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Unformatted text preview: e that do not, such research
would contribute to the theoretical debate between the decision analysts and
behaviouralists. The behavioural decision theorists would no longer be able to claim
that there is no value in a theory that does not aim to predict what decision-makers
will do. Such research would obviously also be valuable to practitioners.
This type of study, however, has been slow to appear in the literature doubtless
because of the threat they represent to the decision analysts (Clemen, 1999 pp23-24):
“Asking whether decision analysis works is risky. What if the answer is
negative? The contribution will clearly be scientifically valuable, but many 3 individuals – consultants, academics, instructors – with a vested interest in
decision analysis could lose standing clients, or even jobs.”
The current study aims to remedy this situation by researching the use of decision
analysis in investment appraisal decision-making by the major companies in the
upstream oil and gas industry. The oil and gas industry epitomises investment decision-making under conditions of risk and uncertainty (Watson, 1998; Newendorp,
1996; Rose, 1987; Ikoku, 1984), and hence was one of the first industries to apply
decision analysis (Grayson, 1960). The industry is often used as a laboratory for the
development of new decision analysis tools and concepts (for example, Bailey et al.,
in press; Galli et al., 1999; Ball and Savage, 1999; Dixit and Pindyck, 1998 and 1994;
Smith and McCardle, 1997) and it is recognised to lead all other industries, with the
exception of the finance industry, in the extent to which it uses decision analysis
(Schuyler, 1997). Clearly, then the oil industry provides a particularly useful context
in which to establish whether a relationship exists between the use of decision
analysis in investment appraisal by companies and business success. The study will
focus on those major upstream oil and gas companies that are operators in the U.K..
Since most of the major oil companies that operate in the U.K. are global players in
the oil industry, the findings will be indicative of investment decision-making in the
worlds’ major upstream oil and gas companies. The research questions that the thesis
aims to answer and methodological approach followed are outlined in the following
1.3 RESEARCH QUESTIONS
1. Which techniques are the most appropriate for companies to utilise in their
This question is motivated by the observation that there are many decision analysis
techniques presented in the academic investment decision-making literature leading
many practitioners to feel confused about which decision analysis techniques are most
applicable for investment decisions (see Chapter 6 and studies by Schuyler (1997) and
Fletcher and Dromgoole (1996)). Clearly, there is a need to identify which of the
decision analysis techniques and concepts presented in the academic investment 4 decision-making literature are the most appropriate for practitioners to use for
investment decision-making. The current study undertakes such research in the upstream oil and gas industry.
The current study draws on the decision analysis and oil in...
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- Summer '14
- The Land