CORPORATE DECISION MAKING - AN EMPIRICAL STUDY

A questionnaire regarding corporate decision-making practices was mailed to 500 vice presidents of 125 large firms. Response rate was 50%. Data indicate that many goals other than profit maximization are important in decisions, and that estimates of marginal costs and profits are not always carefully made. Profitability and executive satisfaction with decision-making practices are positively correlated. Factor analysis reveals at least 3 important dimensions of the decision-making process: managerial cohesiveness, formal procedures in decision making, and centralization-decentralization. Factor scores derived from these factors were significantly different for firms in top and bottom 3rds on profitability. These scores did not predict increases or decreases in profitability over a 7-yr time span. Interpretation favors the view of the corporation as a coalition, with social role and personal bias of the executive affecting his decisions. Participative practices are supported as both satisfying and profitable. (23 ref.) (PsycINFO Database Record (c) 2006 APA, all rights reserved). © 1969 American Psychological Association.