Herd Behaviour in Organizations : The Case of Entering an Investment Project
The presented model can certainly be developed. We may consider the possibility that "the last in the row" decision maker does not care much of the prosperity of the led company (the case where "the last in the row decision maker" is also opportunistic). Such set-up of the model should be thoroughly examined. Moreover, the case of trust and reputation can be here deeply looked into. If the mutual trust is present in the organization and this trust is not spoiled by the employees' misbehaviour, many negative decision biases and organizational externalities are unlikely to happen. Such companies (equipped with internal trust) are called dense social capital companies. The analysis of the role of social capital (Coleman, 1988) in organizations and its influence on internal information flows and knowledge sharing is definitely worth carrying out.
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