The Impact Of Strategy Theories And Leadership Profiles On Strategic Decision Making In Organizations

Strategy Theories and Strategic Decision Making

Strategic management is the process of formulating and implementing plans and initiatives to achieve the objectives of an organization in the most cost effective manner based on the consideration of the internal and external factors. Strategic behaviour refers to the decisions made by the management of an organization and how they influence both the internal and external business environment. Strategic decision making is the process of decision making by management of organizations based on the consideration of all factors at play within the business environment and aligning those decisions to the objective of the organization. 

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The competition in the business world is becoming stiffer each day. As different organisations seek to gain a competitive edge and increase profitability, strategy formulation has become one of the most important aspects of organizational culture . Strategic management is influenced by two factors. The first factor is strategic decision making, which is the application of the relevant theories so as to leverage an organization’s competitive advantage over competitors. Secondly, the leadership capability is vital as it informs the nature and extent of strategic decision making. This proposal, therefore, seeks to assess the impact of perspectives of strategy on real-world strategies adopted by firms. The research will focus on the process of strategy formulation and how the three identified theories can be incorporated into strategic decision making. The intended research will also explore the relationship between strategic leadership and the cognitive abilities of the leaders. It is the leaders in an organization who formulate strategic decisions which makes their cognitive abilities an important variable in the research.

The industry-based view theory focuses on the business environment within the industry. This is an evaluation of the external factors which are at play within the industry in which an organization is carrying out its business. This theory involves the analysis of the existing conditions within the business environment and how they can be manipulated to the advantage of an organization. The aim of application of this theory is to gain a competitive advantage and to create a unique product or service that will not be exposed to competition in the industry. The resource-based view theory, on the other hand, focuses on the internal capabilities and strengths that an organisation can exploit so at to maintain its dominant opposition in the market or create a new market niche. Resource-based view leads to a competitive advantage if an organization possesses resources that are non-substitutable, non-imitable and rare and valuable.

Leadership Profiles and Strategic Decision Making

The third theory is the institutional based view which is a supplement to the first two theories. This theory looks into the institutional culture of an organization vis a vis the overall culture of the industry. The differences in business cultures can then be exploited to further expand an organization’s competitive advantage by exploiting the beneficial institutional business cultures that are superior to the overall industry business culture. In the process of strategy formulation within an international business environment, the application of a combination of these theories can be advantageous by enabling a business to efficiently allocate its resources, align its marketing strategy to the demand as well as align its internal management policy and institutional culture to the industry culture. With respect to the theories in strategic decision making, the research will be based on a broad context, and will explore a wide range of published journals and published data through quantitative study. As well, the research will analyse the application of the above theories to a range of firms and organizations from different countries globally. Based on the above extensive study, the research will be based on the following hypotheses:

the application of resource-based theory in strategic decision making can improve an organization’s internal efficiencies both in terms of resource allocation and limitation of wastage organizations that apply the industry-based view have better marketing strategies The institution-based view theory can be used to gauge the effectiveness of the leadership skills within an organization.

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The research will also be based on an additional integrative hypothesis A combination of the three theories is the most effective in a global business environment.

A leader’s profile is also a determinant of the nature of strategic decisions that are made in an organization. The individual qualities, traits and competencies all inform the nature of decisions that business leaders arrive at, with the influence of the prevailing business environment. The decisions that business leaders arrive at are influenced by factors such as their qualification, field of studies, age and gender. Others studies have also discovered a correlation between strategic decision making and the behavioral and psychological traits of a leader. The link between these various factors and the actual decision-making ability of a leader is the cognition of a leader. For instance, the ability of a leader to relate and use their unique qualifications and psychological traits to formulate practical business strategies is dependent on the levels of cognitive skills that they possess. For this reason, this research will also explore the link between the leader profiles and strategy formulation. In this respect, the hypothesis of the research will be that the individual leadership capabilities of the management of an organization have an effect on the overall business culture through the adoption of relevant strategic decision-making theories.

Research Questions

The research will address the following research questions:

  1. How do companies make strategic decisions?
  2. To what extent are the real-world strategies adopted by firms associated with/supported by the three major perspectives (resources, institution and industry) of strategy.
  3. Whether/ to what extent do the leader specific characteristics (qualification, the field of studies, age, gender, behavioral or psychological characteristics) influence their strategic decision-making abilities.
  4. What is the relationship between the specific psychological and behavioral characteristics and cognitive behavior?
  5. What is the impact of a leader’s cognitive behavior on strategic decision making?

The findings of this research will contribute to a better understanding of how the three mentioned theories affects the decision-making processes within organizations, especially in businesses that operate globally. The scope of the theories will be advanced, as well as the investigation of whether other additional factors influencing the decision-making abilities of leaders could be developed. This will enable companies and policymakers to come up with practical variables that can be used in the recruitment of leaders in industries where strategy is vital such as the technology-driven organizations where the business strategy should be dynamic and market-oriented. Strategy determines company performance, competitiveness and sustainability which are all dependent on the ability of the management to analyse and understand the business environment, the internal environment as well as the prevailing business culture globally. The objective in this respect is therefore to provide a link between leadership profiles and how they can be incorporated in the strategic decision-making process. The cognitive behaviour of a leader is significant to an organization since the decisions made by the top management influence the success and profitability. Better cognitive behaviours results into better strategic decision making which will benefit all stakeholders in an organization.

A quantitative approach will be used in the sampling and gathering of data and information. This will be conducted through the use of questionnaires and surveys of a sample that meets the set criteria. Computational techniques will then be used to manipulate the existing statistical data. A thorough content analysis of a broad range of published materials with relevant information will be carried out to correlate the findings of the existing research to the hypothesis that have been formulated. A deductive approach will be applied in the interpretation and analysis of the data and information so as to ensure that the correlation is effective and addresses the research questions. The research questions will be related to each specific hypothesis that it addresses so as to come up with findings and a conclusion that is based on evidence and credible data interpretation techniques.


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