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The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

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Capturing Knightian advantages of large business organisations through group decision-making processes

Finch, J.H. and Dinnie, N. (2001) Capturing Knightian advantages of large business organisations through group decision-making processes. International Journal of the Economics of Business, 8 (3). pp. 379-404.

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This paper develops an explanation of how large business organisations may achieve advantages of size by virtue of decision-making procedures. The argument is inspired by Knight's (Risk, Uncertainty and Profit, NewYork: Houghton Mifflin, 1921) model of internal business organisation, together with his explanation of profits pertaining to large business organisations by being connected with situations that he characterises as uncertain rather than risky. Capturing the decision-making advantages is fairly straightforward in Knight's explanation. Decision making is internalised to individuals who cope with uncertain situations-beyond the range of normal experience-in a manner consistent with managerial/entrepreneurial vision. Recent organisation theory has drawn attention to the use of groups as an integral part of decision making within large business organisations and this has important implications for economics. This paper highlights the role of groups in achieving Knightian advantages. The argument loosens the identification of organisation with a managerial/entrepreneurial vision, adding different levels and types of deliberate and automatic selection, the alignment of which is likely to be problematic.