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How much does performance matter in strategic decision making?

Author

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  • Said Elbanna
  • Rabia Naguib

Abstract

Purpose - The purpose of this paper is to explore the influence of two aspects of firm performance: financial and business performance and organizational effectiveness, on three dimensions of the strategic decision‐making process, rationality, intuition, and political behavior. Design/methodology/approach - The empirical study goes well beyond the common anecdotal observations or reflections on strategic decision‐making by utilizing a mixed‐methods approach. Based on a multi‐method field study, 286 Egyptian managers who participate in making strategic decisions are surveyed; and 36 semi‐structured interviews are conducted. Findings - The results suggest that strategic decision‐making in high‐performing firms is more rational and less intuitive and political. Interestingly, they also show that organizational effectiveness is a stronger predictor of strategic decision‐making process dimensions than of financial and business performance. Research limitations/implications - In Egypt, a widespread suspicion of academic research adds to the frequent difficulty of obtaining completed questionnaires from more than one senior manager in a company. Moreover, because of the difficulty of collecting objective financial data, subjective measures are used to gauge performance. Further research should test the generalizability of our results in narrowly defined samples, e.g. the banking industry or the automotive industry. Practical implications - The results highlight the importance of performance in strategic decision making and seem to support the “culture free” argument advancing the position that cultural differences may not have a significant impact on the influence of performance on the strategic decision‐making process. Originality/value - Although scholars have posited organizational performance as an important contextual variable influencing the process of strategic decision making, this influence is not well understood or articulated, especially in the Egyptian setting. This paper contributes to filling this gap.

Suggested Citation

  • Said Elbanna & Rabia Naguib, 2009. "How much does performance matter in strategic decision making?," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 58(5), pages 437-459, June.
    • Handle: RePEc:eme:ijppmp:v:58:y:2009:i:5:p:437-459
    DOI: 10.1108/17410400910965715
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    Citations

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    Cited by:

    1. Andrea Nagy & Carmen Mihaela Băbăiță, 2017. "Orientation Towards Innovation, Participative Decision-Making And Performance In Romanian Hotels," Revista de turism - studii si cercetari in turism / Journal of tourism - studies and research in tourism, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 24(24), pages 1-9, December.
    2. Titus Musyoka Kilonzi & Rukia Atikiya & Wallace N. Atambo, 2023. "Managerial Roles as a Strategy Implementation Driver and Performance of the National Government Departments in Kenya," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(2), pages 1-39, June.
    3. Mohamud Jama Ali & Elegwa Mukulu & John M. Kihoro & Joyce D. Nzulwa, 2016. "Moderating Effect of Firm Size on the Relationship between Functional Integration and Firm Performance," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(9), pages 38-57, September.

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