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Decision Making and Business Performance

Eric J. Bolland and Carlos J. Lopes

This breakthrough study examines how business decisions explain successful and unsuccessful performance. Real world and academic research is evaluated, including interviews and cases studies, to create a model of how decisions and performance are connected for businesses of all sizes. Recommendations are made to optimize decision making and projections about the future of decision making and performance are provided.
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Chapter 7: Underlying performance factors

Eric J. Bolland and Carlos J. Lopes


The focus of this chapter is on joint impacts of 17 factors that may affect performance. The 17 factors are assessed by factor analysis to help determine if there are underlying factors in performance undetected in the initial analysis. From that, five principal components are developed and analyzed. Team effectiveness, employee satisfaction and human resource management practices are all highly correlated with each other. That accounts for 16 percent of variance in the results. CEO tenure is highly correlated with other factors and explains 14 percent of variance. Marketing and R & D which is highly correlated with innovation accounts for 10 percent of the variation. Operations management explains 9 percent of the variance. Ethical reputation is responsible for 9 percent of variance. Together with other variables, six components explain 66 percent of variance, meaning that underlying performance factors were identified and their impact on performance was significant. In related findings, labor effectiveness has a strong positive effect on decision success while CEO tenure is not a predictor of success.

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