Guest editorial: Beyond rationality in organizations’ choices: exploring the dark and the bright sides of non-rational decision-making

Citation

Cristofaro, M., Bachkirov, A.A., Burton, N., Fodor, O., Julmi, C. and Loia, F. (2023), "Guest editorial: Beyond rationality in organizations’ choices: exploring the dark and the bright sides of non-rational decision-making", International Journal of Organizational Analysis, Vol. 31 No. 5, pp. 1165-1175. https://doi.org/10.1108/IJOA-09-2023-009

1. Background

The decision-making process of organizational agents has been investigated by management and organizational scholars due to its central role in influencing the operations and performance of organizations. In particular, since the emergence of the disrupting concept of bounded rationality (Simon, 1947) – that questioned the previously dominating assumption of perfect rationality – scholarly interest has moved toward understanding the deviations of the human mind from logical and rational choice paths (Cristofaro, 2017). Prolific have been works investigating the role of intuition (Barnard, 1938; Simon, 1987; Dane and Pratt, 2007; Julmi, 2019, 2023; Loia and Adinolfi, 2022), affective states (Bachkirov, 2015; Fodor et al., 2016; Fodor and Pintea, 2017; Cristofaro, 2019, 2020), heuristics (Tversky and Kahneman, 1973, 1974) and cognitive traps (Hammond et al., 1998) within the decision-making processes of organizational agents – who are dealing with an increasingly complex business environment also further exacerbated by the COVID-19 pandemic and other dramatic changes (e.g. Russo-Ukranian war, energy crisis and climate change).

These lines of research have resulted in an enlarging of the spectrum of factors shaping decision-making, leading future scholarship to unpack the “nonrational decision making,” i.e. influenced by conscious or unconscious forces that get cognition astray from being logically consistent (Ariely, 2008; Guo, 2009). Researchers suggest that nonrational decision-making may be superior to rational decision-making under certain conditions (Dane and Pratt, 2007; Julmi, 2019; Gigerenzer et al., 2022). However, despite the significant interest of many scholars in better understanding the nonrational forces driving the decision-making processes of organizational agents, important areas still need to be explored and more solid investigations to understand their influence on choices fully. Examples are dark personality traits (Spain et al., 2014), mental disorders (Wiklund et al., 2020), beliefs (Jackson and Artola, 1997), spirituality/religion (Loe et al., 2000; Fernando and Jackson, 2006; Phipps, 2012), superstition (Tsang, 2004a, 2004b; Hirshleifer et al., 2018), meaningful coincidences (Cristofaro, 2021) and atmospheres (Julmi, 2017).

Addressing the above gap is equally essential for practitioners due to the unquestionable impact of decisions on the survival and success of organizations. As such, this Special Issue titled “Beyond rationality in organizations’ choices: exploring the dark and the bright sides of nonrational decision-making” for the International Journal of Organizational Analysis focuses on the investigation of the nonrational forces shaping decision-making processes and the interconnections of nonrational forces with the bounded rational ones, to amplify the strength of both concepts.

2. Development of the Special Issue

The promotion of the Special Issue, through personal contacts with authors interested in rational limits of organizational agents and conference networks, raised many submissions from scholars. This Special Issue featured two important dates for authors to present their works before submitting them to the Special Issue in the journal by December 1, 2022.

The first event was the Paper Development Workshop, held on November 2, 2022. This online workshop allowed authors to refine and enhance their papers before submission. We are delighted to report that six papers were presented during the workshop. These papers received insightful comments and feedback from the guest editors of the Special Issue and the Editor in Chief of the journal, Prof Peter Stokes. The comments and suggestions offered by these esteemed individuals significantly contributed to the improvement and development of the presented works.

The second event was the first Conference in Business Research and Management (BRM): emerging issues after COVID-19, which occurred on May 26–27, 2022, in Toledo, Spain. Although participation in this conference was not mandatory for submission to the Special Issue, interested contributors were encouraged to submit their early work to this Conference. The guest editors of the Special Issue were present at the Conference and provided valuable feedback to authors who offered their work there. This Conference served as a platform for authors to share their initial research findings and receive constructive criticism, ultimately enhancing the quality of their papers for inclusion in the Special Issue.

Each submitted paper passed at least two rounds of reviews, always followed by the final comments of guest editors. In total, 31 scholars – to whom we share our deep obligations – acted as reviewers. In the end, out of the 18 submitted papers, five highly reputable works have been accepted for publication in this Special Issue.

3. Introduction to the Special Issue

The five papers featured in our Special Issue can be ideally clustered into three distinct topics (see Figure 1), each offering valuable insights into different aspects of nonrational forces in organizational choices:

Religion impacts on organizations’ choices: This cluster investigates the influence of religion on decision-making processes within entrepreneurial ventures and organizational contexts. The papers within this cluster shed light on how religious beliefs intersect with other logic, such as community and market logic, to shape decision-making orientations. They challenge the notion that religion is solely associated with nonrational decision-making and highlight the entwinement of religious, community and market logic in decision-making processes. These papers emphasize the importance of contextual religiosity in shaping perceptions of rationality and decision-making outcomes.

The positive role of biases: This cluster explores the positive aspects of biases in organizational decision-making processes. The papers within this cluster shed light on how biases can benefit decision-making and contribute to improved outcomes in specific contexts. They challenge the notion that biases are always detrimental and emphasize their potential value in guiding decision-making.

Manipulating the choice architecture: This cluster explores the intentional design of choice architecture to prestructure administrative behavior in desired directions. The paper within this cluster focuses on using choice architecture in public administration and governance. It highlights how rational, bounded rational and nonrational factors are blended in the application of choice architecture to influence decision-making and shape administrative behavior.

These three clusters represent diverse angles through which the Special Issue explores the multifaceted nature of nonrational forces in organizational choices. By examining the impacts of religion, recognizing the positive aspects of biases and delving into the manipulation of choice architecture, the papers contribute to a comprehensive understanding of the impact of nonrational forces on decision-making dynamics in organizational contexts.

3.1 Religion impacts

The study by Cavalcanti Junqueira et al. (2023) entitled “Not by what we see: how Christian religious beliefs influence market and community logics in a rural context” provides a fresh and novel perspective relating to how religion influences rational decision-making in entrepreneurial ventures. Their paper focuses on a novel and high-religiosity context in rural America. It synthesizes existing theoretical perspectives in family business and entrepreneurship scholarship – namely, institutional logic and stewardship theory – to reveal how different logics intersect to embed a stewardship orientation in decision-making. Based upon an ethnographic approach and interviews with Christian businesses, their study shows how decision-making processes within the firms are strongly influenced by a constellation of community logic, religious (Christian) logic and market logic. In a high-religiosity context, this constellation of logic affects what entrepreneurs and their stakeholders perceive as rational or irrational decision-making. While religion is often associated with nonrational decision-making domains, the authors challenge this view in this paper. The authors show how the religion–community–market logic constellation is so embedded in “place” (a rural location with high religiosity) that decision-making that honors the entwinement of this logic is deemed “rational.” Therefore, in a high-religious context, the sense of religion and community can dominate a market logic to the extent that decisions that foreground a market logic are deemed “irrational.” As the authors noted, this study provides novel insights and diverges from rational decision-making driven by market logic and instead acknowledges the link between contextual religiosity and perceived rationality. The authors turn to stewardship theory to theorize their observations and argue that the normative commitments associated with the Christian faith connect entrepreneurship with decision-making through foregrounding outcomes that show care for others and integrate business and community interests. Thus, “rational” decision-making, when seen through a stewardship lens, puts center community interests.

Soares et al. (2023) article entitled “Shaping individual paths for decision-making: a fuzzy set approach of religious and humanistic beliefs leading to the (non)acceptance of euthanasia” contributes to our understanding of the implications of beliefs for the organizational decision-making. Specifically, the paper explores the interaction of religious and humanistic beliefs and their simultaneous impact on ethical decisions in the context of a lack of social consensus. While the study does not approach a typical situation of organizational decision-making as it focuses on decisions regarding euthanasia, the author/authors start their endeavor by building a compelling case as to why this decision is relevant for the organizational context. Using fuzzy set qualitative comparative analysis on a data set collected from 144 participants, this research attempts to identify different configurations of beliefs leading to the two outcomes: acceptance versus nonacceptance of euthanasia and which beliefs are mandatory for a given outcome. Their most essential contributions refer to the fact that religious affiliation was found not to affect the acceptance versus nonacceptance of euthanasia in a homogeneous fashion and highlight the importance of identifying the distinct combination of beliefs underlying each view on euthanasia. The authors discuss their results considering Jones’ (1991) issue-contingent model and stress the fact that while social consensus is an essential tool for reducing ambiguity revolving around moral issues/decisions, in matters that lack such consensus, individuals resort to combinations of beliefs of different origin. Next to the theoretical contributions, the author/authors also discuss how their findings can be applied in health-care organizations whereby professionals interact with patients potentially facing decisions regarding euthanasia. In terms of ways forward, the study points toward the importance of conducting cross-cultural studies and including different religious traditions to compare the pattern of beliefs underlying a specific ethical decision.

3.2 The positive role of biases

The work “Confidence and coincidences in executive decision making during periods of crisis,” authored by Mormile et al. (2023), examines the coincidence’s influence on executive confidence during crises. In particular, building on Cristofaro (2021), the authors investigated the following research question “How does executive confidence led by meaningful coincidences influence management decisions making during periods of crisis?” In line with the Special Issue topic, this paper aims to further contribute to the literature on executive confidence and meaningful coincidences regarding nonrational decision-making to highlight its impact on business organizations. The authors conducted a qualitative study based on 24 interviews with subordinates of southern Italian hospitality facilities in the Campania region. The findings highlight the connection between coincidences and confidence, emphasizing how meaningful coincidences led to three characteristics of executive confidence during the decision-making process: overestimation, overprecision and overplacement. Although generally considered harmful, subordinates have positively perceived these characteristics as impacting executive confidence in decision-making processes in crisis times, such as during the COVID-19 pandemic. From a theoretical point of view, this study found that subordinates showed positive evaluations of managers’ behavior guided by meaningful coincidences, which increased executive confidence during periods of crisis. From a practical perspective, this contribution indicated that managers should consider the occurrence of meaningful coincidences, as these increase their confidence and allow them to perform well in turbulent contexts. In addition, this study highlights the importance of new managerial skills, such as capacities for rapid adaptation to changes and maintaining confidence in the decision processes, without considering the viewpoint of all staff members. Moreover, thinking beyond the traditional boundaries of rationality can be crucial to surviving in the post-COVID-19 pandemic business scenario because confident managers whose decision-making is guided by meaningful coincidences can find themselves one step ahead of the competition.

Mastrogiorgio and Lattanzi (2023), in their paper “Opaque decision-making in organizations,” take on the challenging task of operationalizing decision opacity. The notion of opacity denotes the extent to which a decision rule is intelligible to the decision-maker. To increase the rigor of operationalization, the authors accentuate a distinction between the knowledge of a decision rule and how the rule works. In this paper, opacity does not mean the degree of the decision rule knowledge as such but rather refers to the extent of knowledge about how the rule works. Applying a bounded and ecological rationality framework, the authors develop a novel theoretical construct named opacity/transparency of decision and propose a typology that categorizes decision rules into rational, irrational and opaque or transparent. When decision-makers are in a “black hole trap” (an irrational and opaque decision), they apply a decision rule that does not work and do not know why. When organizational actors engage in “institutional preservation” (a rational and opaque decision), they know that the decision rule works but do not understand why. The decision rule “Improvement” refers to a situation where the rule does not work, but the decision-makers understand why. Finally, the decision rule works in the “Golden State,” and the organizational actors know why. This insightful contribution stimulates a fresh look at decision (ir)rationality in organizational contexts. The intriguing findings of the study are the nature of decision opacity and its consequence on organizational reputation. Decision opacity is neither a neutral nor static phenomenon. Organizational members tend to manipulate the degree to which their decisions are transparent for political reasons, i.e. to increase their organizational power rooted in knowledge asymmetry. Decision opacity is also consequential for the relationships with external agents. Those organizations that adopt opaque decision-making rules are likely to be perceived as less trustworthy by potential partners. In contrast, those embracing transparent decisions can be expected to achieve greater institutional legitimacy.

3.3 Manipulating the choice architecture

Scott and Merton’s (2023) article on “(Non) rationality and choice architecture: a behavioural approach to public administrative discretion in New Zealand” explores the intent of New Zealand’s Public Service Act 2020 to prestructure administrative behavior in a desired direction. The Act was created to encourage nonpartisan behavior among administrators that is aligned with the interests of citizens rather than the incentives of ministers. It represents an instance of choice architecture being explicitly enshrined in law. As Scott further shows, the applied choice architecture blends rational, boundedly rational and nonrational factors. Methodologically, the case study uses an ethnographic research approach to analyze the development and discourse surrounding the Act. Scott and Merton, as participant observers, were involved in various meetings and activities related to the Act’s development. Their study focuses on the discursive and decisional levels of analysis and uses multiple sources, including documentary analysis and participant observation, to explore the motives behind modifying organizational behavior. The study primarily concentrates on two sections of the Act. Section 12 codifies the “principles” of public service (which include political neutrality, free and frank advice, merit-based appointments, open government and stewardship). It ensures that administrators perform independent functions outside of direct ministerial control. By enshrining these principles in law, the aim is to prevent erosion over time, maintain public trust and serve the interests of successive governments and citizens. Section 13 places a duty on chief executives to protect and nurture the “spirit of service to the community” that administrators bring to their work, acknowledging the importance of public service motivation. This provision aims to foster a unified public service identity, addressing fragmentation issues and encouraging cooperation among administrators for a common purpose defined by shared attributes and values. With his case study, the authors show that behavioral approaches to public administration are being applied intentionally by governments. Practically, the case study emphasizes that policymakers should consider rationality, bounded rationality and nonrationality influences in designing the choice architecture to shape desired administrative behavior.

4. Future research on nonrational decision-making

In this Special Issue of the International Journal of Organizational Analysis, we have presented insightful articles that shed light on the role of nonrational forces in organizational decision-making processes. These articles and the additional research questions we propose open up exciting avenues for future research and offer valuable insights into the complexities of organizational decision-making, which we synthesize in Table 1.

Cavalcanti Junqueira et al.’s (2023) study challenge conventional conceptions of rationality in decision-making within entrepreneurial contexts. Future studies should build upon this foundation by connecting stewardship theory to decision-making processes and examining how approaches in family business and entrepreneurship scholarship frame decision-making. Exploring the interplay between stewardship theory and decision-making can provide valuable insights into the motivations and dynamics behind decision-making processes in entrepreneurial contexts. Moreover, researchers can investigate the impact of contextual factors on decision-making within organizations. By deepening our understanding of how decision-making is shaped by various contextual factors, such as organizational culture, industry characteristics and societal norms, we can gain a more nuanced perspective on the complexities of decision-making. This exploration would contribute to a more comprehensive understanding of decision-making processes and guide organizations in making more informed choices.

The study by Soares et al. (2023) suggests several fruitful directions for future research. First, investigating the underlying mechanisms linking specific combinations of beliefs to the acceptance or nonacceptance of euthanasia would deepen our understanding of the decision-making process. Cross-cultural studies are needed to explore how different religious traditions and cultural contexts shape beliefs regarding euthanasia and ethical decision-making more broadly. In addition, examining the impact of belief systems on other organizational ethical dilemmas, such as social responsibility or diversity, can provide a comprehensive understanding of belief effects. Longitudinal research designs would offer insights into the stability and changes in beliefs over time, enhancing our understanding of their influence on decision-making. Lastly, extending the study’s findings to different organizational contexts beyond health-care organizations would contribute to a more comprehensive understanding of belief patterns and decision-making practices. Pursuing these research avenues would advance knowledge of the role of beliefs in organizational decision-making and provide practical implications for managing ethical dilemmas.

Based on the study by Mormile et al. (2023) on “Confidence and coincidences in executive decision making during periods of crisis,” future research can focus on several key areas. First, investigating the long-term effects of meaningful coincidences on executive decision-making would provide insights into the sustained impact of these coincidences over time. In addition, exploring the contextual factors that influence the positive perception of overestimation, overprecision and overplacement can deepen our understanding of when and why these characteristics are perceived as beneficial or detrimental. Another avenue for future research is exploring the relationship between managerial adaptability and decision-making outcomes, particularly in crisis periods. In addition, incorporating the perspectives of diverse stakeholders and analyzing the effects of meaningful coincidences across different industries and cultural contexts can enhance our understanding of these phenomena’ generalizability and contextual nuances. By addressing these research directions, scholars can learn how meaningful coincidences influence executive decision-making, their mechanisms and their implications for managerial practice.

The study by Mastrogiorgio and Lattanzi (2023) highlights the constructed nature of decision-making preferences during the decision-making process. Building upon this insight, future research can explore how preference construction processes affect decision opacity. Exploring the interplay between preference construction and decision opacity would provide valuable insights into decision-making dynamics and outcomes. Expanding on this line of inquiry, researchers can investigate whether and how decision opacity varies across different organizational functions. By examining decision opacity within specific functions, such as strategy, operations and accounting, we can better understand how nonrational forces interact with decision-making processes in various contexts. This exploration would contribute to a comprehensive understanding of decision-making within organizations.

Furthermore, an exciting research avenue would investigate which decision-making strategies generate more opaque decisions. Understanding the relationship between decision-making strategies, such as satisficing, lexicographic strategy, elimination by aspect, equal weights, weighted additive and decision opacity, would provide valuable insights into the factors contributing to opaque decision-making. This line of research can shed light on the nuances of decision-making processes and guide practitioners in making informed decisions.

Turning to the study by Scott and Merton (2023), further investigations should be conducted to explore the long-term influence of legally enshrined choice architectures on behavior. Examining the impact of choice architectures on behavior over time would deepen our understanding of their effectiveness and shed light on their long-term implications. This research could involve longitudinal studies or comparative analyses of different cases using choice architectures. In addition, policymakers need to identify and study other instances in which policymakers use choice architectures to influence behavior. Exploring the application of legally enshrined “nudging” in politics and other contexts can enhance our understanding of the mechanisms and outcomes of choice architectures. Comparative analyses across different contexts and settings would provide valuable insights into the generalizability and effectiveness of choice architectures to influence behavior.

Apart from the above, several other avenues of investigation are provided here. One area of exploration could focus on the interplay between nonrational forces and cognitive biases in decision-making processes. Understanding how biases interact with emotional, intuitive or superstitious factors can elucidate the mechanisms through which nonrational forces influence decisions and potentially lead to suboptimal outcomes. Investigating strategies for mitigating or harnessing these forces to enhance decision quality could be an essential line of inquiry. Another avenue for future research is the examination of collective decision-making processes and the role of nonrational forces within group dynamics. Exploring how shared atmospheres, group emotions and social influences impact decision outcomes can provide valuable insights into the complexities of decision-making in organizational settings.

In addition, research could delve into the impact of individual differences, such as personality traits, cognitive styles or cultural backgrounds, on susceptibility to nonrational forces. Investigating how these individual factors interact with nonrational forces can offer a more nuanced understanding of decision-making processes and inform the development of personalized decision-support systems. Furthermore, integrating artificial intelligence (AI) approaches with nonrational forces in decision-making represents a promising avenue for research. Exploring how AI algorithms can incorporate and interact with human biases, intuitions or spiritual beliefs may yield insights into hybrid decision-making systems that leverage human judgment and computational power. Examining the ethical implications of nonrational forces in decision-making is another crucial area of future research. Understanding the boundary between good influence and manipulative practices can contribute to developing ethical guidelines for leveraging nonrational forces in decision-making processes. Lastly, investigating the impact of external factors, such as technological advancements, societal trends or environmental conditions, on the dynamics of nonrational forces in decision-making can provide valuable insights into the changing landscape of organizational decision-making.

In this Special Issue, we have highlighted the significance of behavioral strategy (Powell et al., 2011; Cristofaro et al., 2022) as a suitable framework for exploring nonrational forces in organizational decision-making. We encourage researchers to embrace this interdisciplinary field and engage in rigorous empirical studies, theoretical advancements and interdisciplinary collaborations. Combining insights from psychology, sociology, economics and organizational behavior can advance our understanding of the interplay between rational and nonrational forces in decision-making processes.

Figures

Figure 1.

Clusters of papers in the special issue

Table 1.

Future research directions for studying nonrational decision-making in organizations

Research directions	Key points
Stewardship theory and decision-making processes	Connect stewardship theory to decision-making processes
Impact of contextual factors on decision-making	Investigate the influence of organizational culture, industry characteristics and societal norms on decision-making processes
Cross-cultural studies on belief systems and decision-making	Examine how different religious traditions and cultural contexts shape beliefs regarding ethical decision-making
Longitudinal research on belief stability and change	Study the stability and changes in beliefs over time and their influence on decision-making
Beliefs, ethical dilemmas and decision-making	Investigate the impact of belief systems on organizational ethical dilemmas, such as social responsibility or diversity
Meaningful coincidences and executive decision-making	Explore the long-term effects of meaningful coincidences on executive decision-making
Perception of overestimation, overprecision and overplacement	Investigate the contextual factors that influence the positive perception of these characteristics in decision-making
Managerial adaptability and decision-making in crisis periods	Analyze the relationship between managerial adaptability and decision-making outcomes in crisis periods
Meaningful coincidences across industries and contexts	Incorporate diverse stakeholders’ perspectives and analyze the effects of meaningful coincidences in different industries and contexts
Preference construction and decision opacity	Explore how preference construction processes affect decision opacity
Decision opacity across organizational functions	Examine decision opacity within specific functions (e.g. strategy, operations and accounting) to understand nonrational forces’ interaction
Long-term influence of choice architectures on behavior	Study the sustained impact of legally enshrined choice architectures on behavior over time
Application of choice architectures in different contexts	Identify instances where policymakers use choice architectures to influence behavior
Interplay between nonrational forces and cognitive biases	Investigate how biases interact with emotional, intuitive or superstitious factors in decision-making
Collective decision-making processes and nonrational forces	Explore the role of nonrational forces within group dynamics and their impact on decision outcomes
Individual differences and susceptibility to nonrational forces	Investigate the impact of personality traits, cognitive styles and cultural backgrounds on susceptibility to nonrational forces
Integration of AI approaches with nonrational forces	Explore how AI algorithms can incorporate and interact with human biases, intuitions or spiritual beliefs
Ethical implications of nonrational forces in decision-making	Examine the boundary between good influence and manipulative practices in leveraging nonrational forces
Behavioral strategy as a framework for decision-making	Embrace the interdisciplinary field of behavioral strategy for studying the interplay between rational and nonrational forces

Source: Own elaboration