the bidder, the dismissal of the target CEOs is noticed after the takeover attempt. The investment behaviors of the CEOs are still not known who are capable of retaining their positions even after the takeover attempts. A behaviorally informed model has been advanced for the purpose of engaging in this underexplored governance context. Evidence regarding the existence of a nonlinear relation between the uncertainty degree of expected returns and target CEO tenure has also been found in strategic investments in case of failed attempts of hostile takeover.
These findings are crucial for the managers in the organizations as it provides that the processes and outcomes of the firm are greatly influenced by its executives and managers. Therefore, it must be ensured that the managers, CEOs and executive are performing well.
Environmental forces are the main contextual factor discusses in this journal article. Environmental forces can be defined as the factors that cannot be controlled by a business. The factors can easily increase the profitability of the business and also have the capability of putting a business into heavy losses. In other words, it can increase the cost of goods sold or can increase the sales of the business. Such factors include demographics, availability of resources, government regulations, infrastructure and deliverability, etc.
The article provided certain findings regarding the contextual factor environmental forces. It provides that the new ventures are greatly affected by the environmental forces affecting the country. Two factors are included in the entrepreneurial environment i.e. environmental dynamism and munificence. Environmental dynamism include uncertain markets, rapidly upgrading technology and unstable institutions. On the other hand, munificence include competitive intensity of the entrepreneurial environment and resource abundance. The findings of this article further provides that these two factor play a great role in moderating the relationships between resource integration approaches and competitive advantage. Resource integration approaches such as stabilizing and pioneering approach positively impact the competitive advantage of the new venture. This positive influence have witnessed under the situation of low environmental dynamism and either high or low munificence. However, there is no effect on the competitive advantage of the new ventures in case of low environmental munificence and high environmental dynamism. The findings clearly provides that there is positive impact of the pioneering approach on the new venture’s competitive advantage in case where environmental dynamism is high and environmental munificence is low.
The findings of this article can prove to be beneficial for the managers in an organization as it aware the managers regarding the two important factors namely environmental munificence and dynamism. Pioneering approach can be adopted by them where the environmental dynamism is high and environmental munificence is low for attaining success.
The main contextual factor of the article is the risks faced by the organization. Risks in the organization have the capability of leading it towards heavy losses due to the existence of uncertainty. The risk is mainly suffered by the top level management. Different types of risks are included in the risks confronted by the business such as security, operational, strategic, regulatory, reputational and legal risks.
The findings of this article provides that risk taking by the managers is the most critical factor of strategic management. For the purpose of improving performance of the business and its competitive advantage, risks are required to be taken by the managers, even in cases where the environment is highly uncertain. When the expected value for different strategies are similar but there is greater uncertainty with one strategy, then in such case, the strategy having more certain outcome will be selected by the managers. Also, there are different theories through which the basic assumption of risk taking is challenged such as behavioral theory of the firm, behavioral agency model, prospect theory, upper echelons theory and associated socioemotional wealth. Furthermore, the article provided that the risk taking behaviors of the managers have an ultimate impact on the organizational risks.
These findings are of prime importance for the managers as it provides that the overall risks faced by an organization is affected by the risk taking behaviors of the managers. Therefore, they need to take risks from time to time for the purpose of improving the performance of the business and ensuring that it has competitive advantage in the market.
The main contextual factor in this article is organizational and business practices. These practices can be defined as rule employed or followed, method, procedure or any process adopted by a company for the attainment of its objectives. These factors both individually and collectively are included in the term business practices.
The findings of this article provides that there are positive implications of women’s entrepreneurship for the economic and societal growth. Collectivism is considered to be an important predictor of the business of a women. The balance of individualism and collectivism at the in- group level is most conductive to the business ownership of women. Background condition such as institutional collectivism have an influence on the manner in- group collectivism affects the business ownership of a women. There is a great influence of the in- groups on a women while engaging in the business development. Beneficial environment for developing business is provided to women by offering them the freedom of pursuing individual goals along with support from in- groups.
The findings of this article can support the managers of the organization in gaining an in- depth understanding of the cultural factors that can assist in the designing of a better business development training programs. Such programs will be for the women entrepreneurs and will provide proper advice to the policy makers.
The contextual factor discussed in this article is diversity. Workplaces with diverse employees can be defined as the organizations where there are employees of different gender, socioeconomic background, religious and political beliefs, geographic location and ethnicity. This article is basically focused on the mobility of the employees and its impact on the performance of the organization.
The findings of this article provides that here is a great influence of employee mobility on the organizational outcomes. In other words, various dimensions of relational or human capital engender organizational impacts of employee mobility. The multilevel contextual factors which are characterized under environmental conditions, source and destination firms and attributes of employees have the capability of moderating the utilization and transfer of relational and human capital held by mobile individuals. Moreover, the article provides that the constraining factors such as imperfections of the labor market have the capability of impeding employee mobility. Also, it provides that alternative competing channels such as geographic spillovers, networks, alliances and acquisition can be utilized for the purpose of effectuating organizational impacts like mobility events. These competing channels and constraints are essential as they circumscribe the conditions under which there can be critical influence of the employee mobility on the organizational outcomes.
These findings are very important for the managers of the organization as mobile individuals will bring diverse capabilities to the organization. The outcomes of the organization will be greatly influenced and managers will be able to attain the objectives of the organization.
Conclusion
Therefore, it can be concluded that contextual factors play an important role in the decision making process of an organization. The focus of this assignment was on the manner in which contextual factors affect the decision making by businesses. It also highlighted the findings of the related articles and their importance for the managers. Articles on different topics have been covered such as environmental forces, organizational governance, risks confronting business, functions of diverse firms and organizational and business practices. When the findings of these articles will be taken into consideration by the managers, they will be able to improve the organizational outcomes.
Employee mobility is recommended as the most important contextual factor in case of organizational performance of CQU. Employee mobility will have great impact on the organizational outcomes. Furthermore, employee mobility will assist in the utilization and transfer of relational and human capital held by mobile individuals.
References
Heyden, M., Kavadis, N., & Neuman, Q. (2017). External Corporate Governance and Strategic Investment Behaviors of Target CEOs. Journal of Management, 43(7), 2065-2089. DOI: 10.1177/0149206314563400
Cai, L., Anokhin, S., Yin, M., & Hatfield, D. E. (2016). Environment, resource integration, and new ventures’ competitive advantage in China. Management and Organization Review, 12(2), 333-356.
Hoskisson, R. E., Chirico, F., Zyung, J., & Gambeta, E. (2017). Managerial risk taking: A multitheoretical review and future research agenda. Journal of Management, 43(1), 137-169. DOI: 10.1177/0149206316671583
Bullough, A., Renko, M., & Abdelzaher, D. (2017). Women’s business ownership: Operating within the context of institutional and in-group collectivism. Journal of Management, 43(7), 2037-2064. DOI: 10.1177/0149206314561302
Mawdsley, J., & Somaya, D. (2016). Employee Mobility and Organizational Outcomes: An Integrative Conceptual Framework and Research Agenda. Journal of Management, 42(1), 85-113. DOI: 10.1177/0149206315616459
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