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The purpose of this paper is to explore how organizational climate impacts the speed of strategic change (SSC) for firms in transitional economies and whether if the effects were contingent on internal control mechanisms.

A theoretical model including five constructs is developed. The questionnaire survey is deployed to scale main constructs, including organizational climate, such as open communication and hierarchical bureaucracy, internal controls such as strategic and financial control, and SSC. The moderation regression method in five steps is employed to test all hypotheses using the survey data from the 120 sampled Chinese firms.

The findings show that open communication has a positive effect on SCC, whereas hierarchical bureaucracy has a negative effect on SSC. Furthermore, strategic control positively moderates the relationship between open communication and SSC but negatively moderates the relationship between hierarchical bureaucracy and SSC; meanwhile, financial control negatively moderates the relationship between open communication and SSC but positively moderates the relationship between hierarchical bureaucracy and SSC.

This research integrates organizational climate and internal control mechanisms into the framework of strategic change to investigate how firms achieve fast strategic change through aligning organizational climate with proper organizational control mechanisms. The findings advance the authors’ understanding of the organizational climate, internal controls, and strategic change literature, and offer valuable managerial insights for managers in situations when strategic change is of central importance in the transitional economies.

This paper seeks to explore how aspects of pre‐decision control mechanisms impact managerial decision‐making behaviour with regard to strategic investment projects.

This study adopted a mixed‐method research approach. Research evidence was collected using a questionnaire survey of 320 large UK companies and eight semi‐structured follow‐up interviews with financial directors who responded to the questionnaire.

The study offers insights into the use and impact of pre‐decision control mechanisms such as: organizational strategy and operating objectives; expectations regarding the involvement of organizational personnel; formal approval procedures; financial evaluation requirements; pre‐determined hurdle rates; established authorization levels and the influence of managerial intuition.

This study adds to prior understandings of capital investment practice by employing mixed methods to examine how pre‐decision controls shape the outcomes of strategic investment decision making. Pre‐decision controls have received little attention within the prior literature, which focuses primarily on project financial analysis.

It is well recognized that Mergers and Acquisitions (M&A) are important and popular ways of achieving corporate growth. Motivations include a search for monopolistic power and growth, desire to respond to a low level of profitability in the existing business portfolio, improvement of market position, filling out product line, protection of supply or distribution, gain of control, acquire what is available, to internationalize, or to reduce risk. However, M&A strategies are not risk-free, and arguably one of the CEOs greatest challenges. The last several decades have witnessed a surge of interest in top executives. The strategic choice ranks as one of the dominant roles and responsibilities of senior management. Executives’ experiences, values, and personalities greatly influence their interpretations of the situations they face and, in turn, affect their choices (Hambrick, 2007).

Over the past few years, sad stories of M&A failures have been reported and that can be attributed to poor synergy, bad timing, cultural issues, hubris, complexity, and ineffective strategic control mechanisms including poor due diligence process. M&A strategies require a series of choices made over time by actors at various organizational levels; therefore, it cannot be seen as an independent activity but as an integral part of the formal rational procedure as well as the cognitive process. Strategic cognition plays a very important role in the diagnosis of strategic issues and the formulation of problems (Schwenk, 1988). Pre-decision control mechanisms permeate all levels of strategic investments process to ensure that the investment decision aligns with organizational strategy (Alkaraan & Northcott, 2007). Due diligence processes are comprehensive appraisal of strategic investment opportunities undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential. Due diligence processes refer to verification, investigation, or audit of a potential deal or investment opportunity to confirm all facts, financial information, and to verify anything else that was brought up during an M&A deal or investment process.

This chapter explores the influence of due diligence processes on strategic investment decision-making (SIDM) processes. Further, it provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Furthermore, the chapter adopts a strategic perspective on M&A, particular attention has been paid to the influence of due diligence and other related strategic control mechanisms on SIDM processes.

Corporate controls are mechanisms that corporations use to ensure that the processes and/or outcomes of their business units meet corporate expectations. Challenges in measurement of corporate controls have led many researchers to operationalize them as part of the more ambiguous corporate effects construct, instead of addressing them separately. The purpose of this paper is to examine the significance of “fit” between corporate control mechanisms and business unit strategy in performance of business units.

The authors use ordinary least squares regression analysis on data collected between 2010 and 2012 from surveys from managers of 142 Iranian corporations and 1,822 of their subsidiaries. The authors also use financial and market data collected by an IDRO division and accessed through partnership in a joint project.

The authors found that while the fit between business unit strategy and corporate controls has a significant effect on business unit financial performance, it does not have a similar effect on market performance. The findings demonstrate that when business unit managers perceive that they are subject to a balance of strategic and financial controls with a slightly greater emphasis on strategic controls, then business units have higher financial and market performance, although the difference in financial performance is not significant.

The authors find that the misfit between corporate controls and business strategies in such cases could negatively affect the performance of the business unit. However, this research also contributes to a better understanding of the importance of strategic controls to the successful performance of business units. The findings show that while the fit between controls and strategy is most critical for achieving financial performance in business units that pursue product leadership, strategic controls play a more prominent role than financial controls in achieving higher financial or market share performance for all business units.

The findings of the propositions in this research would discourage corporations with tight financial control from engaging in acquisition of businesses considered to be product leaders in their relative product markets.

Past research focusing on the fit between corporate-level factors and business-level factors and their role on business performance are largely limited to conceptual work. The limited empirical studies completed in the past generally reduce control mechanisms to lack or absence of autonomy. This shortcoming has been mainly due to difficulties in measurement of control mechanisms. The empirical study overcomes these barriers and in doing so, reveals surprising findings related to the effectiveness of different control mechanisms.

This paper aims to examine the adoption of conventional and emergent analysis techniques in Strategic Investment Decision-Making (SIDM) practices in large UK manufacturing companies. It aims to update the current knowledge on SIDM practices in large manufacturing companies. The research question underlying this study: Are recently developed analysis techniques (i.e. those that aim to integrate strategic and financial analyses) being used to evaluate strategic investment projects?

The research evidence underpinning this study was made up of primary and secondary data, quantitative and qualitative. Firstly, a survey consisting of a mailed formal standard questionnaire was conducted where each respondent is required to answer the same questions based on the same system of coded responses. Secondly, qualitative data was collected using the annual reports of selected companies. Disclosures were used as supplementary source of information using the explanatory notes and parenthetical disclosures accompanying companies’ financial reporting. Sources for these disclosures included management discussions, analyses of company strategy and risk and forward-looking reports regarding future performance and growth opportunities (such as mergers and acquisitions activities). Accordingly, companies’ disclosures were used in this study as an alternative method to semi-structured interviews to collect qualitative data. More recently, companies such as Rio Tinto have prepared strategic annual reports for 2017 against the UK Corporate Governance Code (version 2016).

The choice and use of financial analysis techniques and risk analysis techniques depend on the type of project being evaluated. Decision makers in large UK companies do not appear to use emergent analysis techniques widely. Pre-decision control mechanisms have significant influence on SIDM practices. This includes the changes of internal and external contextual factors, including organisational culture, organisational strategies, financial consideration, comprising formal approval governance mechanisms, regulatory and other compliance policies interact with companies’ internal control systems. Companies incorporate non-financial factors alongside quantitative analysis of strategic investments opportunities. Energy efficiency and carbon reduction are key imperatives of companies’ environmental management. These factors viewed by decision makers as significant factors relevant for compliance with legislation as well as maintaining companies’ legitimacy issues, sustainable business, experience with new technology and improved company image.

High risk, ambiguity and complexity are key characteristics embedded in SIDM processes. Macroeconomic issues remain crucial factors in scanning and screening investment opportunities, as reported by this study. The early stage of SIDM processes requires modelling under macroeconomic scenarios and assumptions of both internal and external parameters. Key assumptions include: projections of economic growth; commodity prices and exchange rates, introduction of technological and productivity advancements; cost and supply parameters for major inputs. SIDM practices rooted on comprehensive knowledge and experience of the industry and markets to draw subjective judgements about the riskiness of prospective projects, but these are rarely formalized into their SIDM processes. Findings of this study, however, remain within the context of UK companies. This study has its own limitations due to its time, location, respondents and sample selection, the size and the sector of the selected companies and questions addressed. Findings of this study raise a call for future research to examine SIDM processes in different settings to explore the relative impact of various organisational control mechanisms on SIDM practices. Also, to examine the influence of contextual factors (such as national culture, political, legal and social factors) on organisational control mechanisms. SIDM practices and processes have received significant attention from researchers, yet there is a lack of evidence in the literature about how companies approach strategic decision-making regarding divestments of some of their strategic investments. This type of strategic decision-making is not less important than other types of SIDM practices.

SIDM practices reflect the art and science of steering and controlling organisational resources to achieve a desired strategy. To understand the factors that shape SIDM practices and align them to organisational strategy, more attention is required to the choice and design of pre-decision controls and to the important role of strategic management accounting tools over the more traditional financial analysis techniques that have formed the focus of much prior empirical research.

Key environmental issues viewed by decision makers as significant factors relevant for compliance with legislation as well as maintaining companies’ legitimacy issues and company image.

Despite their perceived importance in this study, quantitative accounting controls may fail to connect with the kind of investment decision-making required to bring strategic success. Indeed, it has been widely noted that financial evaluation techniques are inadequate for assessing strategic investment proposals; they can only function as a guideline, as SIDM practices involve so many uncertainties, risks and judgements. A key insight from this study is that the achievement of integration between the firm’s strategic investment projects and the overall organizational strategy forms a critical pre-decision control on managerial behaviour at an early stage in SIDM practices. As many strategic investment decisions are one-off, non-repeatable decisions, the information needed to support their evaluation is likely to be similarly unique. Sound SIDM practices require the support of a large amount of varied information, a significant proportion of which is collected and analysed prior to potential capital investment projects being considered, such as information related to strategic goal setting, risk-adjusted hurdle rates and the design of appropriate organisational decision hierarchies.

Drawing on the literature on corporate diversification, the purpose of this paper is to shed light onto the influence of geographic dispersion on the effectiveness of control mechanisms in related diversified corporations. This research contends that control mechanisms implemented by corporations and the extent of geographic diversification play a role in the synergies expected from related diversification being realized.

This study uses OLS regression to analyze data collected through surveys from managers of 193 Iranian corporations and their 2,704 subsidiaries to examine the relationship between relatedness, corporate performance, geographic dispersion, and emphasis of strategic controls.

The author finds that a triple interaction effect between corporate strategy (diversification approach), controls mechanisms, and the extent of geographic diversification influences the overall performance of corporations. Findings of this research suggest that the positive effects of strategic controls in related diversified corporations are most when there is less geographic dispersion and will attenuate as corporations become more geographically disperse.

The findings of this research, have contributed to the extant literature in several ways. First, the findings further establish the superiority of related diversification to unrelated diversification in achieving economic performance in corporations. The findings reveal that, ceteris paribus, the more relatedness between activities of subsidiaries in corporations exists, higher performance can be expected at the corporate level. Second, the findings show once more that to achieve the higher performance that results from synergies in related diversified corporations, emphasis of strategic controls play a crucial and important role. Third, the author find that although the emphasis of strategic controls in essential to realizing the potentials in related diversified corporations, greater geographic dispersion attenuates the positive effects expected from stricter enforcement of strategic control mechanisms.

An important consequence of findings of this research is that managers should be more aware of the implications of selecting the geographic location of the subsidiaries that they either acquire or establish. While the literature focusing on corporate diversification has mainly focused on the differences between related and unrelated diversification, this paper brings a new factor into light. Therefore, the findings of this research provide the author with a better understanding of the factors that define success or failure in achieving financial objectives of corporations.

There has been very little done to investigate the factors that influence effectiveness of strategic controls in related diversified corporation. Much of this shortcoming has resulted due to difficulties in measurement of strategic controls their operationalization in empirical studies. This study has taken a step to that direction and therefore, provides a more coherent and clear picture of the factors that influence the overall performance in corporations.

This paper aims to investigate how a Chinese firm’s strategic orientation impact its knowledge acquisition from its foreign alliance partners through governance mechanisms used in the Sino-foreign alliance partnership.

This research first proposes an integrated model which links a firm’s strategic orientations (entrepreneurial and market orientations), governance mechanism (contract and trust controls), and its knowledge acquisition together. Then, this research collected data from 198 Chinese firms involved in Sino-foreign alliances to test the conceptual model.

For entrepreneurial-oriented alliance firms, a moderate level of contract and a high level of trust are the most efficient uses of control mechanisms for Chinese firms’ knowledge acquisition. In comparison, for market-oriented alliance firms, both contract and trust control mechanisms should be used at the moderate level to achieve maximum knowledge acquisition from their foreign partners.

By introducing a new antecedent for the choice of control mechanisms in the context of Sino-foreign alliance relationships, this study empirically finds a non-linear relationship between contract control and knowledge acquisition and confirms the significant role of trust in facilitating knowledge acquisition between alliance partners from the perspective of alliance firms in emerging markets.

This study brings together cognitive and organizational aspects of the strategic investment decision-making process. It focuses on the early stages of strategic investment decision-making. This paper aims to augment the limitations of previous survey-based research through an archival case study that describes pre-decision screening in detail.

This paper draws on archival data covering an investment decision undertaken by a large brewing company. The data cover a period of about six years, focusing on the decision to invest in West Africa. A rational/intuitive orientation model of the process is used as a framework to help analyze the archival evidence.

Strategic investment decisions are non-programmed, complex and uncertain. For some companies (e.g. those with a strategic focus on new expansions), certain non-programmed decisions may become semi-programmed in the course of time by applying knowledge learned from having successfully handled non-programmed decision situations in the past. However, other companies without such a focus may not be able to programme part of their strategic decisions. Pre-decision control mechanisms constitute a form of strategic control by detecting potential problem areas in the investment option before formal approval.

Given the narrow scope of this paper – a single case study – the findings are used for theorization rather than offering generalizable results. There is a need for unified models to enrich our understanding of the influence that contextual factors have on strategic investment decision-making. Effective strategic pre-decision control mechanisms that maintain a good balance between rational and intuitive approaches are matters that remain open for debate in future research.

Research on organizational and cognitive aspects of the strategic investment decision-making process is inherently practical. To achieve successful strategic investment decisions, it is essential to devote more attention to the choice and design of strategic control mechanisms.

The framework of this study can help practitioners to gauge the strengths and weaknesses of their decision-making practices. It focuses on three aspects that are relatively absent in the literature: the strategic problem, the strategic choice and the chronological relations between the five stages of the strategic investment decision-making process. The use of historical data is suited to providing illustrations of intuitive/heuristic-based practices that would otherwise be hard to capture.

Drawing on the literature on international joint ventures (IJVs) and strategic international human resource management, the paper proposes a model for strategic staffing of IJVs based on an integrative (strategic intent and negotiations) perspective. Building on the results of previous studies that indicate, directly or indirectly, the importance of control in staffing, the paper proposes that strategic control may be a critical driver that underpins IJV staffing. In conclusion, the paper outlines an agenda for future research that can test the model and explore possible implications.