Rational decision-making and firm performance: the moderating role of the environment

This study investigates the moderating roles of environmental munificence and dynamism in the relationship between process rationality and organizational performance. Based on a sample of 62 manufacturing firms, the study found that environmental munificence and dynamism moderate the relationship between rationality and performance. Further, the study found that rationality is strongly associated with performance in environments high in munificence and dynamism. © 1997 by John Wiley & Sons, Ltd.