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Unformatted text preview: crucial decisions. By drawing
on the literature review of Chapter 2, the following paragraphs contextualise the
results of the statistical tests.
Section 2.5 of Chapter 2 identified two areas of empirical literature on the relationship
between the decision-making process and effectiveness. The first demonstrated relationships between features and types of strategic planning and firm performance.
In particular the research to date has tended to focus on the effects of
comprehensivess/rationality and formalisation of the decision-making process on the
performance of the company. Chapter 2 also established that use of decision analysis
implies comprehensiveness/rationality and formalisation of the decision-making
179 process. Hence, the results of the previous section appear to corroborate the stream of
research that suggests that either high levels of performance produce enough
resources to help organisations make more rational decisions, or that more rational
decisions may lead to better performance (Jones et al., 1993; Smith et al., 1988; Dess
and Origer, 1987; Grinyer and Norburn, 1977-78). By implication, then, the findings
seem to refute the research that suggested that superior performance may lower the
extent to which organisations engage in rational/comprehensive, formalised decisionmaking (Bourgeois, 1981; Cyert and March, 1963; March and Simon, 1958).
The second area of empirical research identified in Section 2.5 of Chapter 2 related to
the impact of consensus on organisational performance. It was argued in that chapter
that use of decision analysis encouraged communication and helped to build
consensus amongst organisational members. As such the findings of section 7.5
appear to confirm the research of Bourgeois (1981) and Dess (1987) and others
(Hambrick and Snow, 1982; Child, 1974) who suggested that either business success
leads to higher levels of consensus, or that high levels of consensus encourage better
organisational performance. Simultaneously, the results seem to dispute those of
Grinyer and Norburn (1977-78) and others (Schweiger et al., 1986; De Woot et. al.,
1977-78) who found evidence of a negative correlation between consensus and
performance, and those of Wooldridge and Floyd (1990) who found no statistically
significant relationship at all.
In conclusion, the results from the current study provide some insight into the
association between performance and the use of decision analysis in investment
appraisal. The analysis presented above shows strong positive correlations between
the use and sophistication of decision analysis techniques and concepts used and
various measures of business success in the upstream. This is consistent with the
proposition that sophistication in the use of decision analysis in investment appraisal
decision-making is a source of competitive advantage in organisations that operate in
the oil and gas industry. The theoretical contribution of this research to the debate
between behavioural decision theorists and decision analysts, the implications for
practitioners especially to managerial percepti...
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- Summer '14
- The Land