Organizational Decision Making Under Uncertainty Shocks- In line with the fallacy of riskification of uncertainty by which decision makers believe that the effects of unpredictable phenomena can be captured accurately by probability distributions, organizational scholars commonly treat the organizational inefficiency in dealing with uncertainty shocks—exogenous hazards whose welfare effects spread across industries and markets, such as natural disasters, terrorist attacks, and financial crises—as a problem of risk management. This is problematic because the consequences of uncertainty shocks outstrip the predictability capacity for the average manager and entail a greater complexity of internal and external factors. Moreover, their uniqueness makes translating experience into learning far more difficult. We seek to address this inadequate approach with a theoretical framework that captures the multidimensional complexity of organizations preparing for, coping with, and recovering from exogenous uncertain disruption. We bring together the literatures on cognitive psychology that suggest that biases and heuristics drive behavior under uncertainty, a Neo-Carnegie perspective that indicates that organizational structure and strategy regulate these behavioral factors, and institutional theory that points to stakeholder and institutional dynamics affecting economic incentives to invest in prevention and business continuity. Taken together, this article offers the foundation for a behaviorally plausible, decision-centered perspective on organizational decision-making under uncertainty.
When engaging in social issues, do firms help better by working with non-profit organizations or alone?- Firms are helping societies addressing critical social issues that are novel for their repertoire. Nonprofit organizations (NPOs) are often identified as natural channels for facilitating such engagement, but we lack systematic evidence to confirm this. We tackle this question by outlining the conditions under which allocating company aid for disaster relief and recovery through NPOs results in greater donations than when the firm disburse its aid directly to victims. We analyze all the major natural disasters that affected the world between 2003 and 2015 and observe that firms would have donated more directly (through an NPO) in countries with high (low) institutional development where they had (lack) local operations. Yet, firms frequently chose the channel that yielded lower donations.