Importance of Contextual Factors in Organisational Decision Making – Literature Review

            The administration of business forms is a noteworthy test for some organizations and much research is being done here. Concerning the appraisal of procedure execution, researchers call attention to that organizations must be context aware so as to completely comprehend the deliberate execution of their procedures. Because of a persistently changing condition there are factors influencing execution which are not adequately considered. Different practices, for example, the Data Envelopment Analysis (DEA) exist which can be utilized to break down the execution of business forms. Nonetheless, these strategies should be loaded up with applicable information data, for example, the related impacting factors. Along these lines, organizations regularly disregard the impact of setting on execution, in spite of the fact that it is as a noteworthy explanation behind performance slack. It is thus very important for the management to formulate strategies for growth after looking at the specific contextual factors and practicalities of the industry that the organisation operates in. Thus, contextual factor management and consideration is an essential facet of risk management and sustainable growth.

Catherine M. Daily, Dan R. Dalton, (2003) “Conflicts of interest: a corporate governance pitfall”, Journal of Business Strategy, Vol. 24 Issue: 4,

The contextual factor discussed in this journal article is in regards to conflict of interest – more specifically how conflict of interest may lead to a lacuna in corporate governance. It notes that in modern times, particularly in the USA, discussions on conflict of interest have been largely side lined by topics such as Board Autonomy. While Board Autonomy is indeed an important factor especially in the landscape created by the Enron Corporation controversy which resulted in the then US President George Bush passing the Sarbanes-Oxley Act to preserve Board independence, subtler aspects of corporate governance like conflict of interest may been given less attention that it deserves. The authors thus suggest a couple of measures to strengthen conflict of interest management practices. The first is that discussions involving conflict of interest in the Board be held in the presence of disinterested parties like Independent Directors. More importantly, the interest Directors should not only excuse themselves from the discussion and voting but rather exit the room entirely. Secondly, bidding for products from Companies where a director may be an interest parities should be open bidding so that the firm can decide whether buying from the source would be advantageous for the firm – in that case it should go ahead. Lastly, the entire process should be disclosed in the minutes of the meeting including the fact that interested directors exited the room. Thus basically, full and effective disclosure is the best means of governance to avoid conflicts of interest.

Ling YH. Examining green policy and sustainable development from the perspective of differentiation and strategic alignment. Bus Strat Env. 2019;1–11.

The contextual factor described in this journal article relates to environmental factors on a firm’s growth. Specifically, the authors have addressed the issue how development of a green policy or environmental policy is now one of the central focus points of an organisation for maintaining corporate sustainability and achieving growth through CSR initiatives. The study suggests that firms should go beyond accept and model green management practices to increase profitability as model CSR practices like green management can be copied by other firms with ease and thus there is a need to develop a divergent green management practice.  Thus, to increase firm efficiency there is a need to diversify practices and introduce an integrated approach including green human capital and green innovation. It contributes to the body of academic literature on that topic, for e.g. by specifically concurring and confirming with the Hart NRBV (1995, p. 991) which suggests that firm profitability in the coming years would depend on developing environmentally sustainable practices which is specifically tailored to suit the particular firm. Finally, it warns, that adopting innovative green management strategies with divergent strategies without developing the firm’s green competency would actually lead to a decline in profitability.

Nobre, Liana Holanda Nepomuceno, Grable, John E, Silva, Wesley Vieira Da, and Nobre, Fábio Chaves. “Managerial Risk Taking: A Conceptual Model for Business Use.” Management Decision 56.11 (2018): 2487-501. DOI: 10.1108/MD-09-2017-0892

The conceptual framework dealt with in this journal article is business risks that a firm may face and how to manage it. It notes that existing risk management frameworks already present, deals with specific aspects but don’t not manage risk holistically. Thus, this paper aims to present an objective framework of risk management which could provide concrete steps to be applied in general and which could be flexible and maliable enough to tailor to a particular organisation’s subjective needs according to its external and internal environment. It takes into account conflicts which may arise both at the macro and micro level. The practical result of the framework is aimed to provide a guide to managers about what their responsibilities are in general and factors to look to define their roles according to the industry and goals of the organisations and its investment strategy. It categories various dimensions of risk such as risk capacity, necessity, profile, perception and tolerance. It also suggest the directions of future research to test linkages and propositions between elements of the framework for empirical study.

Maditinos, D., Chatzoudes, D., & Sarigiannidis, L. (2014). Factors affecting e-business successful implementation. International Journal of Commerce and Management, 24(4), 300-320. DOI – 10.1108/IJCoMA-07-2012-0043

The contextual framework that the study deals in is organisational capabilities and business practices in context of online business. The study was conducted on a sample of 213 Greek companies with the respective information system executives being the majority of the interviewees and empirical data was gathered through questionnaires and reports. The article majorly focusses on internal capacity building of the organisation by exercise of sustainable management practices focussed on bolstering training facilities to its employees to boost human resource capability. The major findings are the factors like availability of training resources, boosting in knowledge levels and developing infrastructure for knowledge sharing are the most significant factors in the success of an online business. Another important factor for success involved the size of the organisation and the scale of its operational infrastructure. Surprisingly though, factors such as technical expertise, accumulation of knowledge and its application were found to not have such a large impact for the success of an e-business. To bolster growth, the authors finally propose a three-dimensional framework which includes concepts such as learning capabilities of the firm, organisational readiness and knowledge management and sharing (as opposed to knowledge accumulation) as the key factors. Thus in simple words, the firm which invests the maximum amount of resources in training its human resources to become technology literate with the last development in the field has the best chance of success.

Cook, Alison and Glass, Christy (2014). Do Diversity Reputation Signals Increase Share Value? Human Resource Development Quarterly, Vol 25, No. 4, Winter 2014. DOI: 10.1002/hrdq.21183

The contextual factor focussed on in this article is diversity in human resources. The study is conducted on the backdrop of a long-standing debate among scholars about the relationship and balance between an organisation’s HR policies regarding diversity in recruitments and actual business performance. It focuses specifically on the impact on reputation signals in affecting performance outcomes. It finds that reputation signals such as awards for recognition of efforts in creating a diverse workforce actually benefit the business of the firm and has tangible benefits such as the increase in share prices. Industry practices such as awards are thus important as otherwise, intangible factors like diversity would not be given due consideration as against more tangible factors like measurable profits for the Company – it is easy to justify the non-inclusion of diversity programs looking at the balance sheet as it would save money in the short term. Thus, diversity has a positive link with profitability and performance and over time stakeholders such as investors and shareholders would come to value the firm’s policy of retention of workforce such as working mothers and international recruitment. Increasing diversity will also lead to a positive growth of the firm’s CSR responsibilities which itself has, in recent years become an indication factor of the firm’s valuation. Thus, having forward looking liberal HR policies actually contribute to the Company’s bottom line eventually.