Managerial Decision Making in family-managed organizations are not always evidence-based!

Author(s) : Dr Dipak Kumar Bhattacharyya
ISSN : 0974 - 497
Year : May 2021 | Volume : 15 | Issue : 2/4

Abstract:
Managerial decision-making process in family-managed Indian organizations are still influenced by old values and beliefs, irrespective of business and strategic significance. Like all other organizations, managerial decision-making process in family-managed Indian organizations, follow the usual multi-step model like; establishing objectives, problem definition, identification of alternative solutions, evaluation of alternative solutions, and then taking decisions that give better expected results. This is the usual model of managerial decision making in every organization. To what extent managers follow such rigour of decision-making, largely depends on specific behavioural frame of mind of managers. Indian managers, in general, are risk averse. This is more explicit in family-managed business units, which are sustaining over several decades. Such family-managed business units had long time-tested experience of negotiating with the adversities of business environment, which could help them to develop their knowledge repository for successful business practices. Typically, Indian managers in family-managed business units prefer incremental and bounded-rational decision-making over rational and garbage-can model of decision-making. Incremental and bounded rational decision-making propensities take Indian managers in family-managed business units through the process of preference-utility framework. Weighing individual decisions in preference-utility framework compels managers to be extra cautious while they take decisions. Although it has its inherent defects, as it can potentially harm organizations to respond to changes, as organizations become more structuralist, but for family- managed business units in India, it has become normative. Lack of reconstructionist approach, often considered as deterrent to agility for family-managed business units of India. Whatever may be the criticism, family-managed business units in India have proved their ability to sustain, negotiating with the environmental flux.
This paper is based on typical managerial decision-making style of some family-managed business units in India, as observed by the author through series of research studies primarily on managing family transition and change management. The study essentially negates the practice of evidence-based management in family-managed business units, although it is considered important in today’s business. Evidence-based management suggests the need for managerial decisions based on logic and empirical truth. It discards beliefs that are rooted in ideology and cultural values, as such beliefs and values can potentially influence the managerial decision-making process. The paper first relooks into the theories of evidence-based management, and then examine how such concepts are replicated by the managers of family-managed business units. The second phase of the study, i.e., the extent of replication of evidence-based management, is based on managerial decision-making practices of three family-managed business units, which are surviving over several decades. All the family- managed business units have been selected based on convenience. Based on the study, the paper concludes how difficult it is to discard deeply held values and beliefs in family-managed organizations, and at the same time how managerial decision-making process in family-managed organizations still influenced by old values and beliefs. In this paper we have considered family-managed, family-controlled, family-owned and family businesses as one and the same.


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