Strategy and capital budgeting techniques: the moderating role of entrepreneurial structure

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Abstract

This study explores how Miles and Snow's (1978) typology of strategy relates to a firm's choice of capital budgeting techniques (CBT) when the firm operates in a competitive market. Furthermore, it explores how this relationship is contingent on entrepreneurial structure. The study is based on data from 62 small and medium-sized enterprises (SMEs) operating on First North. The empirical data was collected using a survey and secondary data from annual reports and analysed with content analysis. The results show that an analyser strategy is positively related to the choice of sophisticated CBT, and a defender strategy is positively related to the choice of non-sophisticated CBT. Moreover, entrepreneurial structure positively moderates the relationship between prospector strategy and the choice of non-sophisticated CBT. The study also provides practical insights on how to align strategy, CBT, and structure among SMEs operating on competitive markets.

Original languageEnglish
Pages (from-to)48-70
Number of pages22
JournalInternational Journal of Managerial and Financial Accounting
Volume12
Issue number1
DOIs
Publication statusPublished - 2020

Swedish Standard Keywords

  • Economics and Business (502)

Keywords

  • CBT
  • capital budgeting techniques
  • content analysis
  • entrepreneurial structure
  • organisational structure
  • strategic planning tools
  • strategy

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