Decision Making Theories and Microfinance

Subject: Decision Making
Pages: 7
Words: 2303
Reading time:
10 min
Study level: PhD

Comparing and Contrasting Three Relevant Theories

Decision-making is important in ensuring that problems that befall people remain well solved. In day-to-day live, people encounter different obstacles that require different approaches to solving. Therefore, a decision has to be made. In the light of these expositions, various theories have been developed by different people in explaining how to arrive at such decisions. Among them is the right approach theory, as postulated by theorists. This theory argues that the right decision should be made depending on varied circumstances (Nicklin, 2009, p. 540). The theory calls upon the decision makers to exercise a good deal of caution when deciding eliminating those options, which they feel cannot effectively lead to successful solution of a problems but rather choosing the right decisions that can effectively ensure the reaching of the right agreeable options.

The just or fairness theory states that the decision reached needs to be accommodative of all the stakeholders. Any decision reached should take into consideration the different views and ideas of people. To be fair, the parties on which the decision affects should not feel discriminated, biased, or excluded based on certain things (Heath, Moriarty & Norman, 2010, p.430). Therefore, it proves imperative that the decision makers put into consideration various issues before reaching a certain decision as it may be seen to discriminate against others hence lacking fairness and justice (Skitka, 2009, p.100). Therefore, all the group members should feel that they have been treated justly in order to avoid complains disturbances, retaliations and even strife among themselves. Therefore, this theory postulates the importance of observing fairness and justice in any decision reached and one, which seems capable of affecting the people.

Addressing the utilitarian theory, Mill refers to utilitarianism as one that concerns about a person’s pleasures or rather happiness as opposed to pain (Renouard, 2011, p.89). When applied to decision-making, there arises the need for the decision maker to make decisions that will be appreciated: those that will foster the happiness of those to whom it seems subjected (Rietti, 2009, p.350). The consequences or the effect of the decision need to be considerate promoting happiness rather than oppression. Therefore, the theory advises the decision makers to put the agony, the emotions as well as the feelings of the stakeholders at hand in making up their decisions.

Having explained the three theories in decision-making, it is evident that they both have common implications especially to the overall process of decision-making. Their similarity is exhibited in the sense that both are concerned about the people to whom the decisions affect (Humphrey & Ellis, 2004, p.450). They all demonstrate a sense of dignity and autonomy by being just and fair. Therefore, the decision makers should put the group members at the forefront in whatever decision they make to be able to demonstrate fairness and equality. For instance, the right approach choice requires the decision makers to make the right decisions, which will have a positive impact to the entire fraternity in the organization. Justice and fair theory agitates that the decisions reached need to be accommodative to all the stakeholders in an organization in a fair and just way to avoid discrimination (Husted & Folger, 2004, p.720). On the other hand, utilitarian theory postulates that the decision makers should be considerate of the stakeholder’s emotions and needs when making these decisions (Arnold, 2010, p. 560). These three theories theretofore have some commonness in that they all foster decisive and creative decision-making process by putting the needs and requirements of the stakeholders at hand. However, the three picture some difference. The contrast in the three theories seems significant. For instance, while the right approach theory presents the decision maker as one, who makes the decision based on his/her self evaluation; he/she remains guided by certain guides and rules in the justice and fairness theory. On the other hand, in the utilitarianism theory, the decision maker makes his/her decision based on the emotions of the people to whom the decision will affect.

Importance of decision making in micro-finance

Microfinance institutions provide loans and other financial services to people with low income in an effort to improve their living standards by elevating poverty, encouraging self-employment and promoting entrepreneurship. Currently, the sector has become paramount with many investors coming into the business (Usta, 2011, p. 410). These therefore have led to competition and therefore strategic decision-making has become paramount in order for an organization to remain at the top. Decision-making has therefore become the day to day initiative and practice in ensuring that the microfinance institutions operate smoothly.

q(Slotegraaf & Atuahene-Gima, 2011, p.110). The stakeholders will only be convinced to invest in the institution that promises them better returns and has tangible benefits. When the leadership is not up to its tasks, the decisions in the institutions may not be substantial and therefore may lead to the fall of the institutions due to the lack of trust and confidence on the management. This will see a large number of investors and stakeholders move to other institutions for their needs and services. Decision-making also plays a good role in microfinance, as it fosters growth of the institutions. When decisions are not well thought out, there stand various problems that may emanate leading to failure of the institution or simply retarding its growth. This decision-making in microfinance provides a leeway or provides an avenue in which other alternative structures or procedures can be put into place to ensure the success of the institution. Decision-making in microfinance is also important in microfinance institution because it helps to determine the success or failure of the organization. This means that when proper decisions are made, they foster success of the organization and vice versa. It also helps in ensuing sustainability and achievement of the goals and objectives of the organization. Decision making also aids in planning and coming up with appropriate strategies geared at ensuring the sustainability the finance. These are important when it comes to tough situations that require the intervention of the microfinance institutions like during inflation.

Barriers and Pitfalls to Total Quality management (TQM) Implementation

TQM is an integrated approach which management employs by focusing on all components and levels of an organization quality and continuous improvement (Bou, 2005, p. 75). It is therefore a continuous process, which organizations adapt to ensure their functioning. It stands out as an approach that aims at satisfying customers. Implementation of the TQM is one area that many institutions have failed (Williams, 2005, p. 220). Therefore, there exist several barriers and pitfalls that TQM encounters when it comes to implementation.

Lack of commitment and better leadership in the management of TQM is one of the barriers that the process of implementing TQM faces. Implementation requires commitment and dedication to ensure that the process becomes a success (Soltani, 2007, p. 160). It is this commitment and devotions due to poor leadership that halts the process of implementation. There are no adequate planning and strategic planning, that the leaders perform to ensure its success. Lack of commitment is one of the pitfalls that have seen many institutions fail in implementing their TQM in their institutions.

Insufficient empowerment of workers is also one of the factors or barriers that lead to ineffective implementation of TQM (Yam, 2005, p. 450). Total quality management comes in as a process that requires cooperation of the management and the workers in order to successful implement it. Lower staffs also need to be incorporated in the implementation because in case the relationship between the management and the staff is not well maintained, they can halt the process hence rendering its effective completion. Another pitfall or barrier to the implementation of the TQM is the lack of cross-disciplinary efforts and cross functioning (Nwabueze, 2001, p. 270). When there is lack of coordination between the various departments in an institution this halts effective implementation of the TQM since there will be variations in the decisions, which will make the process stagnant resulting into delays due to a lot of time consumed through consultation.

Another barrier or pitfall to total quality management implementation is because of misdirected focus by the managers or the leaders whereby they emphasize on many trivial or less important problems that face the organizations instead of selecting the most critical ones that need urgent measures (Kekale, 2004, p. 1098). This lack of focusing often impedes successful implementation of the vital ones hence posing a great barrier to the implementation of the TQM in various companies or organizations. Another barrier or pitfall to the implementation of the TQM in many institutions is lack of focus when it comes to training and coaching (Sommerville, 2000, p. 290). Since TQM is a continuous process geared at continuous improvement in performance, it requires adequate training and coaching to be able to update the management on the best ways in which to make decisions causing implementation of other alternatives.

Failure to give attention to the external factors and giving more emphasis on internal factors like customers or one party over the others is also a barrier to TQM implementation (Liu, 2001, p. 586). This halts the process as the managements will not be in a position to think outside the box on other important issues like other issues pertaining to total quality management. Other barriers include absence of costs of quality measurement, lack of performance reporting, and formal recognition and reward systems in the organization (Kanji, 2000, p. 335). This therefore de-motivated that worker hence making them less active in ensuring quality management in their institutions. Sometimes, emphasizes on the long-term or quick fixes or short-term performance instead of putting more emphasis on the long term improvements also halts the process of implementation of TQM.

Importance of TQM to micro-finance

In microfinance, TQM is important because of various reasons: It will ensure that high returns on investment are realized through the continued improvement in its efficiency (Prajogo, 2010, p. 27). Investors will be attracted to the microfinance institution that brings in some improvements, which makes them feel that by being party to a given microfinance will benefit them (Elshennawy & Maytubby, 2001, p. 80). In addition, due to TQM a microfinance institution will be able to realize greater returns because of improved services and operations hence adding value to the microfinance. TQM is flexible in that it allows an institution to take advantage of various developments, which enable operations of management in cross-functional processes. This provides an opportunity for microfinance to adapt to different ways or approaches that can sustain their growth and provide maximum profits. It is a very convenient and flexible way of adapting to different developments hence ensures that the microfinance is up to date with the current changes or developments hence enabling it to compete favorable in a given environment.

TQM is also important in the micro finance because it provides accommodation and collaborations with other finance sectors through strategic alliances. This collaboration is important in a microfinance environment because it helps in sharing of ideas and views concerning different aspects in the sector hence allowing the management to be fully equipped to provide quality financial services to their clients. TQM is also important in microfinance because it encourages innovations and creativity in the sector. As trends change and new designs and approaches come into existence, the TQM allows the management or the players to be innovative in order to keep their customers and attract new ones to continue using their services.

Why survey research methodology is best suited to micro finance research

Survey research methodology is the best option in microfinance because of various reasons. In a survey, high reliability is easily obtained when the researcher represents all the subjects using a standardized stimulus (Rubin, 2010, p. 40). This also helps in eliminating any instances of observers’ subjectivity and rather promoting objectivity in the report or the analysis (Dolnicar, 2011, p. 240). Therefore, it ensures that the information gathered represents the accurate information representing the reality hence making the decision makers have a clear picture in their making of decisions and plans.

The method also ensures that similar information is gathered through standardization. The information can therefore be interpreted comparatively between two study groups, which then provide the researcher with information that best portrays the realty (Sparrow, 2011, p. 31). Therefore, this kind of possibility survey is appropriate in microfinance since the researcher will have information from various stakeholders which will then assist in coming up with the best alternatives based on the report from the collected information (Lynn, 2010, p. 296). Surveys offer the researchers with alternative ways of gathering the data whether face to face administrating of questionnaires, interviews or simply face-to-face interviews and/or written or oral interviews by telephone or as a group.

Many questions can be asked in survey as opposed to other ways of research hence making analysis of information flexible (Bednall, 2010, p. 160). Microfinance institutions can therefore successfully achieve their research goals by using surveys as they will be able to ask questions in detailed which will help them in gathering information that is reliable and concrete in their analysis. Another reason for adopting survey is that it is possible for a microfinance institution to carry out or administer its survey in remote areas using emails or telephone hence making it possible to reach widely spread customers (Manfreda, 2008, p. 90). They are also suitable in that they enable description of characteristics of larger populations, which other research method, will not be able to sustain. Hence, priorities in micro finance especially where a larger number of customers will be reached for an interview. They are also inexpensive especially the self-administered surveys hence proving economical to the institutions. This helps in cutting costs and at the same time aiding in the accomplishment of the set objectives.


Arnold, D. (2010). Recent Work in Ethical Theory and Its Implications for Business Ethics. Business Ethics Quarterly, 20 (4), pp.559-581.

Bednall, D. (2010). Ethics in practice. International Journal of Market Research, 52 (2), pp. 155-168.

Bou, J. (2005). Total quality management, high-commitment human resource strategy and firm performance: an empirical study. Total Quality Management & Business Excellence, 16, pp. 71-86.

Dolnicar, S. (2011). Quick, simple and reliable: forced binary survey questions. International Journal of Market Research, 53 (2), pp. 231-252.

Elshennawy, A., & Maytubby, V. (2001). Concepts and attributes of total quality management. Total Quality Management, 2, pp. 75-97.

Heath, J., Moriarty, J., & Norman, W. (2010). Business Ethics and (or as) Political Philosophy. Business Ethics Quarterly, 20 (3), pp. 427-452.

Humphrey, S., & Ellis, A. (2004).Understanding Customer Reactions to Brokered Ultimatums: Applying Negotiation and Justice Theory. Journal of Applied Psychology, 89 (3), pp. 466-482.

Husted, B., & Folger, R. (2004). Fairness and Transaction Costs: The Contribution of Organizational Justice Theory to an Integrative Model of Economic Organization.. Organization Science, 15 (6), pp. 719-729.

Kanji, G. (2000). Implementation and pitfalls of total quality management. Total Quality Management, 7 (3), pp. 331-343.

Kekale, T. (2004). To Make It Total’: Quality Management over Subcultures.. Total Quality Management & Business Excellence, 15 (8), pp. 1093-1108.

Liu, C. (2001). Pitfalls of Total Quality Management in Hong Kong. Total Quality Management, 9 (7), pp. 585-598.

Lynn, P. (2010). The ESRC Survey Resources Network. International Journal of Market Research, 52 (3), pp. 295-302.

Manfreda, K. (2008). Web surveys versus other survey modes. International Journal of Market Research, 50, pp. 79-104.

Nicklin, J. (2009). Reactions to Others’ Mistakes: An Empirical Test of Fairness Theory. Journal of Psychology, 143 (5), pp. 533-558.

Nwabueze, U. (2001). The implementation of total quality management in the NHS… Total Quality Management, 8 (5), pp. 265-280.

Prajogo, D. (2010). The effect of people-related TQM practices on job satisfaction: a hierarchical model. Production Planning & Control, 21, pp. 26-35.

Renouard, C. (2011). Corporate Social Responsibility, Utilitarianism, and the Capabilities Approach.. Journal of Business Ethics, 98, pp. 85-97.

Rietti, S. (2009). Utilitarianism and Psychological Realism. Utilitas, 21 (3), pp. 347-367.

Rubin, D. (2010). Social work education and student research projects: a survey of program directors.. Journal of Social Work Education, 46, pp. 39-55.

Skitka, L. (2009) Social Exploring the “Lost and Found” of Justice Theory and Research. Justice Research, 22, pp. 98-116.

Slotegraaf, R., & Atuahene-Gima, K. (2011). Product Development Team Stability and New Product Advantage: The Role of Decision-Making Processes. Journal of Marketing, 75, pp. 96-108.

Soltani, E. (2007). Managing Change Initiatives: Fantasy or Reality? The Case of Public Sector Organizations. Total Quality Management & Business Excellence, 18 (1/2), pp. 153-179.

Sommerville, J. (2000). Multivariate barriers to total quality management within the construction industry. Total Quality Management, 5 (5), pp. 289-298.

Sparrow, N. (2011). What is an opinion anyway? Finding out what people really think. International Journal of Market Research, 53, pp. 25-39.

Usta, M. (2011). Self-Regulatory Strength and Consumers’ Relinquishment of Decision Control: When Less Effortful Decisions Are More Resource Depleting. Journal of Marketing Research (JMR), 48 (2), pp. 403-412.

Williams, T. (2005). A Contrast of HRM and TQM Approaches to Performance Management: Some Evidence. British Journal of Management, 16 (3), pp. 211-230.

Yam, R. (2005). TQM: A change management model for market orientation. Total Quality Management & Business Excellence, 16 (4), pp. 439-461.