In this chapter using chapter 6 as the main data

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Unformatted text preview: nt practice produced here to investigate the relationship between the use of decision analysis techniques in investment appraisal decision-making and organisational performance in the upstream oil and gas industry. 156 Chapter 7 The relationship between the use of decision analysis in investment appraisal decisionmaking and business success: a non-parametric analysis 157 7.1 INTRODUCTION This chapter will focus on answering the third research question by exploring the relationship between the use of decision analysis in investment appraisal decisionmaking and business success in the upstream. Organisational performance is complex, multi-dimensional and fundamental to strategic management theory and practice (Venkatraman and Ramanujam, 1986). Most researchers consider performance the ultimate test of new concepts and theories (Keats, 1988; Schendel and Hofer, 1979). It is contended in this chapter that the use decision analysis techniques and concepts in investment appraisal decision-making is a source of competitive advantage among operating companies active in the upstream oil and gas industry in the UKCS. This hypothesis is investigated in this chapter using nonparametric statistical tests. The chapter begins by establishing the type of study that will be carried out. It then draws on the discussions of Chapters 5 and 6, to construct a ranking scheme. Chapter 5 used the decision theory and industry literatures to present the range of decision analysis techniques and concepts available to upstream companies for investment appraisal and in Chapter 6, it was established which of these tools and ideas companies choose to use in investment decision-making and why. In this chapter, using Chapter 6 as the main data source, each of the upstream companies interviewed, are ranked according to their knowledge and use of each of the techniques presented in Chapter 5. Measures are then selected that are indicative of upstream organisational performance and companies are ranked again this time according to the performance criteria. Hypotheses are proposed for statistical testing. Once the statistical tests have been conducted, the results are analysed and discussed. The theoretical contribution of the research to the debate between behavioural decision theorists and decision analysts, the implications for practitioners especially to managerial perceptions of decision analysis, the limitations of the current study and areas for future research will be discussed in Chapter 8. 158 7.2 THE TYPE OF STUDY Most statistical techniques can be applied in different situations that vary in the degree of experimental control the researcher has and in the type of conclusion that can be drawn (Leach, 1979 p20). The distinction, however, is at the level of designing and carrying out the experiment, and not at the level of data analysis (Leach, 1979 p21). Hence, this chapter begins by looking at the two most common types of study and explores which is the most appropriate to use to in...
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