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Background
“Clearly there are occasions when you should use your head instead of the formula. But which occasions they are is most emphatically not clear.” (Meehl, 1973, p.4). Business is becoming increasingly complex and every day managers are required to make complex decisions with limited time and information. Intuitive decisions can be made quickly whilst simultaneously bypassing in-depth analysis, and could therefore offer a solution (Dane & Pratt, 2007; Isenberg, 1984; Simon, 1987; Wierzbicki, 1997). Business management literature provides many examples of managers and scientists who have trusted their “gut-feel” with considerable success (Hayashi, 2001; Isenberg, 1984; Simon, 1987; Sinclair & Ashkanasy, 2005).
However, there is also a large portion of literature which demonstrates the fallibility of these same decisions. This has resulted in two strong but conflicting prescriptions – one from a group that argues in favour of intuitive decisions and praises experts and their ability to make successful intuitive decisions (e.g. Klein, 1993; 2008), and another that warns that intuition should never be trusted because of the bias and inaccuracy that will result (e.g. Kahneman, 2011; Kahneman & Frederick, 2002). Dual-process theory offers a useful lens for thinking and research in this area. The theory describes two independent systems of thought: an intuitive system which is fast and effortless, and a rational system which is slow and effortful (Kahneman & Frederick, 2002; Stanovich, 1999; Stanovich & West, 2000).
There has been significant support in the literature for various forms of this two-system view (Epstein, 1994; Evans & Stanovich, 2013; Kahneman & Frederick, 2002; Stanovich, 1999; Stanovich & West, 2000), and despite various criticisms (Evans & Stanovich, 2013), it continues to be the dominant view and continues to garner support (Usher, Russo, Weyers, Brauner, & Zakay, 2011). Using this lens, some studies have demonstrated particular cases where intuition can outperform rational deliberation in decision making (Dijksterhuis, 2004; Dijksterhuis & Nordgren, 2006; Usher et al., 2011). Some of these studies have pointed to complexity as a potential reason, citing research that rational deliberation is limited by working memory capacity, and assuming that intuitive decision making would not be subject to these limitations (Dijksterhuis, 2004; Meszaros, 2007). However, these findings have raised controversy and have been criticised because of methodological issues and problems with replication in other contexts (Usher et al., 2011). One of the criticisms involves a lack of acknowledgement of individual differences in decision making approach (Usher et al., 2011).
Epstein (1994) argued that some individuals are more predisposed toward intuitive thinking than others, and later research has shown that these predispositions to intuition were related to an increase in bias (Keller & Bless, 2009). Software purchase decisions offer a useful context for this research because of the complexity of the decisions (Jadhav & Sonar, 2011) and anecdotal indications that standard recommended rational techniques are not being followed in practice. Personal communication (9 May 2014) with the Chief Information Officer of a large information technology company revealed that his process often involves examining all the information and then going with his “gut”, despite the availability of and prescription for formal rational models such as the weighted scoring method and analytic hierarchy process (Jadhav & Sonar, 2009). The software selection literature in particular points to intuition only as an example of an unacceptable decision method (Carney & Wallnau, 1998) or as a potential source of bias (Jamieson & Hyland, 2006), despite reports that managers often make software selection decisions without following rational processes (Bannister & Remenyi, 2000). These tensions in the literature supported the need for further research to be conducted to determine the role of intuition in business decisions, and software selection and evaluation provided a particularly relevant context.
Problem Statement
In decision making literature there are contradictory views as to the effectiveness of intuition in business decision making. Since there is empirical research on both sides showing that either rational or intuitive decisions were superior, there must be other conditions that explain these differences. Some of the conditions eluded to in the literature included decision complexity and individual differences. Therefore these conditions need further investigation to move our understanding of the rational versus intuitive debate forward. In a practical arena, senior decision makers are often seen making intuitive decisions when selecting software. The literature on software selection however prescribes only rational techniques for these multi-attribute decision making problems, and there is a scarcity of information that addresses intuitive approaches other than warning against them. Therefore, software selection offers a useful context for testing intuitive and rational decisions in order to further the current literature in this area, in addition to general literature regarding the effectiveness of intuitive decision making. Solving this problem will aid in the understanding of the conditions which would promote, or even allow, the use of intuition instead of rational decision approaches.
Purpose Statement
This research aimed to explain the impact of complexity on the accuracy of intuitive decisions, by testing moderators such as complexity and individual differences in order to move the understanding of the effectiveness of intuition in business decision making forward. Within the positivist ontology, an objectivist stance was taken for the research and as such quantitative principles were used for what may seem to be a qualitative phenomenon. The research applied experimental survey instruments to experts in a sample of companies in South Africa. The results were analysed quantitatively to determine the relationship between faith in intuition, cognitive reflection, use of intuition, complexity, and decision accuracy.
Table of Contents
- 1 Chapter 1 – Introduction
- 1.1 Background
- 1.2 Problem Statement
- 1.3 Purpose Statement
- 1.4 Research question
- 1.5 Research objectives
- 1.6 Scope and Definitions
- 1.7 Importance and benefits of the research conducted
- 1.8 Summary and conclusion
- 2 Chapter 2 – Literature review and hypothesis development
- 2.1 Introduction
- 2.2 The context – software selection and evaluation
- 2.3 Intuition
- 2.4 Arguing in favour of intuition
- 2.5 Arguing against intuition
- 2.6 Complexity as a moderator
- 2.7 Dual-process theory
- 2.8 Individual Differences – Faith in Intuition
- 2.9 Individual differences – cognitive reflection
- 2.10 Summarised hypotheses and research model
- 3 Chapter 3 – Methodology
- 3.1 Introduction
- 3.2 Overview
- 3.3 Population and sampling
- 3.4 Unit of analysis
- 3.5 Variable mapping
- 3.6 Data Collection
- 3.7 Data analysis methods
- 3.8 Quality
- 3.9 Ethics
- 3.10 Summary and conclusion
- 4 Chapter 4 – Results
- 4.1 Introduction
- 4.2 Sample description
- 4.3 Faith in intuition scale
- 4.4 Cognitive reflection
- 4.5 Use of intuition
- 4.6 Decision complexity
- 4.7 Decision accuracy
- 4.8 Hypotheses
- 4.9 Hypothesis
- 4.10 Hypothesis
- 4.11 Hypothesis
- 4.12 Conclusion
- 5 Chapter 5 – Discussion
- 5.1 Introduction
- 5.2 Research Objective 1 – The relationship between use of intuition and decision accuracy
- 5.3 Research Objective 2 – decision complexity as a moderator
- 5.4 Research Objective 3 – faith in intuition as a moderator to use of intuition and decision accuracy
- 5.5 Research Objective 4 – cognitive reflection as a moderator to use of intuition and decision accuracy
- 5.6 Summary of discussion
- 6 Chapter 6 – Conclusion
- 6.1 Introduction
- 6.2 Contribution
- 6.3 Limitations of the study
- 6.4 Suggestions for further research
- 6.5 Conclusion
- 7 Chapter 7 – References
- 8 Appendix A – Questionnaire
