Capturing Knightian Advantages of Large Business Organizations Through Group Decision-Making Processes

John Howard Finch, Nicola Cumming Naughton

Research output: Contribution to journalArticle

Abstract

This paper develops an explanation of how large business organisations may achieve advantages of size by virtue of decision-making procedures. The argument is inspired by Knight's (Risk, Uncertainty and Profit, NewYork: Houghton Mifflin, 1921) model of internal business organisation, together with his explanation of profits pertaining to large business organisations by being connected with situations that he characterises as uncertain rather than risky. Capturing the decision-making advantages is fairly straightforward in Knight's explanation. Decision making is internalised to individuals who cope with uncertain situations— beyond the range of normal experience— in a manner consistent with managerial/entrepreneurial vision. Recent organisation theory has drawn attention to the use of groups as an integral part of decision making within large business organisations and this has important implications for economics. This paper highlights the role of groups in achieving Knightian advantages. The argument loosens the identification of organisation with a managerial/entrepreneurial vision, adding different levels and types of deliberate and automatic selection, the alignment of which is likely to be problematic.
Original languageEnglish
Pages (from-to)379-403
Number of pages24
JournalInternational Journal of the Economics of Business
Volume8
Issue number3
DOIs
Publication statusPublished - 2001

Fingerprint

Group decision making
Business organization
Decision making
Decision-making process
Knight
Profit
Risk and uncertainty
Economics
Alignment
Integral
Organization theory

Keywords

  • decision making
  • uncertainty
  • large business organisations
  • Frank Knight
  • capabilities
  • shared mental models

Cite this

@article{f927332467d449308519a96303794ed4,
title = "Capturing Knightian Advantages of Large Business Organizations Through Group Decision-Making Processes",
abstract = "This paper develops an explanation of how large business organisations may achieve advantages of size by virtue of decision-making procedures. The argument is inspired by Knight's (Risk, Uncertainty and Profit, NewYork: Houghton Mifflin, 1921) model of internal business organisation, together with his explanation of profits pertaining to large business organisations by being connected with situations that he characterises as uncertain rather than risky. Capturing the decision-making advantages is fairly straightforward in Knight's explanation. Decision making is internalised to individuals who cope with uncertain situations— beyond the range of normal experience— in a manner consistent with managerial/entrepreneurial vision. Recent organisation theory has drawn attention to the use of groups as an integral part of decision making within large business organisations and this has important implications for economics. This paper highlights the role of groups in achieving Knightian advantages. The argument loosens the identification of organisation with a managerial/entrepreneurial vision, adding different levels and types of deliberate and automatic selection, the alignment of which is likely to be problematic.",
keywords = "decision making, uncertainty, large business organisations, Frank Knight, capabilities, shared mental models",
author = "Finch, {John Howard} and Naughton, {Nicola Cumming}",
year = "2001",
doi = "10.1080/13571510110081187",
language = "English",
volume = "8",
pages = "379--403",
journal = "International Journal of the Economics of Business",
issn = "1357-1516",
publisher = "Routledge",
number = "3",

}

TY - JOUR

T1 - Capturing Knightian Advantages of Large Business Organizations Through Group Decision-Making Processes

AU - Finch, John Howard

AU - Naughton, Nicola Cumming

PY - 2001

Y1 - 2001

N2 - This paper develops an explanation of how large business organisations may achieve advantages of size by virtue of decision-making procedures. The argument is inspired by Knight's (Risk, Uncertainty and Profit, NewYork: Houghton Mifflin, 1921) model of internal business organisation, together with his explanation of profits pertaining to large business organisations by being connected with situations that he characterises as uncertain rather than risky. Capturing the decision-making advantages is fairly straightforward in Knight's explanation. Decision making is internalised to individuals who cope with uncertain situations— beyond the range of normal experience— in a manner consistent with managerial/entrepreneurial vision. Recent organisation theory has drawn attention to the use of groups as an integral part of decision making within large business organisations and this has important implications for economics. This paper highlights the role of groups in achieving Knightian advantages. The argument loosens the identification of organisation with a managerial/entrepreneurial vision, adding different levels and types of deliberate and automatic selection, the alignment of which is likely to be problematic.

AB - This paper develops an explanation of how large business organisations may achieve advantages of size by virtue of decision-making procedures. The argument is inspired by Knight's (Risk, Uncertainty and Profit, NewYork: Houghton Mifflin, 1921) model of internal business organisation, together with his explanation of profits pertaining to large business organisations by being connected with situations that he characterises as uncertain rather than risky. Capturing the decision-making advantages is fairly straightforward in Knight's explanation. Decision making is internalised to individuals who cope with uncertain situations— beyond the range of normal experience— in a manner consistent with managerial/entrepreneurial vision. Recent organisation theory has drawn attention to the use of groups as an integral part of decision making within large business organisations and this has important implications for economics. This paper highlights the role of groups in achieving Knightian advantages. The argument loosens the identification of organisation with a managerial/entrepreneurial vision, adding different levels and types of deliberate and automatic selection, the alignment of which is likely to be problematic.

KW - decision making

KW - uncertainty

KW - large business organisations

KW - Frank Knight

KW - capabilities

KW - shared mental models

U2 - 10.1080/13571510110081187

DO - 10.1080/13571510110081187

M3 - Article

VL - 8

SP - 379

EP - 403

JO - International Journal of the Economics of Business

JF - International Journal of the Economics of Business

SN - 1357-1516

IS - 3

ER -