"I knew it would happen." - What are the risks organizations in Northern Sweden face when deciding to digitalize?

• Main Author: Zingel, Marcel
• Format: Bachelor Thesis
• Language: English
• Published: Umeå universitet, Företagsekonomi 2023
• Subjects: digitalization risks; decision-making; risk perception; hindsight bias; overconfidence; employee involvement; Business Administration; Företagsekonomi; Northern Sweden
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-212979

This thesis aims to understand the risks faced by organizations operating in Northern Sweden when making decisions about digitalization. Through empirical analysis and discussion, the study investigates the influence of hindsight bias on risk perception and the decision-making process. The findings indicate that there is an arguable elevated level of hindsight bias is observed among all participants, with varying intentions behind this bias. One specific case highlights the influence of external decision-makers and the implications of their expertise. While an organization is acting in good faith by seeking advice from individuals of expertise as external decision-makers, who prioritize utility-maximizing choices, it exposes the organization to potential non-perceivable risks. The study reveals that individuals tend to overlook the risks associated with digitalization until they face tangible implications. However, the perception of risks is not artificially altered by expertise level, but rather triggered by occurrences. Moreover, the study identifies a pattern of elevated levels of hindsight bias, primarily in terms of foreseeability, coupled with a motivation for self-esteem. This pattern emphasizes the lack of communication regarding digitalization risks, which contributes to overconfidence and myopia in the decision-making process. The empirical analysis supports the notion that positive perceptions of digitalization and a failure to acknowledge possible implications result in individuals overseeing risks. Consequently, organizations in Northern Sweden run the risk of overconfidence and oversight if they fail to question the basis of their digitalization decisions or the motives and biases of their employees involved in the decision-making process. In conclusion, this thesis reveals that the risks faced by organizations operating in Northern Sweden when making decisions about digitalization include a failure to perceive digitalization risks due to preconceived positive perceptions, which affects both ...