**4. Research results and discussion**

Within our study sample of 210 small corporations concerning their strategical decision‐mak‐ ing processes, managers and owners of these companies consider future planning and self‐ development to be critical.

#### **4.1. Strategic fields**

The first question in our research involved areas limited to small corporations in Slovakia where the strategic decision making relies on and introduces the exact type of decision mak‐ ing within the period of the last 2 years. We have also asked which factors are the main trig‐ gers of the strategic process of decision making in their corporations.

The managers had defined more concrete problems which were divided into the groups that we can see in **Graph 1**.

On the basis of this knowledge, we have discovered several facts. The first one is the economic depression impact on strategic decision making even in small corporations. Rescheduling and organizing changes were represented in order to save costs because of economic depression. However, challenges relating to marketing strategy and its delimitation or appropriate selec‐ tion of customers and their satisfaction dominated.

The explanation of this is that the employee's loyalty in small corporations is a bigger factor, informal relations dominate, and the managers do not have issues, for example, relating to human resources. That is why we would recommend to those corporations not to ignore the people and their competences in the business and also with a high accent to look at the prob‐ lems of employees' development rather than how it has been in the past. In these spheres, advances in managing small corporations have been set up on quality as well as knowledge about well‐founded decision making where necessary. It is more and more connected with higher and more intensive changes that are often unpredictable and managers, while they

**Graph 1.** The spheres of strategical decision making in small corporations in SR. Source: own processing.

make strategic decisions, have to also direct and assist employees, learning, and knowledge. It is necessary to encourage their employee's creativity, entrepreneurism, initiative, and abil‐ ity to work in teams in order that everybody can be involved in customer satisfaction and company improvement.

Higher global competence, a move to an economy of knowledge and fast‐shifting technology impact many aspects of work life in a small company. In the future employees with differ‐ ent professional qualifications, good working profiles and higher secondary and university degrees will be necessary in small corporations. The employees will need to improve their abilities and specialist skills.

The most expressively inadequate orientation has appeared in micro‐corporations. Especially, they have to attract people with the highest qualification through the process of lifelong edu‐ cation at the company to get over problems. It is necessary to invest in electronic skills, to spread employment procedures for new groups of the population, and to develop the concept of feasibility and foster labor mobility.

It is also necessary so that managers are aware of the fact that the employees represent the most valuable company asset and that's why it is necessary to ensure the strong company cultural ori‐ entation for employee training and development plus the empowerment of individual workers. The company should create a pleasant incentive environment for their employees who have to have the possibility for self‐development. They have to have an interesting job and be motivated in the most appropriate way. A functioning system is a guarantee of knowledge management.

Through the analysis of strategic areas of small corporations, we found certain reserves in strategic orientation for innovation and technological progress. At present, innovation is more important to survival and business prosperity than ever before. Markets have been changing rapidly and the competition of a developing economy (for instance, China and India) has been bigger and bigger. For small corporations, we can see a bigger challenge in carrying out research and development as well as accomplishing innovation than for big business. Small corporations often lack the finan‐ cial resources needed to carry out research and therefore need to look for a competent business partner to create their own ideas and provide access to programs that result in innovation.

Innovation is not only a problem for small corporations in Slovakia, even in businesses of medium size and big businesses innovative activity lags behind most other EU countries.

The managers stated that the main reason for the formation of a strategic decision‐making process within external resources primarily is their customers. The next "triggers" according to managers are the businesses internal resources. The replacement of employees by a highly qualified work force will give power to the manager and create new opportunities.

#### **4.2. Rational decision making**

**Graph 1.** The spheres of strategical decision making in small corporations in SR. Source: own processing.

**4. Research results and discussion**

94 Corporate Governance and Strategic Decision Making

development to be critical.

**4.1. Strategic fields**

we can see in **Graph 1**.

Within our study sample of 210 small corporations concerning their strategical decision‐mak‐ ing processes, managers and owners of these companies consider future planning and self‐

The first question in our research involved areas limited to small corporations in Slovakia where the strategic decision making relies on and introduces the exact type of decision mak‐ ing within the period of the last 2 years. We have also asked which factors are the main trig‐

The managers had defined more concrete problems which were divided into the groups that

On the basis of this knowledge, we have discovered several facts. The first one is the economic depression impact on strategic decision making even in small corporations. Rescheduling and organizing changes were represented in order to save costs because of economic depression. However, challenges relating to marketing strategy and its delimitation or appropriate selec‐

The explanation of this is that the employee's loyalty in small corporations is a bigger factor, informal relations dominate, and the managers do not have issues, for example, relating to human resources. That is why we would recommend to those corporations not to ignore the people and their competences in the business and also with a high accent to look at the prob‐ lems of employees' development rather than how it has been in the past. In these spheres, advances in managing small corporations have been set up on quality as well as knowledge about well‐founded decision making where necessary. It is more and more connected with higher and more intensive changes that are often unpredictable and managers, while they

gers of the strategic process of decision making in their corporations.

tion of customers and their satisfaction dominated.

Among the main criteria that allow us to explore the extent of the rationality behind the decision‐ making process, we have chosen five entries. These were proposed by Dean and Sharfman [7]

• search for relevant information when creating strategic decisions,


Search for relevant information is a significant element of the decision‐making process, mainly because correct information forms the whole process and influences its final result. Information is the predisposition for conceptual and competent control and the ability to operatively influ‐ ence the course of controlled processes and to flexibly react to the changing conditions in both interior and exterior entrepreneur environment. We have divided managers into two types based on their approach to decision making with low or high amounts of required information:


The first group is made by managers, called maximizers. Their goal is to search, accommo‐ date, and restlessly look through a mass of data, before making a decision. The result of their work is a well‐informed decision; however, it may be time costly and lack effectivity. This group of managers represents 25% of the whole count. The second group is composed by managers, who only need the key facts, and if these satisfy their conditions—they decide. We call them satisfiers (managers optimize the amount of information). In our research group, these represented the 75% group.

It is obvious that managers of small corporations are more likely to incline to a restricted rational model of the process of decision making, it comes from partial information, which is sufficient for a satisfying decision. The maximization of effectiveness is not always a primary concern in these businesses.

In the fields of information search, we were concerned about their resources, meaning: where do managers get their Intel from. Our research was based on their division into internal and external strategic information. Internal, the one that comes straight from within the business (information about the sources of the business and their use also information about borderline situations experienced in the business, etc.) The source of this information is the staff/business itself. External information is gained from a businesses' external environment, for example, press, analyses conducted by advisory companies and organs of the state, information from suppliers, customers, and so on.

A question was opened, to allow the gain of deeper insight into ways of collecting informa‐ tion. The most usual answers were: "I regularly look through my internet resources," "I read vocational magazines, to keep myself up to date," "I often take advice from my family," "I monitor the demand of my clients"; some answers appeared several times, others were excep‐ tional. The overview is shown in **Graph 2**.

The results lead us to the fact that small corporations in contrast with big (which dispose with a vast source for systematic global, and targeted monitoring) have a much worse situation Strategic Decision Making and Its Importance in Small Corporations http://dx.doi.org/10.5772/intechopen.68858 97

**Graph 2.** Sources of information for managers. Source: own processing.

• analysis of relevant information,

96 Corporate Governance and Strategic Decision Making

information

these represented the 75% group.

concern in these businesses.

suppliers, customers, and so on.

tional. The overview is shown in **Graph 2**.

• significance of quantitative techniques,

• efficiency of subject's decisions when processing information, • the use of analytical and intuitive decision‐making processes.

• Managers with a satisfiable approach (only need key facts).

Search for relevant information is a significant element of the decision‐making process, mainly because correct information forms the whole process and influences its final result. Information is the predisposition for conceptual and competent control and the ability to operatively influ‐ ence the course of controlled processes and to flexibly react to the changing conditions in both interior and exterior entrepreneur environment. We have divided managers into two types based on their approach to decision making with low or high amounts of required information: • Managers with maximalist approach (acquisition and analysis of great amount of

The first group is made by managers, called maximizers. Their goal is to search, accommo‐ date, and restlessly look through a mass of data, before making a decision. The result of their work is a well‐informed decision; however, it may be time costly and lack effectivity. This group of managers represents 25% of the whole count. The second group is composed by managers, who only need the key facts, and if these satisfy their conditions—they decide. We call them satisfiers (managers optimize the amount of information). In our research group,

It is obvious that managers of small corporations are more likely to incline to a restricted rational model of the process of decision making, it comes from partial information, which is sufficient for a satisfying decision. The maximization of effectiveness is not always a primary

In the fields of information search, we were concerned about their resources, meaning: where do managers get their Intel from. Our research was based on their division into internal and external strategic information. Internal, the one that comes straight from within the business (information about the sources of the business and their use also information about borderline situations experienced in the business, etc.) The source of this information is the staff/business itself. External information is gained from a businesses' external environment, for example, press, analyses conducted by advisory companies and organs of the state, information from

A question was opened, to allow the gain of deeper insight into ways of collecting informa‐ tion. The most usual answers were: "I regularly look through my internet resources," "I read vocational magazines, to keep myself up to date," "I often take advice from my family," "I monitor the demand of my clients"; some answers appeared several times, others were excep‐

The results lead us to the fact that small corporations in contrast with big (which dispose with a vast source for systematic global, and targeted monitoring) have a much worse situation to handle in this field. Their ability to gain information is significantly reduced in financial, human, material, and technological areas. The greatest source of information for these busi‐ nesses is customers. A total of 93% of researched businesses see their main inspiration in customers and their feedback. Thus, the main principle is to stay close to customers and adapt strategical decisions to the demand. The next significant source is the Internet, which is nowa‐ days a common part of an entrepreneur's life. Then, with the same approximate representa‐ tion come vocational magazines, friends and family, informal relationships, and everyday dialogs with other entrepreneurs. Only a small percentage of managers (14%) claimed to use external advisors, due to the shortage of funds.

Information required for strategical decision making of small corporations comes mainly from external sources. It is required to note that search for information is not mostly conducted on a systematic basis. It is based on random occasions; it is time and resource restricted, and considerably subjective. We can state that the methods of searching and amassing information show the application of a restricted‐rational model of strategic decision making of small cor‐ porations overlapping certain features of the intuitive model, in which the gain of information is affected by approaches, ideas, and resolutions of the manager himself/herself.

When analyzing and processing information, managers followed up in responses to the pre‐ vious question of gaining information. The nonexistent means for extensive databases, statis‐ tical and quantitative analyses, report on both financial and expert level, and restrict efforts put in decision making from reaching maximal value from the information. The problem of effective decision making can also be the fact that managers are overwhelmed with informa‐ tion, and they cannot process them and use them to effectively support the decision‐making process. From the results of our research, we have ultimately discovered the lack of correct and clear presentation of information.

Many managers still control and decide as if there was no worldwide computer grid. This problem has several aspects. First, the use of clear intuition is too common; it is substantiated too often by managers' experience. Second, there is only a very weak link between bits of infor‐ mation that are really accessible to the manager, and the decision that he/she makes.

Ultimately, such analyses are ignored in favor of the institution and comfortable, old prac‐ tices. Most of the small corporations do not know what their best decisions were and how could information and technologies be used to make those decisions more informed. Our results coincide with other researches [17, 24], showcasing the absence of analytically based managers, trend of using ad hoc approach, the usage of approach based on experience, and behavioral‐based evidence.

Another dimension within the examination of strategic decision‐making process in small corporations referred to the creation of opportunities, which we based on four styles of deci‐ sion making of managers [25]: decisive (little information, one direction), hierarchical (much information, one possibility), flexible (little information, many possibilities), and integrating (much information, many possibilities).

Managers in our test sample were supposed to place themselves into one of the four given types based on the amount of information and possibilities. The most frequent style of small corporation managers was decisive style—meaning that the managers stated need for less information and narrow focus when it comes to selecting options. Such managers recognize rapid action and effectiveness and consistency in the absence of time and resources. Their choice is linked to overall search, collection, and information‐processing processes, which they stated in previous statements, and to sufficient "satisfactory" search options within deci‐ sion‐making process.

Flexible style is the second most common. However, its representation is significantly lower and managers who identified it as used by them use it properly, in times of relative uncertainty, when there is need for quick changes of direction, based on the change of conditions. Hierarchical style is regarded as highly analytical, explaining its small representation in our test sample. Integrating style did not occur in the sample. This style requires many inputs, time, constantly opened information flows, a wide range of views, including contradictory ones, and mostly gives just framing of decision situation with multiple possible solutions considering changing conditions in complex, dynamic, and turbulent business environment during the global crisis.

To assess a model process of strategic decision making (in the sense of assessing its rational‐ ity), it was required to research also the use of varying (mostly quantitative) methods and techniques used for deciding (**Graph 3**). Acquaintance and intensity of usage of each decision‐ making method was rated by managers on a scale from 1 to 5 with the following contextual definition: 1, unknown; 2, known but unused; 3, known, used rarely; 4, known, used occasion‐ ally; and 5, known used often.

By studying **Graph 3**, it is clear that not only the usage but mainly the knowledge of basic methods is very low when it comes to small corporations. Our opinion is that the reasons are several. One of them being the all‐around knowledge of statistical methods (that also being because of the reason of technical education on many managers). Their use is inexpensive, easy, and time effective. In favor of exact methods is also the fact that a part of them is simply integrated chart processors with tools to analyze, communicate, and to share results. Via this,

**Graph 3.** Usage intensity of decision‐making methods by managers. Source: own processing.

we can also explain the tendency to not use, or rather not know specific managing methods. Then again in case of knowing these, it is characteristic to lack practical experience with using such methods. Another reason is obviously the impracticality of some methods in certain sec‐ tions of control. The usage, or rather the resting of some software to support decision making, is conditioned by financial and human resources. A manager of a small corporation is not capable of maintaining the required level of expertise in several fields at once.

Based on found results, we can state that the process of strategic decision making in small corporations inclines to a restricted‐rational model of decision making, which is restricted by time and funds. It is limited by expert capabilities of managers, it works with deficient infor‐ mation. Information is gained unsystematically, randomly, or based on informal business or social relations and customers' demands.

#### **4.3. Judgment**

too often by managers' experience. Second, there is only a very weak link between bits of infor‐

Ultimately, such analyses are ignored in favor of the institution and comfortable, old prac‐ tices. Most of the small corporations do not know what their best decisions were and how could information and technologies be used to make those decisions more informed. Our results coincide with other researches [17, 24], showcasing the absence of analytically based managers, trend of using ad hoc approach, the usage of approach based on experience, and

Another dimension within the examination of strategic decision‐making process in small corporations referred to the creation of opportunities, which we based on four styles of deci‐ sion making of managers [25]: decisive (little information, one direction), hierarchical (much information, one possibility), flexible (little information, many possibilities), and integrating

Managers in our test sample were supposed to place themselves into one of the four given types based on the amount of information and possibilities. The most frequent style of small corporation managers was decisive style—meaning that the managers stated need for less information and narrow focus when it comes to selecting options. Such managers recognize rapid action and effectiveness and consistency in the absence of time and resources. Their choice is linked to overall search, collection, and information‐processing processes, which they stated in previous statements, and to sufficient "satisfactory" search options within deci‐

Flexible style is the second most common. However, its representation is significantly lower and managers who identified it as used by them use it properly, in times of relative uncertainty, when there is need for quick changes of direction, based on the change of conditions. Hierarchical style is regarded as highly analytical, explaining its small representation in our test sample. Integrating style did not occur in the sample. This style requires many inputs, time, constantly opened information flows, a wide range of views, including contradictory ones, and mostly gives just framing of decision situation with multiple possible solutions considering changing conditions in complex, dynamic, and turbulent business environment during the global crisis. To assess a model process of strategic decision making (in the sense of assessing its rational‐ ity), it was required to research also the use of varying (mostly quantitative) methods and techniques used for deciding (**Graph 3**). Acquaintance and intensity of usage of each decision‐ making method was rated by managers on a scale from 1 to 5 with the following contextual definition: 1, unknown; 2, known but unused; 3, known, used rarely; 4, known, used occasion‐

By studying **Graph 3**, it is clear that not only the usage but mainly the knowledge of basic methods is very low when it comes to small corporations. Our opinion is that the reasons are several. One of them being the all‐around knowledge of statistical methods (that also being because of the reason of technical education on many managers). Their use is inexpensive, easy, and time effective. In favor of exact methods is also the fact that a part of them is simply integrated chart processors with tools to analyze, communicate, and to share results. Via this,

mation that are really accessible to the manager, and the decision that he/she makes.

behavioral‐based evidence.

sion‐making process.

ally; and 5, known used often.

(much information, many possibilities).

98 Corporate Governance and Strategic Decision Making

Another field that we surveyed at managers in order to determine the type of strategic deci‐ sion making was an area of Judgment. Judgment represents a mental activity, which is also participating in solving problems and decisions. Judgment is the process through which we think about, form our opinions, achieve conclusions, and critically assess actions around us; it is based on an available information and also is a source for decision making.

Managers were asked about their way of judgment to find out specific facts, situations, and events from which we could derive certain conclusions within the meaning of determining the model of the strategic decision making.

Managers in their responses state: "when thinking I use method of trial and error, when thinking I use my own experience and intuition, I had an idea that….. I felt, it should be so, I woke up and suddenly I knew what to do, it was my spontaneous idea, unexpected formation of my thought" and so on.

The feedback is clear that the dominant model is intuitive model. Managers on a regular basis possibly every day act without apparent use of all relevant information that is available from the environment and their memories. Even if they are aware of all the details, they necessarily do not investigate them deeply and do not always give the appropriate importance, before the deci‐ sion. On the contrary, they often deal with the first what they think of. It usually occurs without some apparent effort and they cannot answer the question of why they come up with such a proposal. Managers often tend to trust their intuition, simply because it is quite successful in some cases. It seems like it is possible for them to be satisfied with intuition in many situations.

Certainly, we must point out on supportive opinion about intuitive decision making, mainly in small corporation managers. These people do not have time to compare, logically and sys‐ tematically, all available options. They are learned to make decisions in a certain way, which has worked and saves time so far. On the basis of associations with different designs and past experiences, they assess the situation and almost immediately act on the grounds of experi‐ ence and intuition. The major advantage is the ease, speed, and parallelism.

However, change of minds is so difficult and slow. Intuitive judgments may or may not be correct and controlled. It is significantly impacted by various inclinations, tendencies, abbre‐ viations, and heuristics. In this case, the best way of how to control the intuitive judgments is by rational mental processes, which is more demanding of time and effort.

This is why many authors point this when they talk about counter‐arguments [26–28] and many others. "Faith in intuition is understandable, because people always search for mysti‐ cal powers for direction of their faith" [26]. It adds that intuition has its place in decision making, but "anyone who thinks that intuition is a substitution for logical thinking, it is only risky devotion of self‐deception. Intuition is unstable and independent leader that will easily lead you to success but also to a catastrophic disaster" [26, p. 117]. Therefore, intuitive deci‐ sions require years of experience and learning of facts, situations, concepts, procedures, and abstractions that are stored in the human brain.

#### **4.4. Emotional, cognitive, and socially conditioned tendencies of managers**

In a small company, and even more in micro‐corporations, the personal characteristics of the decision maker have a significant impact on the decision‐making process, because in most cases the decision making is domain of only one (the owner‐manager) or two people. Heuristics, deviations of rationality, or emotions of managers can suppress the whole deci‐ sion‐making process and bring him/her into the wrong end.

It was not very difficult to investigate the emotional, cognitive, and other socially conditioned tendencies of managers on account of the structure of research. For a deeper understanding, as the object of the research, it would be preferable to choose individual decisions in a smaller number of enterprises that have a wide variety of problems. It may arise in the decision‐mak‐ ing process from which it is possible to create specific, different influences of emotions, person‐ ality characteristics, heuristics, prejudice, deviations from rationality, ethical values, and so on.

Managers were asked a few of questions to determine the above tendencies. Answers were acquired in the form of a controlled interview, so the meaning of the questions would not be mis‐ understood. It was about questions like: Do you prefer the experience or an advice of an external consultant? Would you prefer a lucrative sale of the company or continuation of the enterprise in order to achieve personal goals? Would you rather employ foreign workers who are cheaper at the expense of domestic workers? If you are under stress, do you make a decision or try to move it a little later? If you have made a decision, have you ever wondered what it would be if you chose another option? In bargaining, do you prepare specific proposals before the meeting or you wait for proposals of counterparty? Does it influence you in decision making any various past events, trends, or old information? During decision making, do you consider to decide tomorrow maybe later or do you take an action immediately? Can you relieve from sunk costs (economic or psychological) in your decisions? Have you ever wondered whether in collection of information you emphasis on information that confirm your statement or to conflicting information?

The answers of managers were evaluated and we came to the conclusion that the influence of the abovementioned effects of the decision‐making process is visible. It is indicating the dominance of an intuitive model of decision making associated with their intuitive strategic thinking which defined [29] as a thinking which operates according to the main article and the whole is assessed on the basis of selected central element.
