Strategic investment decision processes and organizational performance: An empirical examination

Strategic investment decision processes and organizational performance: An empirical examination

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Article ID: iaor199979
Country: United Kingdom
Volume: 9
Issue: 2
Start Page Number: 115
End Page Number: 132
Publication Date: Jun 1998
Journal: British Journal of Management
Authors:
Keywords: performance, management
Abstract:

The central question that this paper aims to answer is whether there is a relationship between organizational performance and the characteristics of strategic investment decision (SID) processes. To do so, it adopts an empirically derived nine-dimensional framework for classifying SID processes and employs a set of objective and perceptual measures of performance. The empirical results stemming from the process–performance relationship, suggest that higher performance is strongly related to more rational decision-making processes (DMPs); more financial reporting activities; broader participation both in terms of departments and in terms of hierarchical levels. Furthermore, our data suggest that long-term performance appears to be more strongly related to SID processes than short-term performance and the ‘structural’ characteristics of the DMPs (i.e. rationality, financial reporting) are mainly related to long-term objective performance, while such ‘behavioural’ characteristics of the DMPs as problem-solving dissension reveal some interesting associations with short-term performance. In light of these findings, implications for theory and future research are advanced.

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