The role of information in strategic decision-making

Aspects of the role of information in strategic decision-making by executives in industry are hardly ever mentioned in management research publications. We therefore investigate in this paper the way information is obtained, analysed, judged and applied by executives in industry that have to take strategic decisions. We interviewed executives from thirteen companies in The Netherlands and in Germany about the stages in the decision process that they followed in thirty two recent decisions they had to make.We found that executives that follow a rational approach collect and use ample information in a structured decision-making process passing through a number of distinct phases in time. In this process, information plays a crucial role in reducing uncertainty. Over all discussions held, the aspect of the quality of the information used by the board was stressed. We could only obtain circumstantial evidence of changes in the decision making process caused by developments in new information acquisition and analysis methods such as use of the Internet becoming common practice. But we can affirm that with more relevant information available, discussions in the boardroom on issues affecting the choices and alternatives can now be better controlled and rational decision-making is thus facilitated.

Research highlights
► Executives that follow a rational approach collect and use ample information in a structured decision-making process.
► Information plays a crucial role in reducing uncertainty and judging alternative options.
► All aspects of quality of information to be used by the board were stressed.
► New information acquisition and analysis methods such as use of the Internet is now common practice.
► With more relevant information available, discussions by the board on issues affecting the choices and alternatives can now be better controlled and rational decision-making is thus facilitated.