Ante and Cons Intuitive Decision Making

Long Range Planning
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(2012)
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http://www.elsevier.com/locate/lrp
A Model of Antecedents and

Consequences of Intuition in
Strategic Decision-making:
Evidence from Egypt
Said Elbanna, John Child and Mumin Dayan
While management theorists have recently paid more attention to the use of intuition in
strategic decision-making, there is still little empirical research on the subject. Examination
of potentially relevant contextual variables and outcomes is particularly lacking. This article
advances our understanding by proposing and examining a model of antecedents and
consequences of intuition in strategic decision-making using partial least squares (PLS). In
addition to intuition, the model consists of four antecedent variables (decision motive,
decision uncertainty, company performance, and company size), two moderating variables
(environmental uncertainty and hostility), one decision outcome (decision disturbance),
and one control variable (rationality). A study of Egyptian manufacturing firms indicates
that decision uncertainty and company size are related to the use of intuition; that intuition significantly influences decision disturbance; and that environmental hostility moderates the relationship between decision intuition and disturbance. The implications of
these findings for strategic decision-making theory, for practice, and for further research,
are discussed.
2012 Published by Elsevier Ltd.
Introduction
This paper proposes and examines a model of the contextual antecedents and consequences of intuition in strategic decision-making. It also incorporates rationality into the model. Executives who
make strategic decisions on the basis of intuition often have a hard time explaining the reasons for
their particular decision choices (Covin et al., 2001). However, the presumption in favour of rationality in decision-making has recently come to be questioned. For example, Miller and Ireland
0024-6301/$ - see front matter 2012 Published by Elsevier Ltd.
http://dx.doi.org/10.1016/j.lrp.2012.09.007
Please cite this article in press as: Elbanna S., et al., A Model of Antecedents and Consequences of Intuition in Strategic Decisionmaking: Evidence from Egypt, Long Range Planning (2012), http://dx.doi.org/10.1016/j.lrp.2012.09.007
(2005) claim that many managers embrace intuition as an effective approach to strategic decisionmaking. Making decisions on the basis of intuition is increasingly viewed as a viable approach in
todays business environment, because few strategic decisions have the advantage of complete, accurate and timely information. Similarly, Nutt (2002) suggests that a judgmental approach to making strategic choices is successful under certain circumstances, such as time pressure.
It is difficult to describe intuition but easier to recognize it (Sadler-Smith and Shefy, 2004). Recently, the conceptualization of intuition has received growing attention both among psychologists
and management theorists. Frantz (2000) sees intuition as a mental process but not a conscious
analytical-logical, step-by-step, and reasoned way of thinking. Eisenhardt and Zbaracki (1992) state
that intuition refers to incremental adaptations based on deep and intimate knowledge of the situation faced by decision-makers. Intuition is a synthetic psychological function in that it apprehends the totality of a given situation. It is often associated with having a hunch or a strong
feeling of knowing what is going to occur (Vaughan, 1979), without being able to express the rationale behind this (Nutt, 1998). Parikh et al. (1994) observes that intuition could be a form of intelligence which decision-makers can use when they cannot access rational processes.
Dane and Pratt (2007, p. 40) define intuition as affectively-charged judgments that arise through
rapid, non-conscious, and holistic associations. Mitchell et al. (2005, p. 667) define intuition
among opportunity-seeking entrepreneurs as the dynamic process by which entrepreneurial alertness cognitions interact with domain competence.to bring to consciousness an opportunity to
create new value. Miller and Ireland (2005) distinguish two forms of intuition in strategic
decision-making: holistic hunch, involving a synthesis of diverse experiences, novel combinations
of information, and a strong feeling of being right; and automated expertise, based on a combination
of situation-specific experiences, past learning, and a sense of familiarity. Khatri and Ng (2000) suggest that intuition is subconscious, complex and quick; but not coming from emotion and not necessarily a biased process. Drawing upon these various conceptualizations, we regard intuition as a
mental process based on a gut feeling as opposed to explicit, systematic analysis, which yields an
intuitive insight or judgment that is used as a basis for decision making.1
We argue that theoretical progress on the role of intuition in decision-making is difficult without
adequate empirical examination. While management theory has recently paid more attention to intuition, there is limited research on the antecedents and consequences of intuition in strategic
decision-making (Ritchie et al., 2007).
Despite recent interest in intuition in management research, empirical work has lagged behind
(Akinci and Sadler-Smith, 2012; Elbanna, 2006; Hensman and Sadler-Smith, 2011). Rather than examining intuition empirically, scholars have instead advanced arguments concerning its conceptualization, role, antecedents and outcomes (e.g., Dane and Pratt, 2007; Sinclair and Ashkanasy, 2005).
Theoretical progress on the antecedents and consequences of intuition in decision-making is difficult
without adequate empirical examination.
Other authors have suggested that top executives use intuition in strategic decision-making (e.g.,
Sadler-Smith and Shefy, 2004) and strategy workshops (e.g., Hodgkinson et al., 2006), but without
investigating whether contextual variables influence its use or the impact of intuition on decision or
strategy outcomes.
In one of the very few robust applied studies which have addressed the role of intuition in strategic decision-making, Khatri and Ng (2000) examined the impact of intuitive synthesis on organizational performance. Sadler-Smith (2004) replicated and extended their study by investigating
the impact of both rationality and intuition on the performance of SMEs. Ritchie et al. (2007) tested
the relationship between chief executives intuitive decision style, and financial measures of nonprofit organization performance. This present paper extends previous work by investigating potential contextual antecedents of intuition in strategic decision-making as well as the impact of
1
The authors thank one of the two anonymous reviewers for bringing their attention to this definition.
A Model of Antecedents and Consequences of Intuition in Strategic Decision-making
intuition on decision outcomes. Its focus complements previous work and enhances our understanding of the use of intuition in strategic decision-making. In so doing, we followed SadlerSmith (2004) in building upon Khatri and Ngs work by including rationality as a control variable
in our research model.
We argue in this paper that the use of intuition in strategic decision-making cannot be fully understood unless the context and consequences of the decision-making are taken into account. The
term context in the present study encompasses three categories of variables: decision-specific
characteristics; characteristics of the firm itself that may be antecedents of intuition; and features
of the external environment that could be moderators of the relationship between intuition and
decision consequences. This is not to deny the potential relevance of other factors for reliance
on intuition, such as decision-maker personality, but rather to maintain that context deserves
more attention than it has hitherto received. Any examination of strategic decision intuition
that fails to consider these contextual factors and their possible impact is likely to provide an incomplete and potentially inaccurate picture. This is because factors such as decision motive and
company performance can be expected to influence the use of intuition in several ways. For instance, they affect the imperative that strategic decision makers may face to get the decision
right, through applying a careful and rational analysis rather than relying on intuition. On the
other hand, a lack of clarity concerning relevant environmental conditions or the likely outcomes
of a decision could limit the perceived relevance of rationality and instead favour a reliance on
intuition.
Previous studies by Dean and Sharfman (1993), Elbanna and Child (2007a), and Papadakis et al.
(1998) have adopted integrative models that take some account of the context. However, they have
focused on rationality, and, with the exception of a few theoretical studies (e.g., Dane and Pratt,
2007), the same has not been done for intuition. Similarly, few studies have examined the impact
of intuition on decision outcomes. To the best of our knowledge, no study has examined the effects
of intuition on decision disturbance. According to Rodrigues and Hickson (1995), decision disturbance refers to the degree to which unforeseen negative problems or outcomes arose. Using decision disturbance as an outcome variable in this study will enable us to extend the range of decision
outcomes taken into account.
The role of intuition in strategic decision-making cannot be fully understood unless its antecedents
and consequences are taken into account.
Unusually, we report research conducted in a non-Anglo-Saxon setting, namely Egypt. The location in Egypt of the research reported here may give rise to some results that are specific to
that national context, owing to cultural and institutional characteristics. In this way, the study
may serve to raise awareness of nationally relevant factors, as the literature has revealed that different cultural assumptions regarding the environment result in different approaches to formulating
strategy (Schneider, 1989; Savvas et al., 2001). Savvas et al. (2001), for instance, found a significant
difference in cognitive style between UK graduate students and Egyptian MBA students; more specifically, the UK participants were more intuitive (lower CSI scores) than the Egyptian participants.
On the other hand, comparative cross-cultural investigation by Hofstede (1991) suggests that Egyptian managers are likely to be relatively respectful of leadership and hierarchical distance, fatalistic,
and inclined to act according to the particular relationship involved rather than in accord with general rules or standards. Such a respectful behaviour would be associated with an unwillingness of
subordinates to take unfamiliar risks, and a tendency towards uncertainty avoidance (Hofstede,
1991) on strategically important issues. Moreover, from their review of relevant studies, Hickson
and Pugh (2001) characterize Egyptian managers as sensitive to personal relationships (especially
with superiors), and cautious. Other authors confirm that there is respect for seniority in Egypt
(e.g., Elbanna and Child, 2007a; Parnell and Hatem, 1999). Overall, these features might be expected to increase a reliance on top managers intuition in the strategic decision-making process
and a reduction in their application of rational techniques.
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Having introduced the key issues and challenges concerning the study of intuition in strategic
decision-making, we now proceed by developing a model of contextual influences and outcomes
of the use of intuition in strategic decision-making, hypothesizing the effects of contextual variables
identified by two theoretical perspectives and the impact of intuition on decision disturbance.
Theoretical model
A theoretical model integrating the literature on the antecedents of intuition and its outcomes in
strategic decision-making was developed and tested (see Figure 1). This model combines factors
associated with two perspectives on decision intuition; namely, decision-specific features and
firm characteristics. It also incorporates an outcome variable e decision disturbance. The model
also postulates a moderating impact of two factors associated with the environmental perspective,
and it controls for the possible influence of rationality.
Given the wide range of contextual variables that may influence the intuition of decision-making
process, it is necessary to be selective. We applied two criteria to the selection of contextual variables: their relation to major theoretical perspectives, and the continuity they would provide
with previous research on strategic decision-making. We decided to examine four contextual variables, grouped by their identifying theoretical perspectives, which have been the subject of substantial discussion and/or empirical attention. The fact that these variables have been of interest to
many researchers enhances the possibility of comparing the findings of our study with those of previous investigations.
The first type of antecedents consists of two decision characteristics, that is, decision uncertainty
and decision motive, which have been the subject of considerable interest in previous research
(Dayan and Elbanna, 2011). Moreover, Papadakis et al. (1998) find that these two characteristics
influence the strategic decision-making process more than environmental, organizational and managerial factors. Elbanna and Child (2007a, 2007b) partially support this finding.
The firm-specific variables examined in the present study are company performance and company size. For the reasons given below, we expected that these two firm-level characteristics would
be highly likely to impact on the use of intuition. Other firm-specific variables of a more intrinsically organizational nature, such as degree of structure, development of internal systems, and delegation to specialists, were excluded not just for reasons of economy but because they were thought
to be much closer ontologically to the focal variable, manifesting the extent to which formal analysis
was preferred to a reliance on intuition.
Intuition is expected to have an impact on decision outcomes. In this study, we assume that intuition may increase the likelihood of decision disturbance e the existence of major negative
Environmental-based moderators
Decision-specific antecedents
Environmental
hostility
Decision uncertainty
Environmental
uncertainty
Decision motive
Decision
disturbance
Intuition
Firm-based antecedents
Company performance
Company size
Rationality
Figure 1. Theoretical model

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unexpected outcomes. Moreover, we expect environmental characteristics to have a moderating impact on the relation between decision intuition and disturbance. The literature indicates that the impact of intuition on organizational performance differs across various environmental conditions,
suggesting that such conditions should be investigated as moderating variables (e.g., Dane and
Pratt, 2007). Khatri and Ng (2000), for instance, found that environmental uncertainty moderates
the relationship between intuition and organizational performance. Similarly, Dayan and Elbanna
(2011) reported that environmental turbulence moderates the impact of intuition on product success.
The primary environmental characteristics of complexity, dynamism and hostility (Miller et al.,
2006) were assumed to translate for strategic decision makers into perceptions of environmental
uncertainty and hostility. Perceptions of environmental uncertainty and hostility have appeared frequently in empirical studies of strategic decision-making or been suggested as subjects for future
research, as Baum and Wally (2003) note. Uncertainty can arise from either or both complexity
and dynamism (variability) in a firms environment (Sia et al., 2004). For reasons of parsimony,
as well as that of maintaining continuity with previous work on strategic decision-making, we chose
to focus on environmental hostility and environmental uncertainty as the consequence perceived by
senior executives of external complexity and dynamism.
Finally, we should not examine intuition in strategic decision-making without controlling for rationality. Previous research supports the view that managers who tend to use rational processes will
also use a kind of heuristic based on their intuition (Eisenhardt, 1989). In fact, reliance on intuition can be a reasonable course to follow when the environment is unstable and a prompt satisficing decision is essential. Moreover, the use of intuition can complement the gaps in rational
analysis arising from uncertainty and lack of relevant information in making the decision. Given
the possible interaction between these two variables, we controlled for the effect of rationality
when examining the antecedents and consequences of intuition.
Hypotheses
Decision-based factors
Uncertainty refers to a lack of clear information relevant to making a decision, ambiguity in analysing decision options, and difficulty in predicting decision outcomes (Sonenshein, 2007). Uncertainty here refers to a specific decision, as opposed to environmental uncertainty in general.
Decision-making, especially of the non-routine kind, is liable to be conducted under uncertainty.
Some theorists maintain that uncertainty creates an ambiguity that cannot be resolved by rational
processes (e.g., Hayashi, 2001). Dane and Pratt (2007) argue that for ill-defined issues, an intuitive
approach may be the appropriate approach. Daft and Lengel (1986) suggest that the use of intuition
is necessary when the matter is not analysable. Others also argue that uncertainty will increase the
reliance on intuition (e.g., Burke and Miller, 1999; Sonenshein, 2007). Similarly, in the literature on
group behaviour, the point is made that when decision uncertainty is high, team members rely
more on their intuitive judgments to make decisions (e.g., Wegner, 1986).These contributions
suggest:
H1: There will be a positive relationship between decision uncertainty and the use of intuition.
Decision motive
A strategic decision may be triggered by the perception that there is either a crisis or an opportunity. Papadakis et al. (1999) show that decision-makers react in a quite different manner when they
are facing a crisis, as opposed to a situation of opportunity. This has important implications for
managers because it deeply affects the subsequent processes of decision-making. Previous research
supports this notion (e.g., Jackson and Dutton, 1988). Sayegh et al. (2004) argue that the use of tacit
knowledge and intuition may be the only feasible approach under crisis conditions since decisionLong Range Planning, vol
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makers will not have sufficient time to apply the protocols of rational decision-making. By contrast,
Dutton (1986) claims that the process of resolving a strategic issue becomes easier when the strategic issue represents an opportunity; hence decision-makers may rely more on intuition. However,
Mintzberg et al. (1976) conclude that the strategic decision-making process is less intuitive when
the decision is interpreted as a crisis as opposed to an opportunity. Fredrickson (1985) argues
that managers initially characterize decision motives as having positive or negative effects, and
they expect decisions which are interpreted as opportunities to lead to significant positive results
for firms. These decisions do not provide critically needed solutions; on the contrary, simply responding to these stimuli promises previously unanticipated benefits. Therefore, managers would
tend to exploit opportunities using an intuitive approach. Tindale and Sheffey (2002), for example,
argue that groups are willing to rely on their intuitive skills, if they perceive that the decision they
are about to make may result in seizing an opportunity.
In short, although there are contradictory arguments concerning the relationship between decision motive and intuition, and the evidence is limited, the empirical results reported by Mintzberg
et al. (1976) and arguments of both Fredrickson (1985), and Tindale and Sheffey (2002) lead to the
following hypothesis:
H2: The strategic decision-making process will rely more on intuition when it is motivated by
opportunity.
Firm-based factors
Company performance
We define performance as the level of a firms attainment on both financial (e.g., return on assets
and growth rate of sales) and non-financial indicators (e.g., quality of product and efficiency of operations) compared to companies that are similar in size and industry (see Appendix 2 for the full
list of performance indicators). Cyert and March (1963) argued that slack, a product of good organization performance, decreases the intensity with which organizations will search for information in pursuit of rationality. Other authors also take this view (e.g., Bourgeois, 1981). For example,
Fredrickson (1985) argued that managers in successful firms sometimes make a series of what appear to be intuitive decisions. Moreover, high performance may motivate decision-makers to be
more confident in their intuition, and hence reduce their desire to search for and analyse information. Whereas in low-performing firms a wrong decision may seriously harm the firm and threat the
positions of decision-makers. In such circumstances, decision makers may be reluctant to rely upon
unexplained and risky intuition, and be willing to use rational supports for decision-making, such
as hiring consultants, collecting relevant data, and conducting detailed analyses. Cyert and March
(1963) similarly argue that poor performance puts pressure on decision-makers to make precise decisions. This gives rise to:
H3: There will be a positive relationship between company performance and the use of intuition.
Company size
Company size has frequently been identified as a factor that can influence strategic decision processes
(e.g., Child, 1997). Small firms tend to be less formalized which may encourage a greater use of intuition. Snyman and Drew (2003), for example, argue that in small firms managers may pursue a single
strategic decision-making process, whereas in larger firms, managers will need two or more strategic
decision processes to formulate and implement strategy. Hart and Banbury (1994) argue that in small
firms, strategy-making relies on the idiosyncratic capabilities of a single (or a few) individual(s), while
the larger firm must typically develop more formalized approaches to planning. Larger organizational
size is a highly consistent predictor of arrangements supporting the application of rationality to
decision-making, such as the formalization of procedures and employment of specialists (Child and
Mansfield, 1972). We therefore suggest that smaller firms will employ more intuitive processes, for
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two reasons. First, small firms may well not be able to afford the costs of pursuing a rational process.
Second, small firms may not have specialized subunits or staff who encourage and facilitate the adoption of rational decision-making procedures (cf. Fredrickson and Iaquinto, 1989). Hence:
H4: There will be a negative relationship between company size and the use of intuition.
Consequences
Although some authors have argued that intuition has an important role in strategic decisionmaking, there has been limited empirical research on its consequences. For example, Eisenhardt
(1989), Judge and Miller (1991), and Wally and Baum (1994) investigate the impact of intuition
on the pace of strategic decision-making, but they do not directly investigate the relationship between intuition and decision outcomes. In one of the few applied studies that have addressed
the role of intuition on organizational outcomes, Khatri and Ng (2000) found that the use of intuition in the strategic decision-making process is negatively related to organizational performance
in a stable environment. Similarly, Elbanna and Child (2007b) hypothesized that the use of intuition in strategic decision-making will be negatively related to strategic decision effectiveness. Sauter
(1999) mentions that managers using intuition may become impatient with routine or details, and
they may reach conclusions very quickly, ignore relevant facts, or follow an inspiration when it is
clearly bad. Hence, intuition may increase the chance of producing unforeseen problems. In other
words, using intuition in decision-making increases the possibility of decision disturbance.
In view of the above, we posit the following hypothesis:
H5: The use of intuition in strategic decision-making will increase the likelihood of decision
disturbance.
Moderating environmental influences
Environmental uncertainty
It is likely to be more difficult to rely on formal analysis and in-depth study when having to deal with
unpredictable or high-velocity environments that are characterized by an absence of precedents, information scarcity and rapid change (Covin et al., 2001). For this reason, one may expect environmental uncertainty and limited information to increase managers reliance on intuition when making
strategic decisions. Dane and Pratt (2007: 46), for example, argue that under conditions of environmental uncertainty, decision-making scenarios may move from the intellective end of the task continuum toward the judgment end. Similarly, McCarthy et al. (1987) claim that a principal problem
with the application of formal models in high-tech environments is the difficulty facing decisionmakers in acquiring the relevant, timely and valid data required for the effective use of these models.
In the absence of such data, it is argued that intuition provides an alternative basis for strategic
decision-making. Rajagopalan et al. (1997) point out that the performance effects of the decision process are likely to be different across different types of environmental uncertainty. Eisenhardt (1989)
supported this conclusion. Goll and Rasheed (1997) found that environmental munificence (as an
opposite of hostility) moderates the relationship between decision-making process and performance.
Khatri and Ng (2000) report that environmental stability moderates intuition and company performance link. We therefore argue that decision-makers who rely on intuition, in an uncertain environment, are more likely to forgo systematic analysis, and that this increases the probability of
unfavourable and unforeseen outcomes. In conclusion, the use of intuition in strategic decisionmaking is expected to be greater in an uncertain environment than in a certain environment, and
hence we anticipate that the impact of intuition on decision disturbance will be greater in the former
type of environment than in the latter one. Therefore, we offer the following hypothesis:
H6: The higher the level of environmental uncertainty, the greater the impact of intuition on
decision disturbance.
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Environmental hostility
A hostile environment is one in which the changes in the external environment of the firm are perceived as unfavourable to the mission or outputs of the firm (Edelstein, 1992). This environment
can be characterized, for example, by tough competition in the market, low margins, oppressive governmental regulations, and limited growth opportunities (Zahra et al., 1997). Although there is only
limited empirical research examining the impact of environmental hostility (or its opposite, environmental munificence) on the relationship between decision process and outcomes, this clearly points to
its importance (Elbanna and Child, 2007a; Rajagopalan et al., 1997; Wan and Hoskisson, 2003). Goll
and Rasheed (1997), for instance, reported that environmental munificence moderates the relationship
between decision-making process and company performance. McArthur and Nystrom (1991) found
environmental munificence to be a significant predictor of the strategy-performance relationship. Similar results are reported by Covin and Slevin (1989), who found that in hostile environments an organic
structure and entrepreneurial strategic posture are positively related to firm performance. In a hostile
environment, firms need to make a greater analytical effort to understand the threats they face
(Khandwalla, 1973). Similarly, Miller and Friesen (1983) report that organizations respond to increased environmental hostility through decision-making characterized by greater analysis and reduced innovation. Hence, we anticipate that intuition is more likely to lead to unexpected negative
outcomes in hostile environments than in munificent environments. In formal terms:
H7: The higher the level of environmental hostility, the greater the impact of intuition on decision
disturbance.
Methodology
This study takes the strategic decision as its unit of analysis. This choice is due to the fact that,
within the same organization, the decision process can differ from one type of decision to another
(Hickson et al., 1986). The strategic decisions to be investigated were selected according to four criteria. These are: 1) the decision had to be defined by both the respondent and the researcher as
a strategic one; 2) the decision was made during the last two years to minimize memory error;
3) the respondent was closely involved in making the chosen decision; and 4) the decision outcomes
were clear at the time when the data were collected. The decision areas in the sample vary widely,
with no area accounting for more than 30% of the sample: investment in capital equipment, product introduction or discontinuation, geographical expansion, diversification, restructuring, downsizing. Given the likely effects of context, we conducted an exploratory investigation prior to
hypothesis testing. This is a distinctive feature of this study, which significantly contributed to
its quality (see Appendix 1).
Sample
Given the difficulty of conducting a research survey on the basis of a random sample, e.g., the absence of accessible sampling frames (Zahra, 2011), a convenience sample was suggested and is consistent with previous research conducted in Arab countries (e.g., Elbanna, 2012). The target
population was limited to Egyptian private manufacturing companies operating in greater Cairo
and employing more than 100 people. These three aspects of our population helped us to control
partially for unspecified industry effects, to control for unknown effects of regional variation, and to
reduce the variability in the population and hence minimize the need to enlarge the sample size.
We collected data from people who were closely involved in making strategic decisions. Respondents were directors (35%), CEOs (31%), general managers or managing directors (20%), and
chairmen or presidents (14%). The firms represent a variety of industries, with no sector accounting for more than 23% of the sample. Employment in 77% of the companies ranged between 100
and 600 persons, while 23% of the companies had between 600 and 2,500 employees. We compared
the distribution of company sizes in our sample with that used for a prior exploratory study (see
Appendix 1), applying a two-sample t-test. There was no significant difference between the two
samples in terms of company size (p 0.56). This may suggest that our sample is representative
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of the population. Regarding the non-response bias of sporadic items, sample means were used to
replace missing values with the mean for the variable concerned.
Four hundred questionnaires were dropped off in person, and 206 completed schedules were collected. Out of these 206 questionnaires, thirty-seven were excluded for different reasons, such as
incompleteness; non-relevant respondents or questionnaires inadvertently collected from stateowned enterprises. The remaining 169 usable questionnaires (a final response rate of 42%) were
included in the analysis. Eight respondents completed the revised questionnaire a second time,
for purposes of judging test-retest reliability. The difficulty of gaining permission to conduct a multiple-informant survey led to the reliance on single respondents.
Harmans one-factor test (Podsakoff et al., 2003) shows that a substantial amount of common
method variance (CMV) does not appear to be present. More specifically, an unrotated factor analysis resulted in factor solution, which accounted for 71% of the total variance; and Factor 1 accounted for 22% of the variance. Because a single factor did not emerge and Factor 1 did not
explain most of the variance, common method bias is unlikely to be a concern in our data. In addition, we can strengthen our argument that CMV is not a major concern in this study, since we are
also predicting a moderating effect. Survey respondents would less likely be able to guess the nature
of the moderation or interaction effect, and therefore, would be unlikely to provide responses that
can be seen as contributing to CMV (Dayan and Di Benedetto, 2010). We also used eleven instances
of multiple respondents within the same company to test for inter-respondent reliability. Our data
enjoy a modest level of inter-respondent reliability. The ANOVA-based intra-class correlation and
Pearson correlation analyses show that ten out of the eleven cases with two informants demonstrated significant correlations at the 1 percent level or better.
Operationalization
The questionnaire was developed through the following processes. First, based on the review of relevant literature, the first author developed a draft questionnaire in English to measure the variables
in our hypotheses (see Appendices 1 and 2 for more details). Second, the draft questionnaire was
reviewed by three academics. Third, the final English version of the questionnaire was translated
into Arabic by the first author. Fourth, five academics who were bilingual in Arabic and English
checked the translation. Finally, a modified Arabic version was administered to seven Egyptian executives leading to some amendments. The resulting Arabic questionnaire could be described as being as close in meaning to the original English version as possible. Moreover, the same layout,
paper, order of questions and number of pages were used in both versions.
Since each variable was measured reflectively with seven-point Likert-scales, the results derived
from Stage 1 were carefully examined and subjected to tests of internal reliability and validity. In
the light of the first stage results, a number of amendments were made to the questions asked. Several items were changed, deleted or reordered, in some cases to avoid undue sensitivity among respondents. For example, two items referring to politics at the country level were removed from the
scale of environmental uncertainty because respondents had been reluctant to answer these two
items (see Appendix 1 for more details).
Data analysis
We used Smart PLS 2.0 M3 software (Ringle et al., 2005) to test the proposed model by conducting
partial least squares (PLS) analysis, which is a structural equation modelling (SEM) technique (e.g.,
Lew and Sinkovics, forthcoming). PLS was preferred as the methodological choice because of the
following reasons: First, as a component-based approach, it places minimal requirements on sample
size and residual distributions to achieve sufficient statistical power (Hair et al., 2012; Reinartz
et al., 2009; Lohmoller, 1989). Second, it allows us to model latent variables and simultaneously
assess both measurement and structural models (Chin, 1998; Barclay et al., 1995). Third, it is considered one of the most suitable techniques for the development of new theory. Fourth, it can be
used to evaluate the effect of common method bias (Liang et al., 2007; Podsakoff et al., 2003).
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We followed the guidelines of Hair et al. (2011 and 2012) on how to apply and report the PLSSEM method. In order to identify the minimum sample size, as suggested by Chin (1998), the number of paths leading to the endogenous construct with the most paths was multiplied by 10. The
performance variables (both of financial and non-financial performance variables), have four paths
leading into each of these performance variables, suggesting that a minimum sample size of 40
would be sufficient. Moreover, as indicated by Reinartz et al. (2009, p. 340) the minimum sample
size necessary to achieve a given level of statistical power in PLS is always less than or equal to the
size required for ML-based CBSEM, and in many cases, ML-based CBSEM needs twice as much
information as PLS to avoid Type II error. Indeed, one of the main reasons of choosing PLS is
that statistical power of PLS is higher than ML-based CBSEM (Reinartz et al., 2009; Chin et al.,
2003). Since our aim is to identify potentially significant relationships that may exist, rather
than confirming the significant relationships that have been proved by past research, achieving sufficient statistical power is essential for this study. Therefore, given our sample size of 169 participants, we are confident that our use of PLS to test the hypotheses was appropriate.
Measurement model results
The psychometric properties of the scales and the explanatory and predictive power of the structural model were assessed by conducting PLS analysis. However, variables related to environmental
characteristics were not included because they were used as moderators in this study. Instead, we
performed factor analysis to test convergent and discriminant validity of the environmental variables. As expected, factor analysis produced five distinct factors, four of environmental uncertainty
and one of environmental hostility. Since the four sub-scales of environmental uncertainty did not
separately add to the prediction of decision intuition as compared to their aggregation, we used an
aggregate of all twenty-one environmental uncertainty items in the analysis.
In the PLS analysis, item loadings, discriminant validity, and reliabilities were first examined in
order to assess the psychometric properties of the scales. Construct items were dropped when there
were very small and insignificant item loadings, as suggested by Chu et al. (2004). Item loadings and
reliabilities above 0.70 were considered acceptable (Fornell and Larcker, 1981). Table 1 shows PLS
item loadings and cross-loadings. In PLS analysis, the loadings of items are interpreted as loadings
in a principal component factor analysis (Chin et al., 2003). As Table 2 shows, the items have loadings above 0.70. Descriptive statistics for the model constructs, composite reliability scores, and interconstruct correlations are shown in Table 2. All constructs have acceptable internal consistency,
with all reliability scores being above 0.70. Specifically, the composite reliability scores range from
0.80 for decision motive to 0.92 for rationality. Thus, the composite measurement items have adequate item reliability.
In PLS analysis, there are two criteria used to assess discriminant validity. First, items should load
more strongly on their corresponding construct than on other constructs; and second, the square
root of each reflective constructs AVE should be greater than the level of correlations involving the
construct (Chin, 1998). As shown in Table 2, all items load more highly on their corresponding
construct than on other constructs (i.e., loadings are higher than cross-loadings). Additionally,
as shown in Table 2, all constructs share more variance with their items (AVE) than with other constructs. Moreover, all the correlations were well below the cutoff value of 0.80 (Hair et al., 1995);
and skewness values, ranged from 1.38 to 0.25, are well below the levels suggested for transformation of variables (Ghiselli et al., 1981). Therefore, we conclude that our model has adequate validity and reliability to continue with analysis of the explanatory and predictive power of the
structural model.
Structural model results
We assessed our proposed model by running the structural model in Smart PLS to test our hypotheses. Path coefficients of a PLS model are interpreted same as standardized beta weights in a regression analysis. A PLS models quality is assessed by two indicators: the variance explained (R2) in the
endogenous variables and the regression coefficients significance (Chin, 1998; Saade, 2007). Table 3
10
Table 1. PLS factor loadings
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
1
2
1
2
3
1
2
3
4
1
2
1
2
3
4
1
2
3
Decision
motive
Decision
uncertainty
Financial
performance
Non-financial
performance
Intuition
Rationality
0.853
0.773
0.206
0.252
0.325
0.406
0.330
0.192
0.325
0.169
0.188
0.273
0.423
0.460
0.439
0.498
0.439
0.506
0.316
0.191
0.858
0.878
0.724
0.171
0.181
0.133
0.213
0.191
0.266
0.192
0.228
0.253
0.229
0.357
0.300
0.324
0.257
0.382
0.161
0.163
0.199
0.812
0.828
0.817
0.836
0.142
0.187
0.409
0.356
0.464
0.332
0.381
0.324
0.352
0.451
0.336
0.190
0.190
0.297
0.404
0.396
0.353
0.400
0.220
0.275
0.762
0.807
0.902
0.820
0.468
0.479
0.455
0.175
0.144
0.205
0.220
0.208
0.169
0.126
0.150
0.155
0.877
0.937
0.201
0.167
0.248
0.269
0.338
0.343
0.257
0.478
0.397
0.261
0.287
0.360
0.335
0.338
0.287
0.348
0.268
0.366
0.350
0.388
0.514
0.461
0.917
0.917
0.817
Note: Figures in boldface represent the loadings of individual items on their corresponding factors.
shows the PLS path modelling results (overall and under different environmental conditions); the
differences in two comparisons path coefficient estimates (High uncertainty vs. Low uncertainty;
and High hostility vs. Low hostility). It also provides the results of multigroup comparisons based
on Keil et al.s (2000) parametric test, the permutation test (Chin, 2003; Chin and Dibbern, 2010),
and Henselers (2007) approach.
Results of model testing indicated that our model results in acceptable R2 statistics because they
are greater than the recommended 10% (Falk and Miller, 1992): R2 0.17 for intuition and
R2 0.27 for decision disturbance. Hypothesis 1 predicted that there would be a positive relationship between decision uncertainty and the use of intuition. As the results in Table 3 indicate, decision uncertainty had a weak positive relationship with the use of intuition (path 0.13, t 1.70,
p < 0.10), which provides some support for Hypothesis 1. Decision motive was not significantly
related to the use of intuition (path 0.03, t 0.39, p > 0.10). Thus, Hypothesis 2 was not
supported.
Hypothesis 3 posited that performance would be positively related to the use of intuition. The
results indicate that neither financial performance nor non-financial performance are related to
the use of intuition (path for financial performance 0.09, t 0.12, p > 0.10; path for nonfinancial performance 0.10, t 1.77, p > 0.10). Thus, Hypothesis 3 was not supported.
Hypothesis 4 predicted that there would be a negative relationship between company size and the
use of intuition. The results indicate that company size had a negative relationship with the use of
intuition (path 0.16, t 2.39, p < 0.05), which provides support for Hypothesis 4.
Hypothesis 5 predicted that the use of intuition would be positively related to decision disturbance. The results indicate that there is a positive relationship between the use of intuition and decision disturbance (path 0.20, t 3.23, p < 0.01). Thus, Hypothesis 5 was supported.
Finally, the results revealed that our control variable, rationality, had a negative relationship with
both intuition and decision disturbance (path for rationality on the use of intuition 0.25,
t 2.52, p < 0.05; path for rationality on decision disturbance 0.41, t 4.85, p < 0.01).
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2012
11
12
Table 2. Reliability and inter-construct correlations
Variables
Composite
Reliability
Mean
S.D.
10
1. Intuition
2. Decision uncertainty
3. Decision motive
4. Financial performance
5. Non-financial performance
6. Company size (log)
7. Rationality
8. Decision disturbance
9. Environmental uncertainty
10. Hostility
0.90
0.86
0.80
0.89
0.89
N/A
0.92
N/A
0.92
0.86
4.04
2.32
5.65
4.84
5.69
2.45
5.81
2.40
4.13
3.59
1.96
1.43
1.36
1.15
1.08
0.42
1.17
1.46
1.21
1.63
0.90
0.25**
0.19*
0.18*
0.27**
0.22**
0.35**
0.35**
0.11
0.26**
0.86
0.31**
0.22**
0.28**
0.11
0.37**
0.36**
0.12
0.15
0.81
0.40**
0.48**
0.05
0.53**
0.37**
0.07
0.21**
0.82
0.46**
0.21**
0.40**
0.26**
0.12
0.33**
0.82
0.17*
0.52**
0.50**
0.02
0.25**
1
0.17*
0.05
0.15
0.09
0.88
0.50**
0.13
0.31**
1
0.03
0.32**
N/A
0.43**
N/A
Notes: N 169. Boldface values are the square root of the average variance extracted. It shows the variance shared between a construct and its measures. Boldface diagonal elements should
be larger than off-diagonal elements in order to satisfy discriminant validity requirements. N/A not applicable, p < 0.10, *p < 0.05, **p < 0.01.
Sample size
Overall Uncertainty
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169
Path
Decision uncertainty /
coefficients Intuition
Decision motive /
Intuition
Financial
Performance / Intuition
Non-financial
Performance / Intuition
Company size /
Intuition
Rationality / Intuition
Rationality / Decision
disturbance
Intuition / Decision
disturbance
Adjusted R2 Intuition
Decision disturbance
High
Low
93
76
jDj
Multigroup comparison test results
Hostility
Parametric
High
Low
91
78
Permutation
Henseler
jDj
Multigroup comparison test results

Parametric
Permutation
Henseler
0.132 0.142 0.128 0.014 1.940
1.612
0.034
0.153) 0.139 0.014 1.970
1.323
0.067
0.03
0.071
0.064
0.007 0.383
0.733
0.045
0.081
0.076
0.005 0.121
0.076
0.011
0.093
0.098
0.086
0.012 1.735
1.357
0.012
0.097
0.088
0.009 0.229
0.102
0.032
0.10
0.112
0.104
0.008 0.256
0.187
0.128
0.092
0.084
0.008 0.321
0.287
0.087
0.16*
0.193* 0.189* 0.004 0.145
0.067
0.031
0.188* 0.181* 0.007 0.288
0.112
0.045
0.25**
0.41**
0.332** 0.253** 0.079 3.562**

0.571** 0.39** 0.181 4.176**
2.692**
2.829**
0.125
0.133
0.372** 0.264** 0.108 3.970***

0.494** 0.448** 0.046 2.763*
2.794**
2.014*
0.782
0.592
0.20**
0.180* 0.178* 0.002 0.089
0.082
0.029
0.210** 0.186* 0.024 2.460*
1.945
0.089
0.17
0.27
0.19
0.28
0.16
0.25
0.18
0.27
0.16
0.24
Notes: jDj Absolute difference of high environmental conditions data and low environmental conditions data results; **Significant at .01, *Significant at .05, Significant at .10; Results for
Henseler (2007) eligible for a one-sided test.
13
Table 3. PLS path modeling results: overall & under environmental conditions
In sum, the results on the aggregate data revealed that with a path coefficient of 0.25, rationality
is the strongest predictor of intuition, whereas company size has a moderate coefficient (path coefficient of 0.16) and decision uncertainty has the weakest coefficient (path coefficient of 0.13).
The essential link between rationality and decision disturbance has the highest coefficient
(0.41) for the PLS path model estimation on the aggregate data level.
Moderating role of environmental uncertainty and hostility
We used the subsample method (Sarstedt et al., 2011; Rigdon et al., 2011; Henseler and Fassott,
2010), performing a quantile split to create separate groups for the lower and higher third of the
dataset, to test for the moderating effect of environmental uncertainty and hostility. We estimated
the path coefficients through PLS path modelling for each subsample. The differences between the
path coefficients indicate whether environmental uncertainty and hostility act as moderating
variables.
In general, the results (see Table 3) indicate that according to the parametric test and the permutation test, environmental uncertainty does not significantly moderate the impact of the use of intuition on decision disturbance (jDj 0.002, t 0.089 and 0.082 for the parametric test and the
permutation test, respectfully, p > 0.10 for both), but environmental hostility does (jDj 0.024,
t 2.460 and 1.945 for the parametric test and the permutation test, respectfully, p < 0.10 for
both). Thus, Hypothesis 7 was supported, but Hypothesis 6 was not.
More specifically, in the structural model, the R2 values of latent variables in the different environmental conditions model estimation show the same rank order compared with the results for
the R2 values on the aggregate data level. The bootstrapping results show that the same paths (Decision uncertainty / Intuition, Company size / Intuition, Rationality / Intuition,
Rationality / Decision disturbance, and Intuition / Decision disturbance) that are significant
in the overall model estimation are also significant in each environmental conditions model estimation. In comparison with the aggregate level results, the path coefficients in environmental conditions model estimations show differences (in absolute values) in the range of 0.005 to 0.161.
However, structural model path coefficients mainly demonstrate the same order of relative relevance.
The environmental conditions model estimations, on the other hand, show stronger differences
that range (in absolute values) between 0.002 and 0.181. The results of PLS-MGA approach
(Henseler et al., 2011; Sarstedt et al., 2011) show that the parametric test and the permutation
test, in most cases, yield significant and higher t-values than the Henselers approach. More specifically, the analysis indicates that the same paths that are significant in both the overall model estimation and the different environmental conditions model estimation are also significantly different
across different environmental conditions according to the parametric test and the permutation
test, with one exception (i.e., the relationship between Decision uncertainty and Intuition). For instance, under the high uncertainty condition, the negative relationship between rationality and decision disturbance is significantly stronger than under the low-uncertainty condition
(jDj 0.181, p 0.01). The similar significant differences also exist under high and low hostility
conditions, such as between rationality and intuition (jDj 0.108, p 0.01). In sum, the results
show that the group specific data is more representative to meet our analytical goals than overall
sample data.
Discussion
Theoretical implications
The present investigation attempts to examine a more comprehensive model of the antecedents and
consequences of intuition in strategic decision-making than those previously formulated. As anticipated, our results show that decision uncertainty and company size are significant predictors of the
use of intuition, that intuition significantly influences decision disturbance, and that environmental
hostility moderates the linkage between decision intuition and disturbance.
14
Consistent with earlier research (Sadler-Smith, 2004, r 0.27, p < 0.01; Scott and Bruce, 1994,
r 0.17, p < 0.05), the relationship between intuition and rationality was significantly negative
but relatively low (r 0.25, p < 0.01). However, this does not mean that intuition and rationality
are necessarily the two opposite extremes of a single dimension, for Hodgkinson and Sadler-Smith
(2003), and Leybourne and Sadler-Smith (2006) found a non-significant correlation between intuition and rationality. Using a version of the Rational-Experiential Inventory (REI) that measures
rational and experiential/intuitive thinking styles, Pacini and Epstein (1999) report that the two
styles were independent and exhibited discriminant validity. Similarly, Epstein (2011) claims that
there are individual differences with people relying more on their intuitive processing and others
on their rational processing in response to a change in incentive level.
Surprisingly, decision motive and performance do not predict intuition, and environmental uncertainty does not moderate the relationship between intuition and decision disturbance. We now
consider the interpretation of these findings.
It is worth noting that none of the previous studies examined the impact of decision motive on
the use of intuition empirically. Therefore, it was not possible to compare this result to related research. A possible explanation for our result is that the impact of decision motive on decision intuition will vary according to decision-makers characteristics. Leybourne and Sadler-Smith (2006),
for example, report that more experienced managers may be more intuitive than less experienced
ones. Similarly, Sayegh et al. (2004) argue that experience is critical in the use of intuition in the
strategic decision-making process.
Interestingly, neither financial nor non-financial performance significantly predicts the use of intuition. Related research in different settings, such as the USA and Greece, reveals that different aspects of performance are differentially related to the use of intuition (e.g., Khatri and Ng, 2000) and
to other aspects of strategic decision-making (e.g., Papadakis, 1998). In view of this and the fact that
performance is a complex and multidimensional phenomenon, we suggest that divergent aspects of
performance may differently influence the use of intuition in strategic decision-making. Although
financial and non-financial performance inversely influence decision disturbance in our study, this
impact was insignificant. As suggested in our revised theoretical model (Figure 2), future research
could examine the impact of other aspects of performance, not considered in the current study,
such as the effect on the use of intuition of long and short-term performance, subjective and objective performance, past performance, and balanced scorecard perspectives.
It is also worth noting that the causal relationship between intuition and performance could be
bi-directional. While some researchers have examined the impact of intuition on organizational
performance (e.g., Khatri and Ng, 2000; Sadler-Smith, 2004), we regarded performance as an antecedent of intuition. An important consideration, which should be taken into account when assuming causal direction, is the unit of analysis of the study. If the unit of analysis is the overall
decision-making of an organisation, the direction of causal relationship between intuition and
performance can be examined both ways. If the study examines isolated strategic decisions, as
does the current study, the overall performance of an organisation may have only a weak relationship to any individual decision. This is because the same firm makes diverse strategic decisions
(Hickson et al., 1986), and because different decisions in the same firm can produce diverse patterns of success (Nutt, 2002). Rajagopalan et al. (1997) suggest that overall organizational performance measures cannot be linked to the actions of a manager, let alone a specific decision. In that
case, the examination of both past and current performance as an explanatory factor of decision
process makes greater logical sense. It avoids the problem of causal ambiguity, which would attend
the choice of organisational performance as an outcome of a single decision. This is essential in the
light of the many exogenous effects on organisational performance (Pearce et al., 1987). Moreover,
in order to clarify the nature of what is likely to be a two-way recursive relationship, we suggest
that future investigations should adopt a longitudinal research design, using both laboratory and
field settings.
There is a positive statistical relationship between relying on intuition and decision disturbance.
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2012
15
Decision-based antecedents
- Decision uncertainty
- Decision motive, experience as a moderator
- Decision type
- Decision structure
Possible moderators
- Environmental hostility
- Environmental turbulence
- Environmental instability
- Previous experience
Intuition
- Dual-process theory
- CEST theory
- The associative/rule-based theory
- C-system-X-system distinction
- Types of intuition
- Intuition outcomes
- Purposes behind the use of intuition
Firm-based antecedents
- Organization size
- Different aspects of performance
- Short and long term
- Subjective and objective
- Current and previous performance
- Balanced scorecard perspectives
- Organization age
- Organizational culture
- Slack
Demographic and personal-based

antecedents
- Age; education; tenure; experience
- Affect/emotion; self confidence; propensity to
risk; cognitive styles; mood states
Multi indicators of success

- Decision quality
- Decision effectiveness
- Decision disturbance
- Decision speed
Possible control variables

- Peer consensus
- Environmental favorability
- Quality of decision implementation
- Belief/self-confidence in intuition
- Other modes of processing information
- Country or region
Methodological Improvements
A new scale of intuition in decision-making; the use of multiple respondents; carefully select the unit of analysis; longitudinal research design; clarification
of the causal relationship between in tuition and performance; take account of the national context of the study
Figure 2. Revised theoretical model and platform for future research
As expected, the use of intuition increases the possibility of decision disturbance, while environmental hostility significantly moderates the relationship between intuition and decision disturbance. However, there was no support for a moderating impact of environmental uncertainty on
the intuition-decision disturbance linkage. This result is consistent with Elbanna and Child
(2007b), who reported that environmental uncertainty did not moderate the relationship between
intuition and decision effectiveness. Similar results were reported regarding other dimensions of the
decision process such as rationality and political behaviour (e.g., Dean and Sharfman, 1996;
Elbanna and Child, 2007b). However, the above findings contradict those of other studies which
found environmental uncertainty to moderate the relationship between decision processes and organizational performance (e.g., Goll and Rasheed, 1997). It should be noted that all of the above
studies, apart from Dean and Sharfman (1996) and Elbanna and Child (2007b), examine organizational performance, which is normally not explicitly assessed in terms of decision outcomes. This
suggests that variations between the constructs of organizational outcomes used in previous research may be a possible source of the inconsistencies in the results obtained.
The absence of a moderating effect from environmental uncertainty could also be due to another
factor, specific to the national context of the study. There is reason to suspect that the degree of
familiarity with an environmental condition such as uncertainty may affect the extent to which
it moderates the relationship between intuition and decision disturbance. Getting used to living
with environmental uncertainty appears to lead Egyptian managers to discount it when making
strategic decisions. This is suggested by evidence from our interviews which revealed that Egyptian
executives have become accustomed to working under conditions of environmental uncertainty.
They appear to take these conditions for granted in decision-making within the Egyptian setting.
Egyptian managers tend to discount environmental uncertainty when making strategic decisions.
This lends support to the argument that the way in which managers perceive environment in national settings may differentially influence strategy formulation (Schneider, 1989; Savvas et al.,
2001), and also affect the moderating impact of environmental uncertainty on the decision
16
process-outcomes linkage (Elbanna and Child, 2007b). While, as previously noted, studies have
identified fatalism and uncertainty avoidance as characteristics of Egyptian culture, it may well
be that such characteristics are reinforced by genuine instability in the national business and political system. The relevance for modelling the strategic decision process of such national differences
warrants further comparative investigation.
The Middle East area including Egypt . is a completely unstable area. If we base our policies on
it, we will never ever develop, an executive said.
Commencing January 25, 2011, Egypt underwent a revolution against the dictatorship of Hosni
Mubarak. The revolution secured widespread popular support, especially among the younger generation, which demanded Dignity, Freedom and Social Justice. It is expected to influence managerial practices including the use of intuition in strategic decision-making. One of the interviewed
managers, for example, described the chairperson as being self-opinionated, insisting on his point
of view regardless of the other managers opinions or feedback. Our Chairman is a dictator. He is
a good listener . but he does not react to what he listens to . we know this fact well and accordingly act! another manager in the same company said. This confirms the high power distance and
high respect for seniority in the Egyptian culture as noted by other researchers (e.g., Elbanna and
Child, 2007a; Hickson and Pugh, 2001; Hofstede, 1991; Parnell and Hatem, 1999). This is considered a major drawback of the decision making process in Egypt which tends to leave little room for
effective participation and innovation. However, as a consequence of the January 25 revolution,
these assumptions may require revision. This opens a promising avenue for future research.
The flame of freedom and dignity is spreading and the culture of fear has been broken and there
is no going back, said Mohamed ElBaradei, the ex-Director General of the International Atomic
Energy Agency, commenting on the impact of the Arab Spring on Arabs in his speech in the Cinema for Peace Gala e Berlin 2012.
As a consequence of the January 25, 2011 revolution, current assumptions concerning management
practices in Egypt may require revision.
Practical implications
Since decision-makers can be trained to make better intuitive decisions (Hogarth, 2001), this study
has some practical implications. First, such training can help decision-makers understand intuition
and value it as a legitimate mental function that is particularly useful for some situations. Many
executives try to keep secret the fact that they rely upon intuition (Agor, 1989); while others, acting
like attorneys, search for confirmatory evidence and provide a post hoc rationalization for decisions
reached intuitively (Reynolds, 2006). This reflects the absence of executives self-confidence in intuition as an effective approach to decision-making, which may be due to the perception that it is
unscientific (Sadler-Smith and Shefy, 2004) and a result of limited empirical research on the subject. This study helps to fill this gap through empirically pointing to the variables that may lead to
the use of intuition in the strategic decision-making process and its impact on decision disturbance.
Moreover, the study calls attention to another important consideration which executives should be
aware of when examining the impact of intuition on decision outcomes. This is that the use of intuition in decision-making can differentially influence diverse types of decision outcomes. Realizing
this will help executives to better understand the practical value of intuition and its shortcomings.
Second, given that there is a growing interest among practitioners in ways of developing and understanding intuition, this line of inquiry may help them to a clearer view of where and when they
can trust their intuition. Third, since research suggests that executives do make significant use of
intuition, the process of intuition and its antecedents and outcomes should form part of the management education curriculum. This study and related research may encourage its inclusion.
Intuition should form part of the management education curriculum.
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2012
17
Limitations
This study is subject to a number of limitations. First, while our data enjoy a modest level of interrespondent reliability, and many related studies have collected data from a single respondent, it
would have been preferable to have had multiple respondents in order to minimize the risk of systematic response bias.
Second, our sample was drawn only from Egyptian private manufacturing firms. Therefore, caution should be expressed in generalizing these findings.
A third limitation is that the conceptual and operational scope of this study does not do justice to
the full breadth of the contextual variables potentially affecting intuition. To some extent, our results might therefore be idiosyncratic to our model and another model including an equally well
thought-out set of explanatory variables might yield different results.
Fourth, although environmental uncertainty and environmental hostility are related to observed
heterogeneity, there is also unobserved heterogeneity that cannot be attributed to pre-determined
variable(s). As noted by Sarstedt et al. (2011), unobserved heterogeneity would lead to misinterpretation of PLS path-modelling results if it is not considered in the analysis. Thus, future research
should investigate this essential issue by using mixture PLS such as FIMIX-PLS (Money et al.,
forthcoming).
Fifth, decision success is multifaceted in nature. This means that a decision may be successful
from one aspect; for instance, it achieves its stated objective. However, unforeseen consequences
of the decision, such as on employee morale, may represent a failure. Hence, a limitation of this
study and most of previous research is that they apply a single indicator of success e in our
case decision disturbance. Therefore, as suggested in Figure 2, future research needs to consider
the multi-dimensional nature of decision success by examining the relationship between intuition
and different types of decision outcomes in order to have a better understanding of this complicated relationship. A good way to do so is to ask the people who make the decision to observe
its effects and comprehend its context to judge, retrospectively and on several indicators, how
the decision turned out. Similarly, Nutt (2002) suggests that the documentation of decision success
requires multiple measures to capture the different dimensions of decision success.
Research needs to consider the multi-dimensional nature of decision success.
Finally, we should also acknowledge the limitations of the survey study, such as inability to track
changes over time or capture causal relationships and errors associated with reporting past behaviour. As discussed above, we attempted to minimise these limitations.
Directions for future research
Several lines of future research are suggested by this study. First, an important development would
be to incorporate other predictors of intuition into the theoretical framework for intuition. As suggested in Figure 2, these could include some of the following variables: affect or emotions, experience, organizational culture (e.g., Sonenshein, 2007), decision complexity (e.g., Hensman and
Sadler-Smith, 2011), decision type (Papadakis et al., 1998), confidence (e.g., Leybourne and
Sadler-Smith, 2006), thinking styles, mood states, decision structure (Sadler-Smith and Sparrow,
2007), and implicit and explicit learning (e.g., Dane and Pratt, 2007). Other variables may be examined as moderators such as environmental turbulence (e.g., Dayan and Elbanna, 2011) and environmental instability (e.g., Fredrickson and Iaquinto, 1989; Khatri and Ng, 2000).
Second, researchers need also to control for the effect on the intuition-outcomes link of several
variables at different levels. At the personal level, these would include level of agreement with the
decisions and self-confidence in intuition; at the decision level: quality of decision implementation;
at the organizational level: organization size; at the industry level: type of industry; at the environmental level: environmental favourability and country or region. It is worth noting that according
to the research design proposed in Figure 2, antecedents of intuition might be used as moderators,
such as performance (e.g., Elbanna and Child, 2007b), or controls such as size (e.g., Khatri and Ng,
18
2000), and vice versa. Moreover, some researchers examine the moderating impact of environmental variables on both the intuition-outcome link and the relations between antecedents and intuition (e.g., Dayan and Elbanna, 2011).
Third, a more precise understanding of the causal relationships between antecedents and decision
intuition requires the adoption of a longitudinal research design (e.g., Dean and Sharfman, 1996;
Pettigrew, 1990). For example, a longitudinal design may help to reduce the limitations of our cross
sectional/survey study such as reliance on the responses of managers who articulate a post hoc justification in order to rationalize their intuitions.
Fourth, intuition remains an understudied mental process with respect to its role in the strategic
decision-making process. Further empirical research, together with continued theoretical development, will help us to construct well-developed alternative theoretical perspectives on the subject.
Fifth, when researchers have found a negative relationship between rationality and organizational
outcomes, there has been a tendency to suppose that intuition is an alternative that is better suited
to the prevailing environmental circumstances. However, it does not follow that the use of intuition
and rationality are simply alternatives. Both approaches could be used as dual processes whereby,
for example, rationality is employed up to its limits in terms of the availability of relevant information and intuition takes over beyond those limits. For example, Woiceshyn (2009) examines how
decision makers manage complex situations by combining rational analysis with intuition. It
may therefore be more appropriate to conceive of intuitive and rational-comprehensive processes
of decision-making as two complementary systems of understanding used to inform strategic decision making. Environmental circumstances are likely to have relevance for the weight each process
has in arriving at a decision, but it would be an over-simplification to conclude that decisionmakers opt for the one approach rather than the other.
Hence, as shown in Figure 2, further research should investigate intuition as a dual process in the
context of strategic decision making. As argued by Hodgkinson et al. (2008), dual process formulations such as CEST (Epstein, 1994), the associative/rule-based theory (Sloman, 1996), and C-system-X-system distinction (Lieberman et al., 2004) provide a promising framework for
understanding the dynamics of intuitive and rational processing.
Sixth, drawing from Langleys (1989) framework of decision rationality and recent reviews on
intuition (Akinci and Sadler-Smith, 2012; Sinclair, 2011), future research can extend this work
in order to enhance our knowledge on intuition types (Gl
ockner and Witteman, 2010; Pretz,
2011), purposes (e.g., Klein, 2002; Mueller et al., 2007) and outcomes (Akinci and Sadler-Smith,
2012; Dane and Pratt, 2009) (see Figure 2).
Seventh, as previously mentioned, the use of Khatri and Ngs (2000) scale of intuition in this
study was found to be justified, and it was significantly correlated with the well-established
Scott-Bruce measure of intuitive decision-making style. However, some authors have recently argued that Kathri and Ngs scale should be refined to include more facets, and to improve its psychometric properties (e.g., Sadler-Smith, 2010: 164-165). As depicted in Figure 2, this is another
promising avenue for further research to capture the essence of intuitive processing, as contained
in many relevant theoretical and empirical studies, in order to capture intuition beyond using personal judgment and gut feeling.
Conclusion
This paper offers five main contributions to knowledge: 1) it contributes to understanding the use
of intuition in decision making in the context of organizations by developing a model of the contextual influences on and consequences of intuition, and controls for the effect of rationality; 2) it
reports research conducted in a non-Anglo-Saxon setting; 3) it examines the impact of intuition on
a hitherto unresearched decision outcome variable, decision disturbance; 4) on a practical note, it
points to the variables that may lead to the use of intuition in the strategic decision-making process
and its impact on decision disturbance; and 5) it concludes with a new theoretical model of intuition in strategic decision-making which can be considered as a highly plausible foundation for
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further research on intuition. In formulating the new model, we also highlight some methodological concerns which should be considered by further research. The new model can help decisionmakers to better understand intuition and value it as a legitimate mental function that is particularly useful for strategic decision-making in some situations.
Acknowledgements
The first author gratefully acknowledges the research grant from the UAEU (Research Project #
FSRGP/2009/BUSA/002) that supported the preparation of this paper. The authors wish to thank
the guest editors and two reviewers for their insightful comments. The authors are also grateful to
David Wilson, Kilani Ghoudi, and C. Anthony Di Benedetto for their comments on earlier drafts of
this paper.
Appendix 1. The exploratory study

Data collection in the first stage exploratory study covered both private and state-owned firms.
One-hundred and twenty-eight questionnaires were collected from a wide range of industries, representing chemicals, food, cement, cars, metals, furniture, paper, railroads, poultry products, electrical and electronic goods, and textiles. Two responses per company were collected from eleven
cases to check inter-rater reliability. Examples of decisions examined are downsizing, launching
a new product, new investment, geographical expansion and restructuring.
Along with the survey questionnaire, the first author conducted thirty-six semi-structured interviews, with executives who closely participated in making strategic decisions, in both private and
public sectors. These were divided into twenty-one interviews in private business sector companies
and fifteen interviews in public business sector companies. All interviewees were male. We followed
several rules for the interviews, e.g., detailed interview notes and impressions were completed
within one day of the interview. The interviewer started the interview by explaining the nature
of the present study, and the benefits the interviewee would get from this research. The following
are examples of questions which were included in our interview guide: 1) How and when did this
decision start and finish?; 2) Please provide me with a detailed description of this decision, the
process followed in making it, the main sequence of events from its inception to its completion,
and the interactions between decision-makers.
The exploratory stage was used to 1) clarify concepts; 2) operationalize measures; 3) determine
the practical problems of carrying out the research; 4) finalize our theoretical model; and 5) enrich
the discussion of our results. For example, the interviews revealed that top management teams in
state-owned manufacturing companies in many cases were not allowed to take strategic decisions
without getting approval from their holding companies. Indeed, their top managers were taking
some strategic decisions merely in response to governmental policies. The decision to initiate an
early retirement policy, for instance, which was one of the most frequently arising decisions in
the first stage sample, was merely the implementation of the governments policies related to its
privatization programme. Given these limitations, state-owned firms were excluded from the second stage of the investigation.
The first exploratory stage, also, helped us to exclude some variables from our model, reword
some questions, refine questionnaire design and enrich our interpretation of the findings. For example, because of the considerations of sensitivity of Egyptian executives to items related to politics, two items were removed from the scale of environmental uncertainty (i.e., the ability of the
party in power to maintain control of the country and the threat of armed conflict in the Middle
East). These two items led to respondent resistance to cooperate with the researcher. Similarly, this
study does not incorporate the demographic and personal characteristics of the decision-makers
themselves because, by contrast to countries like the U.S.A, such data are not publicly available
in Egypt and exploratory direct questioning indicated that Egyptian respondents are reluctant to
provide them.
20
Appendix 2. Operationalization of the study variables2

Intuition: Khatri and Ngs (2000) measure of intuition was used in this study for the following
reasons: 1) their measure appears to capture the main indicators of intuition, namely knowing
(judgement) and sensing (gut feeling), which have been addressed by previous studies; 2) different methods have been employed to test the validity and reliability of this measure; 3) Khatri and
Ng applied their measure to strategic decision-making, which was also the aim of the present
study; and 4) using this measure, Khatri and Ng report that intuition is a characteristic that managers often exhibit in their strategic decision-making, and that it captures meaningful variations
in the strategic decision-making process. Based on results of confirmatory factor analysis, their
question on experience was eliminated from the scale. The interviews indicated that some respondents saw the question as a test of whether they have enough experience. For example, the commercial director of a textile and clothing company replied: The long experience of our top
management team is enough to make any decision ... this experience permits any member of
the team to manage one of the biggest consultation centres. Coefficient alpha for the revised
scale was 0.90. Finally, in a new sample of fifty-two respondents, we examined the relationship
between the intuition scale with an established measure of intuitive decision-making style introduced by Scott and Bruce (1995) and successfully adopted by other researchers, e.g., Sadler-Smith
(2004). Our intuition scale and the Scott-Bruce measure were significantly correlated (r 0.51,
p < 0.01).
Outcomes: It is significant that the largest body of empirical research on organizational outcomes
deals with organizational performance, which is generally not explicitly portrayed as a decision outcome. Drawing on Rodrigues and Hickson (1995), we used a perceptual measure of decision outcomes, namely decision disturbance (the existence of major negative unexpected outcomes of the
decision). This measure can be applied to all types of strategic decisions in different organisations,
which is an important consideration since the present study includes different decisions from various kinds of organisations working in different manufacturing sectors.
Context: Three items developed by Khandwalla (1977) and successfully used by many researchers (e.g., Papadakis et al., 1998) were used to measure environmental hostility. Investigation of the measure of environmental uncertainty (Miller, 1993) during Stage 1 suggested
several changes to overcome operational problems, such as the ambiguity of some items, questionnaire length, and the sensitivity of managers to political issues as discussed in Appendix 1.
Factor analysis was used to inform the reduction of items to a more manageable number
(Gerbing and Anderson, 1988). The original thirty-five environmental items were reduced to
twenty-one, still retaining four of the original six components. After conducting Stage 2, the
twenty-one items of environmental uncertainty and the three items of environmental hostility
were factor analysed, and five factors were derived: four factors for environmental uncertainty
and one factor for environmental hostility. The five factors are consistent with the hypothesized
structure of constructs.
Depending on Hart and Banburys conclusions (1994), ten items of financial, market and nonfinancial performance were postulated. Respondents were asked to assess their companies performance on each of these items in relation to major competitors (e.g., Khatri and Ng, 2000). Comparisons were scored on a 7-point Likert scale for each item ranging from one (very poor) to seven
(excellent). Based on results of factor analysis, two items were eliminated from the scale, namely,
new product development and diversification into new business. In line with many previous studies, company size is assessed by the number of full-time employees. This statistic is more willingly
made available by companies than others, such as sales turnover and is less prone to erroneous or
false reporting.
To measure decision motive, two questions were asked based on our conception of opportunity
and crisis, which is described by Mintzberg et al. (1976, p. 251) as follows: decisions may be categorized by the stimuli that evoked them along a continuum. At one extreme are opportunity
2
Further information on the operationalization of the variables can be obtained from the first author.
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decisions, those initiated on a purely voluntary basis, to improve an already secure situation. At
the other extreme are crisis decisions, where organizations respond to intense pressures. Here a severe situation demands immediate action. Five items derived from previous research (Beach and
Mitchell, 1978; Dean and Sharfman, 1993; Papadakis et al., 1998) and successfully used by other
scholars (e.g., Dayan and Elbanna, 2011) were used to measure decision uncertainty. Based on
results of confirmatory factor analysis, two of the five original items were eliminated from
the scale.
We measured our control variable e rationality e using three items derived from Dean and
Sharfman (1996) which reflect well our definition of rationality, the extent to which the decision
process involves the collection of information relevant to the decision and the reliance upon analysis of this information in making the choice (Dean and Sharfman, 1993: 1071).
Given that the perceptual measures employed may not truly reflect the phenomenon of interest, we attempted to reduce this limitation in several ways: 1) scale anchors were reversed in several places; 2) multiple sources of data were used; and 3) assurances were given of complete
anonymity and confidentiality. The Pearson correlation coefficients between the answers of eight
respondents, who completed the identical questionnaire on two different occasions, three months
apart, range between 0.83 and 0.99. This result suggests a high degree of stability (inter-temporal
reliability) of the measures used in this study. Finally, factor analysis of the variables making up
each construct confirmed the unidimensionality of each construct.
Measurement items
Decision motive
Item 1
To what extent did you have adequate freedom in addressing this decision?
Item 2
What was the motivation for the company in making this decision e crisis or opportunity?
Item 1
How confident were the decision-makers that they were making the right choice?
Item 2
To what extent were the goals of this decision clear for the participants?
Item 3
It was not at all clear what kind of information we should collect so as to make this decision.
Financial and market performance
Item 1
Return on assets
Item 2
Operating profits
Item 3
Market share
Item 4
Growth rate of sales or revenues
Non-financial performance
Item 1
Quality of product
Item 2
Employee satisfaction
Item 3
Efficiency of operations
Item 4
Social responsibilities
Company size
Item 1
Number of full time employees
Intuition
Item 1
To what extent did participants in making this decision rely basically on personal judgment?
Item 2
On many occasions, decision-makers do not have enough information, and must make decisions
based on a gut-feeling. To what extent did participants in making this decision depend on a gut
feeling to make it?
Rationality
Item 1
To what extent did the decision-makers gather relevant information for making this decision?
Item 2
How extensively and thoroughly did the decision-makers analyse relevant information for making
this decision?
Item 3
How successful were the decision-makers at focusing their attention on crucial information
during making this decision?
22
Decision disturbance
Item 1
To what extent were there any major negative unexpected outcomes of this decision?
Environmental uncertainty
21 items
Clients preferences, demand, changes in product components, changes in product quality, new
product, changes in the production process, inflation rate, exchange rate with the dollar, interest
rate, results of economic restructuring, changes in competitors prices, markets and strategies,
entry of new companies into the market, tax policies, monetary policy, public service provision,
control of prices, legal regulations, national laws, tariffs on imported goods
Environmental hostility
Item 1
Threat to survival
Item 2
Stressfulness
Item 3
Dominance over the company
Note: All items are measured using a seven-point scale.
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--
2012
27
Biographies
Said Elbanna received his BCom (Hons) and MBA from Cairo University, Egypt, and his PhD from the university
of Birmingham, the UK. He is an Associate Professor, the founding director of the UAEU Centre for Strategic
Management at the United Arab Emirates University, and a Strategic Advisor at Alain Municipality in the UAE. His
main research interests are strategic decision-making, strategic planning, internationalization of SMEs, and new
product development. He has published in academic journals such as Strategic Management Journal, Journal of
Product Innovation Management, Journal of Management Studies, and International Journal of Management Reviews.
His awards include the JMS Best Paper Award for 2007. E-mail: Selbanna@uaeu.ac.ae
John Child received his PhD and ScD from the University of Cambridge, UK. He is Emeritus Professor of Commerce at the University of Birmingham, UK. His research interests include the internationalization of SMEs,
and new organizational forms. He has published twenty-one books and over 150 articles. His book co-authored
with Suzana Rodrigues, Corporate Co-evolution, published by Wiley won the 2009 Terry Book Award of the
Academy of Management. His latest books are The Evolution of Organizations and The Dynamics of Co-evolution,
both published by Edward Elgar. E-mail: j.child@bham.ac.uk
Mumin Dayan is an Associate Professor at UAEU, Al Ain, UAE. He received his M.B.A in Marketing from the Bennett S. Le Bow College of Business at Drexel University, and his Ph.D. in Marketing from the Fox School of
Business at Temple University, Philadelphia, PA. His current research areas are new product/technology development, cognitive/social psychology in innovation and small business management, and decision-making in teams.
His work has been published in a variety of leading journals, including Journal of Product Innovation Management,
R&D Management, Information & Management and Journal of Business and Industrial Marketing.
E-mail: mdayan@uaeu.ac.ae
28

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Long Range Planning

A Model of Antecedents and

Figure 1. Theoretical model

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Table 1. PLS factor loadings

Table 2. Reliability and inter-construct correlations

Long Range Planning, vol

Multigroup comparison test results

Multigroup comparison test results

0.132 0.142 0.128 0.014 1.940

0.153) 0.139 0.014 1.970

0.193* 0.189* 0.004 0.145

0.188* 0.181* 0.007 0.288

0.332** 0.253** 0.079 3.562**

0.372** 0.264** 0.108 3.970***

0.180* 0.178* 0.002 0.089

0.210** 0.186* 0.024 2.460*

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Demographic and personal-based

Multi indicators of success

Possible control variables

Figure 2. Revised theoretical model and platform for future research

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Appendix 1. The exploratory study

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Appendix 2. Operationalization of the study variables2

Long Range Planning, vol

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Long Range Planning, vol

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

Long Range Planning, vol

A Model of Antecedents and Consequences of Intuition in Strategic Decision-making

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0.332 0.253 0.079 3.562**

0.372 0.264 0.108 3.970***