Determinants of Rationality in Strategic Decision-Making

Proceedings of the 6th International Conference on Advanced Research in Management, Economics and Accounting

Year: 2024

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Determinants of Rationality in Strategic Decision-Making

Ioannis Thanos

 

ABSTRACT:

In this paper, we draw on four theoretical perspectives (environmental determinism theory, upper-echelons theory, decision perspective, firm perspective) to study the determinants of procedural rationality in strategic decision making. We develop and test an integrative framework using a sample of 103 strategic decisions conducted by Greek services firms. Data collection methods included interviews and survey research. Our results indicate that rationality is positively related to environmental dynamism, past firm performance, organizational size and CEO need for achievement, and negatively related to CEO tenure and decision uncertainty. Thus, the use of rationality is influenced by environmental, organizational, managerial and decision factors. Collectively, these findings represent a solid basis for explaining previous contradictory findings in the area of strategic decision making and have several important implications for theory, practice and policy makers. These implications are discussed in depth in the last section of the paper along with the limitations of our study and suggestions for future research.

keywords: Strategic Management, Strategic Decision Making, Decision Quality, Rationality