New Article Forthcoming in the Academy of Management Journal:
Corporate Control and the Speed of SBU-Level Decision Making
Maximilian Kownatzki*, Jorge Walter**, Steven W. Floyd***, & Christoph Lechner****
* Oliver Wyman, ** The George Washington University, *** University of Massachusetts–Amherst, **** University of St. Gallen
Decision speed has long been recognized as a critical determinant of firm performance, particularly in dynamic environments. Extending prior studies, which have largely focused on firm-level decision speed in small- and medium-sized organizations, this study explores how control mechanisms set by corporate headquarters in multi-business firms influence decision speed at the strategic business unit (SBU) level. Using a multi-method approach, we first inductively derive six types of corporate control, before deductively examining their effects on SBU-level decision speed in five international multi-business organizations. Our results suggest that three corporate control types enhance decision speed (goal setting, extrinsic incentives, and decision process control), two have no effect (negative incentives and conflict resolution), and one has a negative effect (strategy imposition). By integrating results from our qualitative and quantitative analyses, we are also able to identify transparency/alignment, outcome orientation, participation, trust, and timely feedback as the key mechanisms accounting for these effects.
Keywords: Strategic decision processes; decision speed; multi-business organizations; SBUs; corporate control; executives’ mental models; multi-method field study