Strategic investment decision making: the influence of pre-decision control mechanisms

Purpose – This paper seeks to explore how aspects of pre-decision control mechanisms impact managerial decision-making behaviour with regard to strategic investment projects. Design/methodology/approach – 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. Findings – 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. Originality/value – 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.