Paper on Cultural Contexts of Strategic Investment: A Deep Dive into Pakistani Companies

1. Introduction

The swift developments in international trade, technology, and communication have led to the globalization of modern economies and world trade collaboration (Carr, Henley, and Pudelko,2007). These emerging issues have necessitated the need to understand how companies operate in various contextual settings as facilitated by culture to enable future collaborative success on the global stage. To adjust to the new and emerging prerequisite for entry and success in this marketplace, firms need to adjust accordingly and incur internal overheads which can be subject to erratic degrees of risk. (Strange and Buckley,2011). Contextual approaches might be the same in different companies. Still, culture brings the difference in strategic investment Decision making and hence it is only prudent to discuss the contextual approaches in tandem with culture to paint the picture clearly in a country like Pakistan where cultural practices play a significant role in the daily running and operations of many companies. Therefore, there is a need to investigate the part played by culture versus context in the 10 Pakistani companies to determine their effects on Strategic investment Decision making.

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In the past research on the issues, there has been little or no mention of the relationship that seems to exist between contextual issues and the effects of culture in developing countries. The present literature seems to explore the general use of capital budgeting techniques, and more broadly, most researchers have only attempted to present the general prevailing corporate practices with a concentration on the available techniques that are applicable. (Alkaraan & Northcott, 2006, 2013). However, there exists the need to establish more about how these techniques are being utilized and how these contextual approaches may contrast across various contextual settings as influenced by the culture of such regions(Verbeeten,2006). Further research, tends to prove that SIDs are not all the time primarily centered on financial considerations and there might be a substantial difference in the scope in which contextual approaches versus cultural and economic factors, are emphasized in their analysis.

Cross-country research postulates that the differences that occur in SIDs might be associated with country beliefs and practices (Carr and Harris 2004). Hitherto, SID research and literature have provided insufficient evidence of which exact contextual variables, besides the country's culture, could be associated with a difference(Chen 2008). Thus, we investigate the effects of contextual variables in relation to countries' beliefs in the 10 Pakistani company's cases, to determine their impact on SID making.

2. Background and Literature Review

2.0 Background of research

This research focuses on comprehensively investigating Pakistan contextually and culturally, as our independent representative in SID making. Pakistan is a South Asia country among many others which include, India Bangladesh, Nepal, Afghanistan, Sri Lanka, Maldives, and Bhutan.

Over the previous years, South Asia has sustained a period of vigorous growth that has elevated many living in poverty, and made remarkable advances in health and education. The World Bank reports that between 2013 and 2016, growth in South Asian countries improved from 6.2% to 7.5% while growth rates of other developing nations remained level or even turned negative. In the coming years, the World Bank expects countries in South Asia to continue this growth trajectory, estimated at 6.3 percent in 2020 and 6.7 percent in 2021. Pakistan's impressive economic growth makes the comprehension of her SID, making Strategy crucial for future complementary studies for developing countries.

2.1 Contextual Influences on SIDS

SIDs can be considered essential and long-term investments affecting the long-term direction or survival of the company (Alkaraan, 2015).SID making is characteristically intricate, involving subroutines and peripheral interruption. Recent research on SID-making practices can be partitioned into two research streams. The first point of view focuses mainly on how capital budgeting methods have been utilized throughout contextual settings (Allameh, S. M. (2018). However, the SID making does not necessarily revolve around financials but instead on more expansive emerging issues in the field. The progressive growth of Strategy and differences across cultures are crucial factors. Another point of view debates the financial versus strategic approach and their effects on a single country variable (Attia, A., & Essam Eldin, I. (2018), while disregarding other contextual subjects. Generally, the two approaches are still underdeveloped in strategic formation with little or no contextual and cultural determinants incorporated with the entire SID-making

2.2. The contextual variables affecting SIDM

Previous literature indicates several contextual factors that may substantially influence the processes of SIDM. However, there is a shortage in the research that may provide evidence relating to the effects of contextual variables on decision-making styles. Therefore, the present study not only bridges this gap but provides a significant implication for the existing field of strategic investment. The following variables outlined below illustrate how these factors affect the SIDM, and they include:

2.2.1 Type of Investment Decision

The study of Elbanna & Child, Carr et al., (2007, 2010) reveals a strong relationship between the types of investment decisions and SID. Similarly, one prominent study shows a leading role of decision-type characteristics in determining SID. ( Papadakis et al. 1998, p.134) propose that "new business investment and investments in marketing exhibit less association with rationality in comparison to capital equipment investment and internal reorganization. Investment in internal reorganization seems to be hierarchically more centralized in comparison to all other types of strategic investment." Therefore, it seems essential to include the types of investment decisions as a significant contextual factor in affecting the strategic investment style, and so the first research question of this study related to distinguishing the different SIDM styles. Based on these rationales we propose the following hypothesis

H1.Type of investment decisions has positive influences on SIDs

2.2.2 Size of company

Earlier literature identifies factors such as the size of the company, Strategy, and national culture as significant contextual (contingency) factors that may affect SID and other organizational processes (Mintzberg & Waters, 1982; Fredrickson, 1984; Fredrickson & LaQuinta, 1989; Pike, 1996; Papadakis et al., 1998; Chenhall, 2003; Verbeeten, 2006, Asio, 2010). Some studies indicate that company size is related to SID processes, although there is mixed evidence of the direction of the relation (Mintzberg & Waters, 1982; Papadakis et al., 1998, Verbeeten, 2006; Ansio, 2010) Further, there are also studies where no impact of company size in connection with strategic investment decision was found (Schreck, P., & Raithel, S. (2018). Such conflicting results require further investigation. Therefore, this study includes company size as a contextual variable to investigate effects on SIDM that have potential importance. Based on these rationales we propose the following hypothesis

H2.Company size has an impact on SIDM

2.2.3 Perception of the Country Context

Strategic management is an emerging topic in developed countries, and very few studies have been carried out in developing countries. According to Herzig et al. (2012), globalization has moved many industrial and manufacturing activities from the USA and Europe to Asia, specifically the South-Asian region. Few studies, however, examine the context of the country of origin while studying SIDM (Shields et al., 1991; Jones et al., 1993). Moreover, field studies on SIDM indicate that cross-country differences do affect strategic investment decisions (Carr et al., 2010). Values may also influence the fundamental beliefs and observations that lead to different strategic choices, and these may vary among countries (Ziegler, A. (2017). Therefore this study highlights the context of SIDM, i.e. uses country-specific contextual variables, while investigating SIDs. Thus the second research question of this study is related to the effects of contextual variables on various styles of SIDM. Based on these rationales we propose the following hypothesis

H3.Country context has an impact on SIDM

2.2.4 Strategic Objectives

Several studies indicate strategic objectives as the critical contextual factors affecting SID. Such studies also reveal that firms choose their projects on a strategic basis, especially for big projects such as diversification, mergers, acquisitions, or launching a new product (Kulkarni, U., Robles-Flores, J. A., & Popovic, A. (2017). However, few studies indicate that significant investments relate mostly to strategic objectives, and these objectives shape the parameters and boundaries of different SID practices (Carr et al., 2010). Another critical aspect that requires attention is the central position of the financial aspect while investigating strategic decisions (Boeddeker et al., 2011). Further, in light of the past Literature, various strategic objectives and contextual issues may affect SIDs.Based on these rationales we propose the following hypothesis

H4.Strategic objectives have an impact on SIDM

2.2.5 Corporate performance

For a business's survival in the contemporary competitive business world, the firm's performance is essential in formulating investment strategies.