Team Decision Making in Operations Management

The existing behavioral OM literature has primarily studied individual decision makers. However, the behavioral economics literature suggests that, compared to individuals, teams may make better decisions. Specifically, the Eureka theory suggests that teams outperform individuals when the problem is Eureka-like, i.e., has a key insight that can be persuasively communicated to others. To study the behavior of teams making operational decisions, we examine two canonical settings: standalone Newsvendor inventory decisions (tactical decision-making) and Newsvendor under information sharing (strategic decision-making). We find that teams perform no better than individuals when making standalone Newsvendor decisions. Using chat analysis and preference integration analysis, we find that the key insight to the problem - the classical Newsvendor logic - is neither prevalent nor particularly persuasive in team discussions. In the information sharing setting, we find that team retailers are more likely to lie and inflate when sharing information compared to individual retailers; the argument to be untrustworthy is prevalent and persuasive within team chats. By contrast, team suppliers do not perform differently from individual suppliers in a systematic way; although the argument to be untrusting is prevalent, it is not uniquely persuasive. Our paper provides useful managerial insights into the situations under which companies can benefit from implementing team decision-making: It benefits the company if the decision is Eureka-like. Many operational decisions are plausibly Eureka-like; however, careful behavioral study is needed to help determine whether they are.