The Cognitive Micro‐foundations, and Socio‐psychological Mechanisms, of Organizational Decision‐Making in Public Management
| Published date | 01 April 2023 |
| Author | Ian R. Hodgkinson,Paul Hughes,Higor Leite |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12629 |
British Journal of Management, Vol. 34, 787–804 (2023)
DOI: 10.1111/1467-8551.12629
The Cognitive Micro-foundations, and
Socio-psychological Mechanisms, of
Organizational Decision-Making in Public
Management
Ian R. Hodgkinson,1Paul Hughes2and Higor Leite3
1School of Business and Economics, Loughborough University, Loughborough, LE11 3TU, UK, 2Leicester
Castle Business School, De Montfort University, Leicester, LE1 9BH, UK, and 3School of Management and
Economics, Universidade Tecnológica Federal do Paraná, Curitiba, PR 80230, Brazil
Corresponding author Email: I.R.Hodgkinson@lboro.ac.uk
How do cognitive micro-foundations impact organizational decision-making in public
management? The study focuses on the relationships between two cognitive micro-
processes (intuitive, type I and rational, type II) and the contrasting organizational
decision-making approaches of strategic planning and organizational spontaneity.Draw-
ing on survey data from managers working across a range of public services in Brazil,
the ndings reveal that rational reasoning drives both approaches to organizational
decision-making. Intuitive reasoning, on the other hand, is observed to drive strategic
planning only. Two socio-psychological mechanisms moderate the core relationships:
bureaucracy strengthens the rational reasoning–planning relationship, but weakens
the intuitive reasoning–spontaneity relationship, while organizational learning plays a
critical role in activating the intuitivereasoning–organizational spontaneity relationship.
Post-hoc analysis of variance reveals a group of public service organizations that
rely heavily on both decision-making modes and highlights the core features enabling
paradoxical decision-making.
Introduction
Strategic decision-making is contingent on mental
processes and the choice environment of the orga-
nization (Calabretta, Gemser and Wijnberg, 2017;
Luoma and Martela, 2021; Powell, Lovallo and
Fox, 2011; Tabesh and Vera, 2020). The complex
nature of organizations’ operating environments
often means that decision-makers will ‘lack the
cognitive capacity to make fully informed and
unbiased decisions’ (Powell, Lovallo and Fox,
2011, p. 1377). Such demands of decision-makers
are exacerbated in a public sector setting charac-
terized by multiple stakeholders and conicting
needs, frequent exogenous shocks, regular changes
in policy, imposition of politically driven goals
and high levels of bureaucracy, rigidity and red
tape (Andrews et al., 2007; Boyne, 2002).
Despite such observations, the rational–
planning model remains dominant and is con-
sidered ubiquitous to the public sector (Poister,
2010). Yet, as noted by Boyne (2001), some public
service organizations (PSOs) may actually en-
gage in planning in a loose and intuitive way.
Despite this observation, the interplay between
micro-level processes, such as cognitive reasoning
types, and PSOs’ decision-making has rarely been
examined (Bryson, Edwards and Van Slyke, 2018;
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy
of Management.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs Li-
cense, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-
commercial and no modications or adaptations are made.
788 I. R. Hodgkinson et al.
George, 2020), which compromises academic and
practitioner understanding. Behavioural strat-
egy theory is a means to address this knowledge
void. Behavioural strategy ‘merges cognitive and
social psychology with strategic management
theory and practice’ (Powell, Lovallo and Fox,
2011, p. 1371) and is an apt theoretical lens for
examining decision-making, strategic leadership
and strategists (Rabetino, Kohtamäki and Fed-
erico, 2021). It is used here as a lens to frame the
study’s research question: How do cognitive micro-
foundations impact organizational decision-making
in public management?
Cognitive micro-foundations can be under-
stood from the dual-types perspective developed
in the eld of cognitive psychology, where two
distinct reasoning types are presented: type I
(intuition) and type II (rationality) (Hodgkin-
son and Sadler-Smith, 2018). As Tabesh and
Vera (2020) note, a paradox exists in the duality
between these qualitatively different reasoning
types, which will likely manifest in differing ap-
proaches to decision-making being adopted by
organizations. Decision-making approaches are
fundamentally different from reasoning types
(Dane and Pratt, 2007), but can also be highly
contrasting. Two decision-making approaches are
examined: strategic planning, dened as ‘the extent
to which an organizationattempts to be exhaustive
or conclusive in making and integrating strategic
decisions’ (Fredrickson and Mitchell, 1986, p.
474); and organizational spontaneity, dened as a
decision-making process that allows organizations
‘to react to events as they unfold, or to be able to
continue to move forward despite the unexpected’
(Gesell, 2005, p. 4). The former is reective of
typical decision-making behaviour in the public
sector (Poister, 2010), while the latter is increas-
ingly noted to be suited to decision-making in
challenging environments (Gesell, 2005; Souchon
et al., 2016). Developing new understanding of
how these reasoning types and decision-making
approaches interact, and the potential for com-
plementarity, in the strategy process is deemed
a critical next step for management and organi-
zation studies (Akinci and Sadler-Smith, 2019;
Calabretta, Gemser and Wijnberg, 2017; Luoma
and Martela, 2021; Tabesh and Vera, 2020).
Drawing on survey data from managers across
public services in Brazil, the contribution of this
study is threefold. First, building on the seminal
call by Powell, Lovallo and Fox (2011), the study
addresses the need for a paradoxical formulation
of managers’ intuitive and rational reasoning for
a ‘ne-grained understanding of the ways through
which they are integrated to inuence important
decisions’ (Tabesh and Vera, 2020, p. 2244), which
has been lacking (Luoma and Martela, 2021).
Second, positioning the study within the public
sector, the study sheds much-needed light on the
micro-level processes of PSOs strategizing activity
as called for by George (2020), given that little is
known about ‘the actual process of participants’
thinking’ in strategic decision-making (Bryson,
Edwards and Van Slyke, 2018, p. 322). Finally, the
study examines two socio-psychological moderat-
ing mechanisms by which reasoning types affect
PSOs’ decision-making – organizational learning,
dened as the process of creating knowledge that
people learn (Lloria and Moreno-Luzon, 2014)
and bureaucracy, dened as the degree of hierar-
chical authority within an organization (Andrews
et al., 2007). In doing so, the study adds new
contextual understanding to bridge the sometimes
perceived gap between individual cognition and
collective strategy process (Powell, Lovallo and
Fox, 2011).
The strategic decision-making process
Within management-centred conceptions of orga-
nizations, the origins of strategic decision-making
can be located at the micro-level(Dean and Sharf-
man, 1996). For instance, under the logics of the
upper echelons perspective, Hambrick (2007, p.
334) explains that ‘if we want to understand why
organizations do the things they do […] we must
consider the biases and dispositions of their most
powerful actors’. Organizationaltheory has, there-
fore, positioned micro-level factors as potential
critical drivers of the strategy process, including
the psychological features of the human condition
(Powell,Lovallo and Fox, 2011), which can aid un-
derstanding about how individuals impact PSOs’
decision-making (Bryson, Edwards and Van Slyke,
2018).
Extant strategic management research has
linked the cognitive processes of individual man-
agers, and teams, to organizational outcomes
(Akinci and Sadler-Smith, 2019; Dean and Sharf-
man, 1996; Hughes et al., 2018), with Burgelman
et al. (2018) noting how research on cognition has
provided an important contribution to strategy
process investigations. Similarly, the emergence
© 2022 The Authors.British Journal of Management published by JohnWiley & Sons Ltd on behalf of British
Academy of Management.
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