Deciding Fast: Examining the Relationship between Strategic Decision Speed and Decision Quality across Multiple Environmental Contexts

Abstract

Rapid innovation, shortened product life cycles and fierce competition place great pressures on top managers to make fast strategic decisions. However, a key question in strategic decision‐making research is whether decision speed helps or harms decision quality, and there is a shortage of theory and evidence concerning the consequences of decision speed across different environmental contexts. We develop new theory by considering the effects of decision speed on decision quality under conditions of environmental munificence, under conditions of dynamism, and under the joint conditions of munificence and dynamism. We test our theory through analysis of multi‐informant survey data drawn from top management teams and secondary databases, in 117 UK firms. Our findings demonstrate that munificence is the central generative mechanism which moderates the relationship between decision speed and decision quality, and markedly alters the previously theorized positive effects of decision speed in dynamic contexts.