Strategic decision making (SDM)

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 Literature Review

This review aims to provide an overview of existing literature focused on strategic decision making and factors that influence this process. Moreover, since this research focuses on the strategic decision of implementing lean, the following literature review also provides an insight into the concept of lean and what is currently known about the lean implementation driving factors. First, an explanation is provided of what strategic decision making is; then the concepts of lean strategy and its implementation are introduced, and to finish, addresses the different factors that are said to influence strategic decision making.

Strategic decision making (SDM)

According to Shepherd and Rudd (2013), strategic decision making involves the act of making decisions that have the potential to intersect organizational functions, involve a significant financial cost, and affect the organization in the long term. As a matter of fact, strategic decision making processes can be characterized as a set of rational, comprehensive, and political characteristics; as well as a sequence of activities that imply gathering information, developing alternatives, and choosing between options. As Wilson (2014) mentions, strategic decisions are a set of choices and alternatives that significantly shape most of an organization’s actions that are not easily changed, and have the most notable impact on organizational performance. From Nutt and Wilson’s (2010) perspective, strategic decisions concern problems that are difficult to define, usually have a series of possible solutions (of which the positive ones are hard to specify), and involve risky outcomes and decision processes. Hence, strategic decision making is the process of dealing and tackling these complexities that involve varying outcomes, with the business strategy focus in mind.

 Lean as a strategy

The concept of strategy is not defined the same way in every area of business. In fact, strategy may be considered a very different topic and consist of distinct definitions and critical factors depending on the business area in question. Lean strategy significantly differs from conventional business strategy due to its difference in the way of tackling the development of capabilities. While traditional strategy can be considered to be separate from operations and organization, lean strategy revolves around the idea that they all simultaneously shape each other. It is argued that lean strategy is somewhat superior to traditional strategy due to the constant delivery of significant advantages (Ballé et al., 2017).
Lean strategy involves the combination of lean elements with the overall corporate strategy, with the objectives of continuously improving the company, boosting profitability by cost reduction, or becoming the best competitor in the market. Although some strategies may be easier to achieve than others, lean strategy is only achievable when the lean principles are at their highest potential and are focused on throughout every aspect of the organization. Therefore, in order for an effective lean strategy to develop, the company needs to have lean systems operating at every level of the organization. Hence the importance of all employees having a full understanding of the lean strategy is evident (Velaction, 2018).
Ballé et al., (2017) argue that lean strategy has the objective of using the company to create changes in the industry as a whole. The strategic decision of implementing lean aims to constantly learn, correct issues, and avoid careless solutions. Thus, lean strategy gives a better understanding of strategy in terms of determining the most suitable problems to solve, finding the least wasteful solutions, and determining the key organizational capabilities to develop.
According to Baker and Rolfes (2015), lean implementation is not as simple as a collection of perceived suitable tools which companies can choose from. Instead, they argue that lean implementation is considered to be a business strategic decision. With this in mind, it is arguable that strategic decisions are the key factor when it comes to the success of lean implementation. In his research, Bhasin (2012), further suggests a link between strategy and lean implementation by recommending a viable and appropriate change strategy which would improve the potential likelihood of securing successful lean implementations. He states that if an organization adopts the strategy of change when implementing lean, the chances of a successful implementation are higher, reflecting the direct link between lean implementation and strategy. Applying the appropriate lean strategy is of great importance since it will determine the increase or decrease in the inefficiencies of organizational operations.
However Beer et al., (2005) state that strategy is only accountable for 10 percent of the success when implementing lean, meaning that the most important aspects are within the implementation phase. According to Karim and Arif‐Uz‐Zaman (2013), incorrect application of lean strategies results in inefficiencies of an organization’s resources and reduced employee confidence in lean
strategies. Therefore, applying the appropriate strategy at the appropriate time for the right purposes is of great importance. The success of any particular management strategy normally depends upon organizational characteristics, which implies that all organizations should not or cannot implement a similar set of strategies in their particular case (Shah and Ward, 2003). From the perspective of Ballé et al., (2017), the act of implementing lean as a strategy enhances the stream of better quality products and services by determining the organizational value that matters to customers. Additionally, implementing lean involves all departments of the organization finding ways to work in a more efficient way and discovering innovative answers. In essence, lean strategy helps companies re-determine their core objectives, and understand exactly what needs to be done (Ballé et al., 2017).

 Lean implementation

The term lean has become more and more common among researchers as well as companies, who are consequently getting more involved within lean (AlManei, Salonitis and Xu, 2017). Moreover, the literature regarding implementation of lean with respect to principles, practices, and rules has the goal of understanding the success of lean, and most of it recognizes two main streams of the lean concept:
● The lean “toolbox,” which consists of the guidelines and systems designed for direct operations.
● The lean “thinking,” a business philosophy that blends into leadership, culture, and organizational thinking (Halling and Renström, 2011).
According to Yadav et al., (2017) a large amount of research has been done regarding the fundamental principles and practices of lean manufacturing, its success, and the expected outcomes of lean. Lean implementation, when seen as a part of corporate strategy, extends its effects throughout the entire organization and affects all the aspects of it to such an extent that sometimes it can be considered as a new management philosophy (AlManei, Salonitis & Xu, 2017; Liker & Ross, 2017). It may be noted that the lean implementation process can vary slightly based on the nature of an organization. As a matter of fact, the existing body of knowledge on lean implementation is diverse with respect to the application and implementation of lean tools and practices.
Previous research on lean implementation has made it evident that managers play a crucial role in the lean adoption and implementation process. According to AlManei, Salonitis & Xu (2017), the role of management and leadership are vital to a successful implementation of lean, which is why many companies assume that using the correct tools and methods will ensure a successful implementation. However, AlManei, Salonitis & Xu (2017), show that unless the top management are fully on-board and trained within lean, the implementation will not be successful.
Strategic decisions, such as implementing lean, are a big commitment for an organization. This commitment can be represented in the amount of resources dedicated; which may be either financial or employees and their capabilities. This kind of commitment brings a long change, which later on needs to be managed. Management of change involves leadership and this is one of the main reasons why the commitment of top management is vital for a successful lean implementation (Pearce, Pons & Neitzert, 2018). If top management is committed to lean, it can be transferred into leadership. Taking lean as a leadership style creates a sustainable way of managing change and implementing lean within an organization in contrast to mere implementation of methods and tools. However, “the real key to achieving lean success might not be management commitment, but rather understanding to what management should commit.” (Pearce, Pons & Neitzert, 2018)
This highlights another important aspect of the role management plays in lean implementation. As the definition of lean constantly changes, “new and unforeseen deviations or needs may be identified [such as] an increased need for leadership, coaching and dialogue. This in turn affects managers’ views on the implementation process” (Halling & Renström, 2011). Managers’ perspectives influence the whole scope of lean, which is why knowledge is another critical success factor in lean implementation. Pearce, Pons and Neitzert (2018) explain that successful lean implementation requires a manager who appreciates the system, knows the theory, is open to change, and understands variations. “Managers’ knowledge is defined here as the knowledge based on which a manager makes decisions regarding the strategic direction and development of a business. Knowledge became the wisdom needed to handle the many challenges of leading an implementation of lean” (Pearce et al., 2018).
Understanding the system and variations allows companies to tailor their own lean philosophies. AlManei, Salonitis and Xu (2017) infer that there is no single method or strategy for lean. The key for success, is for each organization to design their own lean concept and strategy. Moreover, Dombrowski and Mielke (2014) add that the importance lies within managers’ abilities to adapt the strategy to the specific needs of lean. Additionally, AlManei et al., (2017) also approach the lean implementation topic by addressing the pre-implementation phase and indicating the key drivers and main barriers for a company to introduce lean manufacturing. In their research, the main drivers for lean implementation identified are the following:
● Firstly, the financial benefits are one of the main factors influencing lean implementation. Within this driver factor, the objectives of increasing the firm’s market share, improving the marketing strategy, and decreasing production costs are determined.
● Secondly, customer focus is also said to be a main driver, arguing that firms’ desire to further listen the voice of customers and better respond to demand is reflected on the implementation of lean.
● The third driver for lean implementation according to their research, is the act of seeking a change in the business culture. With lean implementation, the managers’ goal is to further empower the people in the organization, improve teamwork, and create a multi-skilled personnel within the firm.
● The final driver identified is the will to create a knowledge-based production; which in brief involves the integration of all employees by empowerment in order to decrease waste and increase the firm’s overall value throughout the value chain.
In general, the drivers identified involve the will of managers to improve the internal performance of the company and to implement the best business practices (AlManei et al., 2017).
Further, Mwacharo (2013) also touches upon the subject of lean pre-implementation in her research. The findings support the idea that the reason why companies choose to go lean are internal. It is suggested that companies choose lean implementation based on the objective of improving productivity and enhancing the overall processes in the company. Halling and Renström (2011), reinforce this idea and argue that the reasons for lean implementation are the seeking of a higher level of competitiveness and the will to run the organization in a decentralized way whilst ensuring continuous improvements.

Factors affecting SDM

Research regarding factors affecting strategic decision making is extensive (Geletkanycz & Hambrick, 1997; Haider & Mariotti, 2016; Kauer, Prinzessin zu Waldeck & Schäffer, 2007; Matzler, Uzelac & Bauer, 2014; Papadakis et al., 1998; Phipps, 2012; Cray et al., 1988; Schneider & De Meyer, 1991; Simons & Thompson, 1998; Steptoe‐Warren, Howat & Hume, 2011) Although the approaches to the topic may vary, it is notable that all factors affecting strategic decision making that have been previously studied can be classified into three main categories: (1) individual factors, (2) organizational factors, and (3) external factors.

 Individual factors

 Managerial cognition

Steptoe‐Warren, Howat and Hume (2011) refer to managerial cognition as the ability of a manager to take care of analytic detail by using intuitive processing strategies. In essence, it is the capability of a manager to treat complicated and elaborate information, think in an analytical way, and to simultaneously combine “habits of the mind” and “active thinking”. Managerial cognition relies heavily on the way in which information is collected, sorted, processed, and evaluated. Due to the fact that individuals use different ways to manage available information, strategic choices are said to be dependent on the circumstances, objectives, and personal preferences. Managers therefore think through problems and determine possible solutions based on both the preconscious process, and a deeper detailed analysis. Managerial decision making is therefore influenced by the cognitive theory in which decision makers create meaning, and make sense of presented information, by developing mental illustrations that guide the decision. However, by visualizing the situation, the decision to be made, and the potential outcome, decision makers tend to become overloaded with information that exceeds the amount they can process, and therefore create a limited amount of strategic options (Steptoe‐Warren, Howat and Hume, 2011).
Shepherd and Rudd (2013), approach the individual cognition factor from a cognitive style aspect. They argue that cognitive style has an impact on the overall decision quality, on the number of problems addressed, and on the perceived effectiveness. This further strengthens the idea that decision makers who make use of both intuition and objective information tend to make higher quality decisions.

Individual experience and age

Steptoe‐Warren, Howat and Hume (2011), and Schneider and De Meyer (1991), argue that although decision makers can have significant information at their disposal to guide them through their strategic decisions, their choices usually reflect their personal views of strategy and its formulation, based on prior experience. This “reasoning by analogy” concept means that decision makers recall similar conditions and apply what they learned in that past experience to the present situation and decision. According to the authors, the fact that decision making is influenced by an individual’s past experience, can result in biased decisions in which some factors are ignored since they are not seen as important (with reference to the past situation experienced, and the decisions made then). As Simons and Thompson (1998) argue, managers will consider fewer options the more a current situation resembles one encountered previously.
What Steptoe‐Warren, Howat and Hume (2011) add to the influence of experience, is that it does not only involve situations that decision makers have previously faced, but also the overall industrial experience and the experience gathered through training and development. For instance, the managers’ ability to adapt and meet the specific demands of the marketplace. Schneider and De Mayer’s (1991) contribute to this, by creating a link between managerial experience and education, arguing that managers with better education pursue strategic decisions that are more innovative, and are more risk-taking in comparison to managers that lack formal education. Further Shepherd and Rudd (2013) state that educational level affects the SDM process since highly educated managers seem to perform better at generating and evaluating alternatives, as well as at integrating the decisions taken into the firm’s overall strategy. Simons and Thompson (1998), reinforce this argument by stating that a manager’s age is a variable that affects managerial decisions when it comes to risk-taking and tolerance for ambiguity.
With reference to the individual experience factor, it is evident that age is considered as an important aspect when looking at how managers make decisions. It is argued that an elderly managers have the tendency to engage in more risk-taking behavior (Schneider & De Meyer, 1991). However, Hambrick and Mason (1984) imply that managerial age is negatively correlated with the capacity to integrate information when making a strategic decision and suggest that young managers have a higher tendency to embrace uncertainty, seek the unprecedented, and take more risks; whilst elderly managers have more of a conservative approach to decision making. Their findings support the statements that younger managers tend to be more open to change and risky strategies, and experience greater growth and variability.

1. Introduction 
1.1 Background
1.2 Problem formulation
1.3 Purpose
1.4 Research questions
1.5 Delimitations
2. Literature Review 
2.1 Strategic decision making (SDM)
2.2 Lean as a strategy
2.3 Lean implementation
2.4 Factors affecting SDM
3. Theoretical framework 
4. Methodology 
4.1. Research method
4.2 Research Design
4.3 Multiple-Case study
4.4 Systematic literature review and literature search
4.5 Interviews
4.6 Participants
4.7 Procedure and instruments
4.8 Data analysis
4.9 Representativeness, validity and generalizability
4.10 Trustworthiness and ethical considerations
5. Empirical Findings 
5.1. Perspectives on the already determined lean implementation driver-factors
5.2 Individual factors response
5.3 Organizational factors response
5.4 External factors response
6. Analysis and Interpretation 
6.1 Driver factors
6.2 Individual factors
6.3 Organizational factors
6.4 External factors
7. Discussion 
8. Conclusion 
9. Further research 
10. References 
11. Appendix
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