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

Authors: Zahida Sarwary

Addresses: Department of Business Studies, Kristianstad University, Elmetorpsvägen 15, 291 39 Kristianstad, Skåne, Sweden

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

Keywords: strategy; strategic planning tools; capital budgeting techniques; CBT; organisational structure; entrepreneurial structure; content analysis.

DOI: 10.1504/IJMFA.2020.107001

International Journal of Managerial and Financial Accounting, 2020 Vol.12 No.1, pp.48 - 70

Received: 02 Feb 2019
Accepted: 14 Nov 2019
Published online: 30 Apr 2020 *

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