Strategic Decision Speed and International Performance: The Roles of Competitive Intensity, Resource Flexibility, and Structural Organicity.

VerfasserAdomako, Samuel

1 Introduction

Current global developments necessitate that firms cultivate high levels of strategic decision speed (SDS) and flexibility in order to adapt and respond to new market challenges and opportunities in a timely manner (D'Aveni et al. 2010; Dykes et al. 2019; Wiggins and Ruefli 2005). Moreover, decision speed remains a crucial factor in determining firms' ability to capitalize on market opportunities in dynamic environments (Baum and Wally 2003; Dykes and Kolev 2018; Wu et al. 2017). However, while our understanding of SDS and its impact on organizational performance has improved following increasing scholarly attention (Baum and Wally 2003; Dykes et al. 2019; Forbes 2005; Judge and Miller 1991; Netz et al. 2019), we only have a partial understanding of how and when SDS effectively influences firms' international performance.

Strategic decision-making speed reflects "how quickly organizations execute all aspects of the decision-making process, spanning from the initial consideration of alternative courses of action to the time at which a commitment to act is made" (Forbes 2005, p. 355). Firms must choose the speed at which to respond to strategic issues because it is a key part of their ability to leverage resources and opportunities to achieve sustainable returns (Chetty et al. 2014).

Previous studies have long-established support for the positive influence of decision-making speed on firm performance (Baum and Wally 2003; Judge and Miller 1991). For example, Baum and Wally (2003) examined the indirect effect of external factors (environmental dynamism and munificence) and internal firm factors (centralization vs. decentralization, and formalization vs. informalization) on firms' performance (sales growth and profits) through their mediating impact on SDS. In addition, some attempts have been made at exploring the contours of the SDS-international performance linkage over the last two decades. These include studies that have focused on relevant themes such as the speed of firm responses to competitors (Chen and Hambrick 1995), speed to market (Hendricks and Singhal 2008), internationalization speed (Casillas and Acedo 2013; Casillas and Moreno-Menendez 2013; Mohr and Batsakis 2017; Prashantham et al. 2019) and strategic decision-making of "born globals" (Nummela et al. 2014).

However, a critical review of the international business literature reveals important gaps in knowledge in some respects. First, despite the widely held view that SDS has a positive influence on firm performance, this linkage remains largely untested in the unique and rough terrains of developing markets. Given that SMEs in developing economies have limited resources and operate in a more challenging environment, compared to those in developed markets, it is important to further verify the extent to which this general axiom (SDS-international performance linkage) is valid in this context. Second, despite the strong theoretical and empirical support for the SDS-international performance linkage, our understanding with regard to how this relationship may be moderated by varying degrees of external and internal factors lacks theoretical precision (Baum and Wally 2003; Souitaris and Maestro 2010). Stated differently, assuming that speedy decisions matter to the international performance of firms in developing economies, under which conditions is this more effective? The lack of attention to addressing this question is particularly surprising given that differences in firms' internal and external milieu significantly affect their performance. Accordingly, we draw insights from decision-making (Eisenhardt 1989; Judge and Miller 1991), contingency (Burns and Stalker 1961) and organizational structure (Lawrence and Lorsch 1967; Lumpkin and Dess 1996) theories to test a conceptual model on the potential boundary conditions that shape the hypothesized association between SDS and firms' international performance. Specifically, we address the following research questions: (1) Does speedy decision-making matter to the international performance of developing countries' firms? (2) Assuming SDS matters to the international performance of developing economies' firms, how do competitive intensity, resource flexibility, and structural organicity moderate this relationship? Addressing these research questions is crucial given that variations in a firm's external environment, resources, and structure may determine the level of managerial discretion in decision-making.

This study contributes to the international business literature in two main ways. First, the focus on the role of speedy decisions in SMEs' international performance in a developing country context extends the literature because this perspective is mainly built on evidence from developed market firms (Baum and Wally 2003; Forbes 2005; Garcia-Garcia et al. 2017; Netz et al. 2019). Generally, developed economy firms possess more resources (e.g., research and innovation capabilities) and operate in more benevolent external conditions. As a result, it is reasonable to contend that the implications of speedy decisions for their international performance may be different from those of SMEs in developing economies. This is because these latter firms tend to have limited resources as well as operate in more challenging environments (Hoskisson et al. 2000). Moreover, answering this question will be a timely response to the call for researchers to focus on developing countries' SMEs to provide more germane strategic directions for the accelerated growth of these economies (Amankwah-Amoah 2016).

Second, we build on a speed-as-a-capability perspective (Dykes et al. 2019) by exploring the conditions under which decision speed yields superior performance in international SMEs. This is an important extension of the literature because "there is a need for more studies that delve into the moderating factors of the relationship between speed of internationalization and performance" (Garcia-Garcia et al. 2017, p. 97). Additionally, despite past attempts at illuminating the SDS-international performance linkage, the boundary limits of this nuanced relationship are still less understood (Garcia-Garcia et al. 2017). This limitation should be of interest to international business scholars since dynamic global market trends require quick strategic responses to ensure the survival and competitiveness of firms (Baum and Wally 2003; Cravens and Piercy 2013; D'Aveni 1994; Eisenhardt 1989).

2 Theoretical Framework and Hypotheses

2.1 Strategic Decision-Making, Decision Speed, and Outcomes

To date, the extant research on strategic decision-making has largely been pursued from an individual decision-maker perspective on decision formulation and the implementation processes in firms (Baum and Wally 2003; Rajagopalan et al. 1993; She et al. 2019). Broadly, the literature shows that managerial decision-making follows three main approaches. These are the rational-analytic method, the emergent process perspectives, and an approach that combines them.

The rational-analytic perspective suggests that organizational strategies are formulated through a methodological and meticulous analysis of a firm's external and internal environmental conditions, then weighing up the options, before settling on specific strategies and their implementation (Hill et al. 2014; Hitt et al. 2012; Johnson et al. 2009). The notion is that the decision-making process is considered linear and sequential. This view also assumes that the strategy-making process is a guarded, deliberate, and planned process. Thus, the assumption is that decision-makers can make rational choices by generating and analyzing relevant information for decision choices. Furthermore, scholars who subscribe to this perspective argue that programmed decisions are mainly routinized, characterized by a structured and a defined point of departure, which provides preemptive guidelines to predict managerial decision-making (Simon 1960). By and large, the rational analytic decision-making model is commonly associated with large organizations. The organizations often institute teams, hire consultants, and mobilize the attention of the top management team toward the development of an effective organizational strategy (Hill et al. 2014; Johnson et al. 2009). In contrast to the rational-analytic view of strategic decision-making, is the emergent strategy perspective. The proponents of this approach contend that "strategies often do not develop as intended or planned but tend to emerge in organizations over time as a result of ad hoc, incremental or even accidental actions" (Johnson et al. 2009, p. 17). Thus, from this viewpoint, a strategy can emerge from all corners of the organization. This strategic logic hints at the notion of improvisational behavior in the strategy development process (Cunha et al. 1999; Moorman and Miner 1998). In other words, emergent strategy manifests via the performance of activities, routines, and processes that culminate in a decision on the direction of an organization (Johnson et al. 2008). This phenomenon is particularly common in international entrepreneurship, where managers often face unanticipated environmental constraints which require them to take quick strategic actions on 'their feet'. For example, new venture processes typically demand that managers change their originally planned courses of action to help their businesses remain flexible (Mullins and Komisar 2009), survive, and succeed. Based on these insights and perspectives, some scholars contend that managerial actions are heuristic-based (Slovic et al. 1977), and spontaneous (Quinn 1980).

Taken together, the literature shows that, whether strategic decision-making is based on a rational, non-rational, or a-rational process, researchers are generally in agreement that conditions in firms' external and internal business environments play a significant role in the...

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