Background: Previous strategic decision making research has focused mostly on the analytical positioning approach, which broadly emphasizes an alignment between rationality and the external environment. In this study, we propose that hospital chief executive optimism (or the general tendency to expect positive future outcomes) will moderate the relationship between comprehensively rational decision-making process and organizational performance.
Purpose: The purpose of this study was to explore the impact that dispositional optimism has on the well-established relationship between rational decision-making processes and organizational performance. Specifically, we hypothesized that optimism will moderate the relationship between the level of rationality and the organization’s performance. We further suggest that this relationship will be more negative for those with high, as opposed to low, optimism.
Methods: We surveyed 168 hospital CEOs and used moderated hierarchical regression methods to statically test our hypothesis.
Findings: On the basis of a survey study of 168 hospital CEOs, we found evidence of a complex interplay of optimism in the rationality–organizational performance relationship. More specifically, we found that the two-way interactions between optimism and rational decision making were negatively associated with performance and that where optimism was the highest, the rationality–performance relationship was the most negative. Executive optimism was positively associated with organizational performance. We also found that greater perceived environmental turbulence, when interacting with optimism, did not have a significant interaction effect on the rationality–performance relationship.
Practice Implications: These findings suggest potential for broader participation in strategic processes and the use of organizational development techniques that assess executive disposition and traits for recruitment processes, because CEO optimism influences hospital-level processes. Research implications include incorporating greater use of behavior and cognition constructs to better depict decision-making processes in complex organizations like hospitals.