Academic journal article Contemporary Management Research

Preferences in Business and Corporate Strategies: The Role of Personal Values

Academic journal article Contemporary Management Research

Preferences in Business and Corporate Strategies: The Role of Personal Values

Article excerpt

INTRODUCTION

Strategic decisions are vital in shaping the success of a firm (Eisenhardt & Zbaracki, 1992; Hitt, Keats, & DeMarie, 1998; Shivakumar, 2014). Decision makers have a strong influence on the strategic direction of the firm and make strategic choices regarding the direction of their corporations (Child, 1972). The term strategic choice 'is intended to be a fairly comprehensive term to include choices made formally and informally, indecision as well as decision, major administrative choices... as well as the domain and competitive choices more generally associated with the term strategy' (Hambrick & Mason, 1984: 195). In other words, strategic choice involves the options that a decision maker faces concerning the type of strategies to be followed.

Despite the fact that managers make the final choices regarding a firm, decision making is a complex issue influenced by various forces in and outside the firm (Elbanna & Child, 2007; Rahman & De Feis, 2009). The state of the competition in the industry, managers' personal characteristics such as education, organizational characteristics, psychological factors, and ownership type can all have an impact on strategic decision making (see for example Hitt & Tyler, 1991; Papadakis, Lioukas, & Chambers, 1998; Lee, Newman, & Price, 1999; Ashill & Jobber, 2013). For the purposes of this paper, the focus will be placed on personal characteristics. According to the theory by Hambrick and Mason (1984) on managerial characteristics, two major groups of factors affect strategic choices: first, psychological, which includes the cognitive base, values, and personality, and second, observable characteristics. The latter includes factors such as age, education, and socio-economic roots. Whereas most of the studies have centered on the influence of observable characteristics on strategic choices (Bantel & Jackson, 1989; Brouthers, Brouthers, & Werner, 2000; Carpenter, Geletkanycz, & Sanders, 2004), research on psychological dimensions is largely lacking (Lawrence, 1997; Peterson, Smith, & Martorana, 2003).

Apart from a limited number of studies which explored the role of personality in strategic choices and behavior (e.g. Miller, Kets de Vries, & Toulouse, 1982; Nadkarni & Herrmann, 2010; Chatterjee & Hambrick, 2007; Gupta & Govindarajan, 1984; Peterson et al., 2003; Nadkarni & Herrmann, 2010), much more research is needed to explore and understand the relationship between various psychological dimensions and strategic choices (Hambrick, 2007). As Nadkarni and Herrmann (2010: 1065) stated, 'prior studies have examined attributes that capture only a narrow slice of CEO personality (e.g., locus of control) or that, despite intuitive appeal, lack strong psychological and methodological grounding' (e.g., CEO hubris) (Hiller & Hambrick, 2005: 298). However, to the author's knowledge, the relationship between personal values and both business and corporate strategies has not been explicitly studied in a published empirical paper. However, one exception is Kotey and Meredith (1997), who studied the relationship between values and business strategy in small businesses. However, their paper departs from this study in various ways, including the fact that the mentioned paper is exclusively concerned with the small-business domain and is more focused on the topic of entrepreneurial values. In addition, the conceptualization of strategy is different in that it is limited to proactive and reactive business strategies, while this research deals more with generic business strategies and examines both business and corporate strategies from an exploratory angle. Regardless of these differences, this research promises to contribute to the previous research that can help us further understand the link between personal values and strategies. As Finkelstein, Hambrick, and Cannella (2009) argued previously, little empirical research has been conducted on how personal values are converted into managerial action. …

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