UNIVERSITY OF LATVIA FACULTY OF BUSINESS, MANAGEMENT AND ECONOMICS MANUEL EDMUND WOSCHANK THE IMPACT OF DECISION MAKING PROCESS MATURITY ON DECISION MAKING EFFICIENCY DOCTORAL THESIS SUBMITTED FOR THE DOCTORAL DEGREE IN MANAGEMENT SCIENCE SUBFIELD: BUSINESS MANAGEMENT RIGA, 2018 ANNOTATION Purpose: Decision making can be considered as a core part of management science and management practice. However, there still is a lack of understanding as to which major success factors in the decision making process will ultimately lead to better decision making outcomes. In this context, the thesis investigates the impact of the major success factors in the decision making process, defined as the decision making process maturity, on the decision making outcomes, defined as the decision making efficiency, by focusing on the strategic supplier selection process in manufacturing enterprises as an exemplary task of decision making in business management. Moreover, this research analyses the moderating effects of company-internal determinants in the strategic supplier selection process. Research Design/Approach: The thesis is grounded in the notion of “critical rationalism” which implies that the stepwise deduced theoretical framework has to be tested in an empirical environment. The empirical evidence is gained through a laboratory experiment and through a field study with manufacturing enterprises. Furthermore, the author has executed a variety of statistical procedures by using state of the art software technology (e.g., structural equation modelling). Findings: The main findings of this research support the basic hypothesis that there is a significant impact of the decision making process maturity on the decision making efficiency in the strategic supplier selection process. The applied statistical procedures provide significant evidence in support of this claim: The laboratory experiment shows a significant impact of the decision making process maturity on the decision making economic efficiency and a highly significant impact on the decision making socio-psychological efficiency. Likewise, the field study indicates a highly significant impact of the decision making process maturity on the decision making economic efficiency and a highly significant impact on the decision making socio-psychological efficiency. Surprisingly, the tested company-internal determinants such as the manager´s experience, manager´s education, and company´s reward initiatives did not significantly affect the strategic supplier selection process. Originality/Value: The author creates a new construct of the decision making process maturity, which goes beyond actual state of the art concepts, and introduces a holistic approach to measure the decision making efficiency as well. Furthermore, the thesis contributes to the research on descriptive decision making theory by focusing on the strategic supplier selection process in manufacturing enterprises, where empirical research is particularly scarce. Keywords: decision making, decision making process maturity, decision making efficiency, strategic supplier selection process. 2 TABLE OF CONTENTS ANNOTATION .......................................................................................................................... 2 TABLE OF CONTENTS ........................................................................................................... 3 LIST OF FIGURES .................................................................................................................... 6 LIST OF TABLES ..................................................................................................................... 8 LIST OF ABBREVIATIONS .................................................................................................. 10 INTRODUCTION .................................................................................................................... 11 1. Theoretical analyses of decision making in business management exemplified by the strategic supplier selection process in manufacturing enterprises ............................................ 22 1.1. Theory and terminology of decision making with a specific focus on the strategic supplier selection process ..................................................................................................... 22 1.2. A theoretical perspective on decision making in business management .................. 27 1.3. Major success factors in the decision making process: The theoretical foundation of the decision making process maturity .................................................................................. 35 1.4. Evaluation of decision making outcomes: The theoretical foundation of the decision making efficiency ................................................................................................................. 41 1.5. Situational influcencing factors in the decision making process: The theoretical foundation of the company-internal determinants ................................................................ 43 1.6. Results of the theoretical analyses: Synopsis of the theoretical framework............ 45 2. Conceptual framework of the decision making process maturity, the decision making efficiency, and the company-internal determinants: An analytical review of existing models 47 2.1. Methodological background: Structured content analysis....................................... 47 2.2. Literature review on the concepts and measures of the decision making process maturity (independent variable)............................................................................................ 51 2.3. Literature review on the concepts and measures of the decision making efficiency (dependent variables) ............................................................................................................ 61 2.4. Literature review on the concepts and measures of the company-internal determinants (moderating variables) .......................................................................................................... 66 2.5. Results of the conceptual framework ....................................................................... 71 3 3. The investigation of the strategic supplier selection process in manufacturing enterprises: Model development, research methodology, research design, and research results of the two empirical studies ....................................................................................................................... 73 3.1. Basic hypothesis and development of the model framework ................................... 73 3.2. Sub-hypotheses development: Development of the research model ........................ 77 3.3. Research methodology ............................................................................................. 79 3.3.1. The selected research approach: A triangulation of a laboratory experiment and a field study ...................................................................................................................... 79 3.3.2. The selected modelling approach: Structural equation modelling ................... 82 3.4. The usage of a laboratory experiment for the investigation of the strategic supplier selection process ................................................................................................................... 90 3.4.1. Research design and research process .............................................................. 91 3.4.2. Operationalisation of variables ......................................................................... 93 3.4.3. Methods of data collection and quality evaluation criteria............................... 97 3.4.4. Descriptive results .......................................................................................... 102 3.4.5. Model evaluation findings .............................................................................. 106 3.4.6. Structural analyses and hypotheses testing ..................................................... 111 3.5. The strategic supplier selection process in manufacturing enterprises: A field study- based approach ................................................................................................................... 116 3.5.1. Research design and research process ............................................................ 116 3.5.2. Operationalisation of variables ....................................................................... 118 3.5.3. Methods of data collection and quality evaluation criteria............................. 121 3.5.4. Descriptive results .......................................................................................... 123 3.5.5. Model evaluation findings .............................................................................. 132 3.5.6. Structural analyses and hypotheses testing ..................................................... 137 3.6. Discussion of research results and derivation of managerial implications ............. 148 CONCLUSIONS .................................................................................................................... 158 RECOMMENDATIONS ....................................................................................................... 160 REFERENCES ....................................................................................................................... 163 4 WORDS OF GRATITUDE ...................................................................................................