The Role of Data Mining in Organizational Cognition

Abstract

Data mining has quickly emerged as a tool that can allow organizations to exploit their information assets. In this chapter, we suggest how this tool can be used to support strategic decision-making. Starting with an interpretive perspective of strategy formulation, we discuss the role of beliefs in the decision-making process. Referred to as Micro-Theories (MTs), these beliefs generally concern some assumption regarding the organization’s task environment, such as sales increasing in a certain segment or customers preferring a certain product. The strategic role for data mining, referred to as Organizational Data Mining (ODM) is then to provide validation for these beliefs. We suggest a four-step process for identifying and verifying MTs and illustrate this with a hypothetical example of a bank. Implications and future trends in ODM are discussed. Ultimately results of data mining should be integrated with strategic support systems and knowledge management systems.