Behavioral analysis and adaptation of a negotiation based, quantitative planning approach for hybrid organizations

During the last decades organizational flexibility of enterprises has increased to suit the requirements of dynamic and complex markets. The emergence of hybrid organizations as combinations of hierarchical and heterarchical elements comes along with this development. Hybrid organizations consist of centralized and decentralized units which interact with each other. A popular example is the franchising organization of a retailer, where many franchisees act as members of the organization and entrepreneurs at once. Despite the large amount of papers discussing hybrid organizations, our hybrid planning approach in Dobhan and Oberlaender (2013) for a multi-location newsvendor situation is one of only a few approaches which fit hybrid organizations. The hybrid approach results in an optimal production quantity if the decision makers behave risk-neutrally and rationally. However, empirical studies reveal systematic deviations of decision maker's behavior from risk-neutrality and rationality. In this paper, we therefore analyze the results of our hybrid planning approach for empirically observed decision maker's behavior. •We introduce an adaptation of the hybrid approach for multi-location Newsvendor situations of Dobhan and Oberlaender (2013) for risk-averse behavior.•We examine how pull-to-center behavior can be modeled for this specific approach.•We show, that even for risk-averse behavior of decentralized decision makers, the hybrid approach shifts negotiation quantities towards the risk-neutral optimum.•We reveal that a single risk-averse site has a disproportionately low impact on the hybrid approach quantity.•We prove that the hybrid approach works although we considered that decentralized decision makers act in accordance with the pull-to-center effect. However, the behavior has a disproportionately high impact on the hybrid approach quantity.