Search Strategies for Stakeholder Value: A Behavioral Analysis of Multi-Objective Decision Making in Organizations

 

Abstract:
 

This paper examines how organizations navigate multiple stakeholder objectives through different decision-making heuristics.  Drawing on new stakeholder theory and multi-objective optimization literature, we investigate how search strategies affect both financial and social performance outcomes.  Using an NK model simulation, we analyze five distinct heuristics—Maximize, Combine, Alternate, Penalize, and Satisfice—that represent different approaches to balancing stakeholder goals.  Our findings reveal significant variations in performance across these heuristics under different conditions of goal conflict and complementarity.  While strategies like Combine often outperform others in balanced preference scenarios, the Alternate approach shows particular promise in exploring broader solution spaces and potentially exceeding other heuristics' performance along multiple goals.  This research contributes to stakeholder theory and behavioral strategy by providing a systematic analysis of how organizations can effectively manage multiple objectives, offering practical insights for firms pursuing both social and financial goals.