Factors that Influence Strategic Decision Making Process in SMEs - Research Proposal Example

Understanding the factors that influence strategic decision making process in SMEs: An empirical investigation of the entire strategic decision making process in SMEs based in UK 1. Introduction 3 1.1. Background 3 2. Contribution of the Study 3 3. Research questions 4 4. Literature Review 4 4.1. Overview of strategic management approach 4 4.2. Factors influencing strategic decision making in firms 4 4.3. Strategic decision making in SMEs 4 5. Research Philosophy 5 5.1. Research Approach 5 6. Research Methods 6 6.1. Data collection 6 6.2. Interview 6 6.3. Ethical considerations 6 6.4. Validity and reliability 6 7. Timeline 7 7 Reference List 8 1. Introduction 1.1. Background The term ‘strategy making’ is used instead of creation, development or formulation because the term ‘making’ implies creation as well as incorporates the implementation of the strategy (Harrington, et al, 2004). The latter half of the definition is pivotal because the nature of evolving strategies is specifically that they are not deliberately planned or created but they evolve somewhere along the way (Pretorius and Maritz, 2011). The gradually shifting global business environment have altered the way organization conduct business in the contemporary world (Parnell and Lester, 2003). One field of management that saw unprecedented level of controversy and has been characterised by diverse approaches based on exclusive elemental theories, is the field of strategy (Pretorius and Maritz, 2011). Strategy making is of equivalent importance as that of eventual strategy. The build of strategy making has been explained in existing literatures done in this field and thereafter has been practically explored in accordance with feedbacks gathered from the industry (Wooldridge and Floyd, 1994). This research caters to do the same. Strategy making has two seemingly opposing views as is evident from existing literatures (Baum and Wally, 2003). One view stresses about a more formal approach taken towards strategy making and on the other hand another view stresses about an adaptive approach where strategies are made according to circumstances and situations that prevails within organizations (Maritz, 2009). These circumstances arise because of certain factors which also in some way influence the decision making approach taken by top level officials in SMEs (Parnell, 2000). It is this area that the researcher will be striving to explain throughout the research. 2. Contribution of the Study This research does not question the essence of strategy. Given the fact that theories related to strategy must be in constant conversation with actions to stay significant and relevant, the researcher is of the opinion that investigation related to strategy must focus on the reality of strategy that is being implemented. This is where the relevance of this research lies. Till date the researches has been done in the field of strategy, majority of them catered to explain different aspects and dimensions of strategies and how those strategies have an impact on organizational performance. The researches more often than not took a quantitative approach measuring the organizational performance after a certain strategy is implemented. This helped the research scholars to explain the efficacy of those strategies. However, on the contrary this research is taking a completely different approach. The researcher in this study will be focusing on the factors that influence top level officials to make strategies and the approaches that they adopt towards strategic decision making. In addition the researches which have been done in this filed have been conducted on the basis of data gathered from corporations. However, this research will provide the readers with a different point of view as the sample will mainly include owners/managers of SMEs based in UK. 3. Research questions What are the main steps adopted by SMEs based in UK in their strategic decision making process? What are the major characteristics of such a process? Which factors influence the approach taken towards strategic decision making? 4. Literature Review 4.1. Overview of strategic management approach The researches related to strategic management approach can be broadly categorized into two categories: strategy content and strategy process (Rajagopalan, Rasheed and Datta, 1993). The content investigations have focussed on several strategic issues such on both business and corporate levels including diversification, portfolio management, strategy matrix, resource based view, strategic positions and core competence (Prahalad and Hamel, 1990). Unlike researches related to strategy content, the area of strategy process has received relatively lesser attention (Hutzshenreuter and Kleindienst, 2006). This is where this research particularly fits in. The research paper will involve a thorough analysis of the ways adopted by firms in order to implement strategic changes as make strategic decisions. 4.2. Factors influencing strategic decision making in firms Several factors have been witnessed to have significant influence in strategic decision making in firms. According to Rajagopalan, Rasheed and Datta (1993) the factors can be organizational, environmental and decision-specific. The environmental factors encompass favourability/hostility, stability/dynamics and complexity (Baum and Wally, 2003). Organizational factors that have been identified to have significant influence in the organizational decision making process are centralisation, politicization, ownership and size and role of top management (Papadakis and Barwise, 2002). Various other studies have focused on the decision specific factors such as rationality, level and duration of political activities, participation that have considerable influence on the decision making process of organization (Bourgeois and Eisenhardt, 1988). In such a context, this research paper will involve a thorough analysis of key factors that influence an organization’s strategic decision making with the underlying objective of comparing those factors with the ones listed in the empirical literatures. 4.3. Strategic decision making in SMEs An exhaustive search of literatures has resulted in collection of vey few researches done in the field of strategic decision making. This was anticipated as this field of research is still considered to be relatively unexplored. A study conducted by Jocumsen (2002) investigated 32 Australian small businesses and analysed 46 strategic marketing decisions implemented by the firm. The author revealed that decision diagnosis, searching rotes and designing of routes are loosely defined and are conduced iteratively and non-sequentially. Alongside that the boundaries between these steps overlap each other and are blurred. Thus the author was able to conclude that lower level of technical rationality exists in the strategic decision making process in SMEs. In addition the strategic decision making was mostly conducted by the family members of the SME owners/managers. The use of external networks in the strategic decision making process was restricted to only governments, accountants and bankers. This suggests a low level of participation that exists in the strategic decision making process of SMEs. Thus, this study will primarily analyse various attributes of strategic decision making in SMEs thereby explaining the factors that influence the entire process of strategic decision making. The study will also analyse the strategic decision process employed by SMEs based in the UK from the perspective of the owners/managers of the SME’s. 5. Research Philosophy Provided the fact that the study involves an in-depth analysis of qualitative data collected through personal interviews conducted with owners/managers of SMEs based in the UK, interpretive research philosophy has been deemed appropriate. Interpretive philosophy has been considered apt for this research because it enables the researcher to determine the reality by subjective explanation of and interruption in the reality (Mukherji and Albon, 2009). Since this research involves a thorough investigation of general perception of human being regarding a specific issue that is why interpretive philosophy will be used (Somekh and Lewin, 2004). In addition, the main issue that is being discussed in this research is micro-sociological in nature. The investigation of basic intentions behind a person’s behaviour can be cited as an example of an issue that is micro-sociological in nature and this necessitates the implementation of interpretive philosophy (Spradley, 1979). Interpretive philosophy mainly involves focus group interview, personal interview, questionnaire surveys, participant observation action research and appraisal of individual behaviour (Plummer, 1983). 5.1. Research Approach Inductive approach has been deemed appropriate for the purpose of conducting this research in an appropriate manner. The underlying reason behind the implementation of inductive approach is that this research initially explores a generalized issue and then attention is directed towards a specific aspect of the research issue (Blaxter, Hughes and Tight, 2006). In addition, adoption of the inductive approach will allow the researcher to translate outcomes into detailed conclusion (Saunders, Lewis and Thornhill, 2009). The primary requirement of this research is to observe, analyse and interpret the factors the strategic decision making process of owners/mangers in SMEs. Thereafter the researcher will be able to develop a tentative hypothesis and finally draw a conclusion. The facts that have been mentioned in this section provide justification for the implementation of inductive research approach. 6. Research Methods 6.1. Data collection Data collection is one of the most essential activities in a research study. It plays a significant role in maintaining the appropriateness and reliability of the research. Data will be primarily extracted from both secondary as well as primary sources. Primary data will be extracted directly on field through personal interviews whereas secondary data will be extracted from multiple data sources such as books, journal articles, online databases, magazines, newspapers and other authentic websites. 6.2. Interview The researcher will be conducting semi structured interviews with 20 owners/managers who are mainly responsible for making all the strategic decisions in SMEs based in UK. This method will enable the researcher to extract data from reliable sources and gain valuable insight about the research problem that is being addressed. Detailed discussion with the top level officials will enable the researcher to conduct an in-depth analysis. 6.3. Ethical considerations Participants will be informed about purpose and objective of the researcher prior to conducting the research. The researcher will be maintaining the confidentiality norm by not disclosing the name of the company as well as that of the participants. The researcher will be following the guidelines stated by the Human Ethics Committee while conducting the interview. 6.4. Validity and reliability In order to ensure the validity and reliability of this research, secondary data will be extracted from authentic sources and their validity will be tested by comparing the theories opted from other reliable sources. Alongside that given the fact that primary data will be gathered through personal interviews that itself will guarantee the reliability of the research. However to ensure the same, people will the appropriate credentials will be interviewed. 7. Timeline Reference List Baum, J.R. and Wally, S., 2003. Strategic decision speed and firm performance. Strategic Management Journal, 24, pp. 1107-1129. Blaxter, L., Hughes, C. and Tight, M., 2006. How to Research. 3rd ed. New York: McGraw-Hill International. Bourgeois, L.J. and Eisenhardt, K.M., 1988. Strategic decision processes in high velocity environments: four cases in the microcomputer industry. Management Science, 34(7), pp. 816-834. Harrington, R.J., Lemak, D.J., Reed, R. and Kendall, K.W., 2004. A question of fit: the links among environment, strategy formulation, and performance. Journal of Business and Management, 10(1), pp. 15-38. Hutzshenreuter, T. and Kleindienst, I., 2006. Strategy-process research: what have we learnt and what is still to be explored. Journal of Management, 32(5), pp. 673-720. Jocumsen, G., 2002. How do small business managers make strategic marketing decisions? European Journal of Marketing, 38(5/6), pp. 659-674. Maritz, R., 2009. Strategy-making approaches in South African organizations. 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