Some studies in behavioural decision theory had

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Unformatted text preview: , operational decisions before introducing the 187 techniques corporation-wide. Secondly, it provides evidence that as companies introduce more techniques, they tend to use the techniques on more decisions, some of which can be regarded as strategic. Thirdly, in the model there are clearly three groups of companies (each group is a different colour in the figure). This suggests that organisations are choosing not to modify which techniques they use or how they use them, preferring instead to stay within their group. Possible reasons for this include the decision-makers’ perception of decision analysis, which are affected by the lack of any empirical evidence to indicate that using decision analysis is associated with good organisational performance. R M,N,O,P ,Q Proportion of decisions D,E C F,G A I,J, HK S,T L B Number of decision analysis tools used Figure 6.1: A model of current practice This leads into the third research question that this thesis aimed to address, which was to establish if there is a link between the techniques organisations use for investment appraisal and good decision-making in the upstream oil and gas industry. This question was motivated by the recognition that despite over four decades of research undertaken on developing decision analysis methods, on understanding the behavioural aspects of decision-making, and on the application of decision analysis in practice, no previous research had been able to show conclusively what works and what does not (Clemen, 1999). Some studies in behavioural decision theory had evaluated the effectiveness of individual decision analysis techniques (for example, 188 Aldag and Power, 1986; John et al., 1983; Humphreys and McFadden, 1980) and Clemen and Kwit (2000) had investigated the value of a decision analysis approach in Kodak, but, crucially, no earlier study had shown that use of decision analysis techniques could actually help organisations to fulfil their objectives. Qualitative methods again were chosen as the most appropriate to evaluate the effectiveness, or otherwise, of using a decision analysis approach in organisational decision-making in the oil industry. Using the results from the second stage of the research, a ranking of the companies according to the number and sophistication of the techniques and concepts they used, was produced. The research assumed that any value added to the company from using a decision analysis approach, including “soft” benefits, would ultimately affect the bottom-line. This meant that it was possible to investigate the relationship between the ranking of organisations by their use of decision analysis generated by the qualitative study and good decision-making statistically, by using criteria that are indicative of organisational performance in the upstream. The majority of the results produced suggested that there is a positive association between the use of decision analysis in investment appraisal and good organisational performance in the upstream oil and gas industry. This section has shown how the empirical re...
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This document was uploaded on 03/30/2014.

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