Problem Framing and Formulation

Abstract

Numerous management scholars have noted that strategic decision making starts with problem formulation, or the identification of problems’ causes. Problem formulation reduces the uncertainty in problems through finding the underlying causes. When dealing with strategic problems that have both complexity and uncertainty, however, we theorize that problem formulation is not enough. Problem framing, or the decomposition of problems to their subproblems, reduces the complexity of problems. When framing has been successful, problem formulation may then reduce the uncertainty in the problems. Despite the close relationship, we draw on the construal level theory to argue that the cognition that benefits problem framing and formulation are distinct and mutually exclusive. People who adjust their construal level (abstract or concrete way of thinking) while engaging in the two activities would not be able to achieve the optimal outcomes. We conduct four experiments to explore the hypotheses and find support for our arguments.