Impact of Inflation and Interest Rate Volatility on Corporate Strategy: A Secondary Evidence Synthesis Using Mixed-Methods Integration

This paper presents a systematic secondary evidence synthesis investigating the multifaceted impact of inflation and interest rate volatility on corporate strategic decision-making through a mixed-methods integration approach. We synthesize recent empirical evidence from published studies spanning the 2018-2026 period, with primary focus on the 2022-2026 monetary tightening cycle, integrating findings from quantitative econometric analyses with insights from qualitative case studies and executive interview reports. Our quantitative strand synthesizes results from panel regression studies employing GARCH-based volatility measures, examining heterogeneous effects across firm size, leverage, and sectoral characteristics reported in the literature. The qualitative strand synthesizes published case studies and executive interview reports to uncover strategic responses including real options-based investment staging, dynamic hedging programs, and pricing power exploitation. Synthesized findings reveal that interest rate volatility significantly reduces capital expenditures among young and highly leveraged firms, while inflation exhibits context-dependent effects on profitability and investment timing. We develop an integrated conceptual model synthesizing real options theory, monetary transmission mechanisms, and agency theory to explain observed strategic adaptations documented across the empirical literature. This secondary synthesis contributes to corporate finance literature by systematically integrating diverse empirical evidence on macroeconomic-strategy linkages, offering actionable insights for executives navigating volatile economic environments, and identifying critical boundary conditions under which inflation and interest rate shocks differentially affect strategic choices across heterogeneous firm populations.