Purpose – The purpose of this paper is to identify the role of the rationality of the strategic decision‐making process between decision magnitude of impact and the quality of the decision process output. Design/methodology/approach – From analysis of alternative research approaches, a field survey seems to be the most appropriate methodological choice. This is a field study of real strategic decision‐making process rather than an artificial setting. The questionnaire consists of items measuring the variables of primary interest; namely the independent, mediator, and dependent variables. The study was conducted in Pinang, Malaysia, involving small, medium, and large‐sized private manufacturing firms. To test and eliminate ambiguous or biased items and to improve the format, both for ease of understanding and to facilitate data analysis, a pilot study was conducted by computing Cronbach's reliability alpha. Findings – The results of regression analysis indicate that the decision magnitude of impact is significantly associated with the level of rationality in the decision‐making process. The results of hierarchical regression analyses indicate that the extent of rationality in the decision‐making process is able to significantly change the total variations in the decision‐ making quality explained by magnitude of impact. Research limitations/implications – The complex nature of strategic decision‐making process as a research topic places limitations on this study, particularly in the area of sample selection and data availability and collection. The major sample selection at the manufacturing firms is difficult because a firm's perception in terms of strategic decisions may not be the same, thus it is not easy to ascertain relevant sample characteristics. Practical implications – Findings of this study indicate that a better quality decision is achieved through a rational process. Thus, organizations should encourage greater use of rationality in the decision‐making process, especially when the decision that is going to be made has more impact on the various parts of the organization or it is a strategic decision. Originality/value – This study is believed to be the first to test the mediating impact of rationality of the strategic decision‐making process. This study was carried out among Malaysian manufacturing firms, and therefore comparison of its results to the findings in other countries may suggest the influence of other factors such as ideology, belief, and culture on strategic decision‐making processes. This in turn may open up a promising avenue for future research.
Management Decision – Emerald Publishing
Published: May 2, 2008
Keywords: Decision making; Strategic leadership; Small to medium‐sized enterprises