The Mediating Effects of Entrepreneurial Orientation Between Procedural Rationality and Strategic Decision-making Effectiveness

Abstract

Researchers have shown interest in theory of organizational information processing and the resource-based theory, as they can both serve to provide competitive advantages for companies. Earlier studies have indicated that procedural rationality is used by firms to increase the demand for information processing when making effective strategic decisions. However, there is limited understanding of the mediating effects of entrepreneurial orientation as an intangible resource for organizations between procedural rationality and strategic decision-making effectiveness in the available studies in the literature. Thus, this study sheds light on the relationship between procedural rationality in strategic decision-making from organizations and their strategic decision-making effectiveness, taking into consideration the mediating effects of entrepreneurial orientation as an intangible resource for organizations. The research model was tested using a structural equation modelling design based on survey data from 162 companies that work under the umbrella of the Saudi financial sector, collated and analysed by software (SPSS and SmartPLS), the research found that procedural rationality in strategic decision-making within organizations positively affected their strategic decision-making effectiveness. Likewise, the research revealed that procedural rationality in strategic decision-making increased the level of entrepreneurial orientation. Moreover, the research findings showed that the high level of entrepreneurial orientation within organizations positively impacted their strategic decision-making effectiveness. These findings enrich the fields of strategic decision-making and procedural rationality through entrepreneurial orientation within organizations, this relationship should synchronize in function focusing on relevant information, data analytics, and strategic approach process. In light of this, this study brings scientific evidence from the perspective of financial companies within Saudi Arabia.