http://www.diva-portal.org
This is the published version of a paper presented at Academy of Management, August 7-11, 2020.
Citation for the original published paper:
Grant, M., Nilsson, F., Nordvall, A-C. (2020) Intuition and the Role of Contexts
In: Marta Sinclair and Cinla Akinci (ed.), Intuition in Organizations: New Directions in Intuition Research
N.B. When citing this work, cite the original published paper.
Permanent link to this version:
http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-435081
1 Symposium 2020 – final version
Intuition and the Role of Contexts Grant, Nilsson & Nordvall
In this contribution, we discuss the role of field studies when analysing how contextual factors affect the use of intuitive and analytical processing and its outcomes. Predominantly, intuitive processing has been linked to effective outcomes, based on expertise and the judgmental character of the task. However, examples of biased and poor outcomes have been also reported.
Experimentally based psychological research has contributed to our understanding of how certain contextual factors (e.g. character of the task) and individual factors (e.g. experience) affect the use of intuition, even though field studies have been lagging behind (Sadler-Smith &
Burke-Smalley, 2015; Sinclair, 2011; Salas et al., 2010; Hodgkinson et al., 2009). This is unfortunate since field research can provide new insights into the validity of concepts and theories that intuition scholars use. So far, the used concepts and theories emanate largely from psychological research identifying optimal ways of making decisions in well-structured settings with few contextual factors. This is different from a real-life setting faced with a multitude of contextual factors. Hence, we argue that field studies are of critical importance because they emphasize (or make salient) contextual factors relevant to management practices and thus provide a deeper understanding of concepts and theories used in intuition research.
Relevant to this topic is the level of analysis and how the individual concept of intuitive and analytical processing can be shared and interpreted by a group (Akinci & Sadler-Smith, 2018). Another related area of research is how structures (e.g. formal decision-meetings and decision documents) affect the use of intuitive and analytical processing in strategic decision- making (Grant & Nilsson, 2019; Woiceshyn, 2009).
Organizational Context
Based on an explorative study in a UK bank, Hensman and Sadler-Smith (2011), propose a conceptual framework of intuitive decision-making that incorporates organizational contextual factors and how they affect the use and outcome of intuitive decision-making processes (see also
2 Sinclair & Ashkanasy, 2005). For example, power and authority within the organization can have an effect. An individual might explain their intuitive judgment to someone with higher authority, depending on their relationship. Also, implementing intuitive decisions often requires the cooperation of other people within the organization. Another influencing factor is policies and procedures. In case of the highly regulated banking industry, the accountability and auditability requirements lead to a pressure to concretize or justify intuitions. A different example of how an organizational setting affects the use of intuition was found by Grant and Nilsson (2019). Their study shows how the main reasons for making a strategic investment take form through an intuitive process based on expertise, where the intuitive judgments are translated into analytical and coherent justifications in decision documents required by the organization.
Temporal considerations
In contrast to experimental settings in which decision-making is typically collapsed into a single point in time, field studies tend to have a temporal perspective allowing to demonstrate evolving decision-making. Hence, these studies can show an interaction between intuitive and analytical processes (Woiceshyn, 2009; Hensman & Sadler-Smith, 2011; Huang 2018; Akinci &
Sadler-Smith, 2019b; Grant & Nilsson, 2019). For example, intuitive judgments are tested and/or explained in an analytical manner. In organizations, intuitive judgments need to be transferred to analytical and coherent decision documents (Grant & Nilsson, 2019). A particular case of interest is when intuitive and analytical judgments are in conflict. Some field studies demonstrate, for example, how intuitive judgments trump analytical judgments (Lipshitz &
Shulimovitz, 2007; Huang & Pearce, 2015). However, it is also easy to notice when analytical judgments prevail. In this respect, the study by Hensman and Sadler-Smith (2011) provides a valuable insight about how the outcome of conflicting judgments can be affected by the context.
The study offers a typology for analysing justification powers and subsequently intuitive outcomes when there is congruence or incongruence between intuitive and contextual signals.
A particular managerial context is provided by Huang and Pearce (2015) and Huang (2018), who analyse angel investors in early-stage start-ups. This is a particular situation with unknowable risks, different from situations with uncertainty. Furthermore, Huang (2018) shows that the outcome of intuiting affects the self-focused narratives that investors use to justify the
3 investment. Thus, intuition is a means for substantiating action. In the study by Huang (2018) the scenario is less complex than it can be for other investor who use their own money and could have their own investment criteria. This is likely different from investments in which funds or a group of investors invest jointly. In that context group and social aspects are added. Whereas the organizational context is less complex in the discussed studies, they bring the character of the task to the fore, i.e. an extreme situation, such as that of unknowable risks. In this respect, they show how intuition has been translated into action.
Shared intuition
In their study of police organizations, Akinci and Sadler-Smith (2019b:16) move beyond the typical individual level of analysis by adding group and organizational levels, consequently showing that intuition in decision-making is also about groups within organizations. They conceptualize collective intuition as “independently formed judgment based on domain-specific knowledge, experience and cognitive ability; shared and interpreted collectively”(p.16). Their study shows, similar to other (e.g. Woiceshyn, 2009; Huang 2018), an individual process of intuiting and inquiring, i.e. a deliberate search for and analysis of knowledge from external and internal sources. Moving from the individual to the group level, intuitions are interpreted. This includes articulating intuitive judgments when engaged in dialogue with others. At the group level judgments were shared and interpreted collectively. Furthermore, their study also identified examples of conflicts and disagreement among individuals, illustrating that consensus-building and cooperation is important for enabling action. Consequently, the study highlights the importance of collective intuitions, which typically are typically critical for managerial decision- making.
Expertise
Field studies have typically used a setting with experts showing effective outcomes (Woiceshyn, 2009; Hensman & Sadler-Smith, 2011; Huang 2018; Akinci & Sadler-Smith, 2019b; Grant and Nilsson, 2019). However, some of these studies also detected biased and poor outcomes. For example, Woiceshyn’s (2009) in her research of investment decision-making by CEOs in oil companies identified some CEOs who were considered poor managers. Her study suggests that poor managers had a lack of self-awareness and engaged in detailed discussion and
4 analysis rather than holistic perspectives. Similarly Akinci and Sadler-Smith (2019b) noted that in some cases, in spite of expertise, intuition led to flawed decision-making, which could have been caused by lack of deliberation, perhaps due to confirmation bias.
Future research directions
In summary, the discussed studies illustrate that a field setting offers new insights into the role of context that experimentally based research has not highlighted. It brings to our attention a multitude of contextual factors such as organizational and task characteristics. Moreover, it show the importance of including individual and group levels in order to understand how intuitions of individuals and groups are translated into managerial action. Hence, we propose future research to focus on the following questions that will help us better understand how contextual factors affect the use of intuitive and analytical processing and its outcomes:
How do different organizational contexts affect intuition? This also relates to the question of whether and to what extent certain contextual factors related to specific industry sectors influence intuition. For example, in a highly regulated industry like banking, accountability and auditing might inhibit the use of intuitive judgments.
How do analytical and intuitive processing interacts in different settings, and in particular, how is the outcome of conflicting judgments is affected by the context? For example, a manager in a highly hierarchical organization might supress the intuition towards a manager on a higher level who has a different judgment. To analyse these types of situations, the typology suggested by Hensman and Sadler-Smith (2011) could be useful to study justification powers and subsequent intuitive outcomes when there is congruence or incongruence between intuitive and contextual signals.
What is the importance of context and outcome? Expertise in the specific domain is a critical requirement for successful outcomes. However, as Dane and Pratt phrase it (2007: 50): “How different must context be before the cross-situational relevance of cognitive schemas is negated?” This concerns the question about domain-relevant knowledge. For example, if a person has worked with a specific task in a certain company and environment, can this knowledge or cognitive schemas learned be used efficiently for a task in another setting?
5
6 REFERENCES
Akinci, C., & Sadler‐Smith, E. 2019. Collective intuition: Implications for improved decision making and organizational learning. British Journal of Management, 30(3), 558-577.
Dane, E., & Pratt, M.G. 2007. Exploring intuition and its role in managerial decision making. Academy of Management Review, 32(1): 33–54.
Grant, M., & Nilsson, F. 2019. The production of strategic and financial rationales in capital investments: Judgments based on intuitive expertise. The British Accounting Review, 100861.
Hensman, A., & Sadler–Smith, E. 2011. Intuitive decision making in banking and finance. European Management Journal, 29(1): 51–66.
Hodgkinson, G. P., Sadler-Smith, E., Burke, L. A., Claxton, G., & Sparrow, P. R. (2009).
Intuition in organizations: Implications for strategic management. Long Range Planning, 42(3), 277-297.
Huang, L. 2018. The role of investor gut feel in managing complexity and extreme risk. Academy of Management Journal, 61(5): 1821–1847.
Huang, L., & Pearce, J.L. 2015. Managing the unknowable: The effectiveness of early–stage investor gut feel in entrepreneurial investment decisions. Administrative Science Quarterly, 60(4): 634–670.
Lipshitz, R., & Shulimovitz, N. 2007. Intuition and emotion in bank loan officers' credit decisions. Journal of Cognitive Engineering and Decision Making, 1(2): 212–233.
Sadler-Smith, E., & Burke-Smalley, L. A. (2015). What do we really understand about how managers make important decisions. Organizational dynamics, 44(1), 9-16.
Salas, E., Rosen, M.A., & DiazGranados, D. 2010. Expertise–based intuition and decision making in organizations. Journal of Management, 36(4): 941–973.
Sinclair, M. (Ed.). 2011. Handbook of Intuition Research. Cheltenham: Edward Elgar.
Sinclair, M., & Ashkanasy, N. M. 2005. Intuition: myth or a decision-making tool? Management learning, 36(3), 353-370.
Woiceshyn, J. 2009. Lessons from “good minds”: How CEOs use intuition, analysis and guiding principles to make strategic decisions. Long Range Planning, 42(3): 298–319.
