Team Decision Making in Operations Management

1. Problem definition: This paper studies how teams make operational decisions in two canonical settings: standalone Newsvendor inventory decisions (tactical decision-making) and Newsvendor under information sharing (strategic decision-making). 2. Academic / Practical Relevance: Team decision-making, while being prevalent in practice, has been rarely studied in operational contexts. Past research in behavioral economics and psychology uses simple, abstract decision tasks and show that teams generally outperform individuals. However, it is less clear whether the results extend to practical yet more complex operational settings. Answering this will help researchers and practitioners understand how teams will behave in operational settings and, subsequently, whether team decision-making should be employed.3. Methodology: We employ behavioral and experimental studies, including text chat analysis to explore teams' decision-making mechanism.4. Results: We find that whether teams will perform differently from individuals depends critically on the team decision mechanism, as reflected in what team members find compelling in intra-team chats. When playing the role of the supplier, both in the standalone Newsvendor setting and the information sharing game, teams find multiple (potentially conflicting) arguments compelling which pull team decisions in different directions, and overall, the teams do not outperform individuals. By contrast, as the retailer in the information sharing game, the compelling argument points to the direction of self-interest and team retailers outperform individual retailers in terms of earning profits. 5. Managerial Implications: Our findings suggest that when companies consider whether to implement team decision-making, it is important to think carefully about whether and which compelling argument(s) will emerge during team discussions, and whether they promote the outcome the company wants. Careful behavioral studies are useful to study this, and chat analysis proves to be a powerful tool in studying teams' decision mechanism