Identity-Driven Decision-Making : Problems and Solutions

Organic organizations rely little on formalization in its classical meaning. Instead, behaviour is governed and expectations are generalized with means that Etzioni has classified as identitive power. Bureaucracies are characterized partly by their use of coercion and purchase (utilitarian power) of motivation of its members, while organic, empowering, flat, learning organizations tend to use symbols that do not constitute threats or rewards as means of motivating members. Instead members are motivated, or committed, by personal identification with the organizational identity. This form of motivation can be compared with rule-based or identity-driven decision-making, by which organizational decisions are guided by organizational and personal identities rather than by a calculation of preferences and expected outcomes. In this paper, three decision-making problems are identified that are caused by improperly functioning differentiation between personal identities of organizational members and organizational identities when identities are the basis for both motivation and bounded rationality (decision-making)