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Unformatted text preview: etween 6 th and 16th) do
not have different TBVs from each other. However, their TBVs are lower than those
companies that achieved higher positions in the decision analysis ranking (in the top
The majority of the empirical results then, suggest that there is a positive link between
the use of decision analysis and organisational performance. The lack of a statistically significant positive correlation between the use of decision analysis and
ROE and PE ratio is not unexpected. As indicated in section 7.4, these two measures
are both indicative of historical decision-making and hence, decision-making when
decision analysis was not routinely used by many upstream companies (Section 6.3 of
Chapter 6). However, the Spearman correlation coefficients for TBV and PR, the two
criteria that are most indicative of upstream performance and that also take into
account recent decision-making and, hence, decision-making using decision analysis,
were significant at the 0.5% level. In the case of PR and TBV, the Kruskal Wallis and
Wilcoxon Rank Sum tests confirmed that those companies that use sophisticated
decision analysis methods were more likely to have high TBVs and high PRs. The
statistically significant positive correlation between PSR and use of decision analysis
indicates that the relationship is independent of the size of the company. Hence, the
178 researcher is confident in asserting that there is an association between the use of
sophisticated decision analysis techniques and organisational performance. The following section discusses these results within the context of the decision theory and
organisational performance literature.
From these results, it is evident that there is an association between successful
companies and the use of sophisticated decision analysis techniques and concepts.
However, before discussing this association further, it is important to acknowledge
that the nature of the study prevents the researcher from concluding that use of
decision analysis alone improves organisational performance. Indeed some writers
such as Wensley (1999 and 1997) would argue that business success cannot under any
circumstances, be ascribed to any one variable since its determinants are too complex
for such a simple explanation. Moreover, it will be impossible to ascertain, whether
using decision analysis tools precipitates business success or if it is once success is
achieved that organisations begin to use decision analysis techniques and concepts.
However, despite these limitations, it is possible to draw the following conclusions
from the current study. Firstly, it is clear that the decision process matters and
secondly, and fundamentally, that decision analysis can be extremely valuable to the
upstream oil and gas industry in investment appraisal decision-making and, arguably
therefore, to other industries with similar investment decisions. Managers have the
power to influence the success of decisions, and consequently the fortunes of their
organisations, through the processes they use to make...
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This document was uploaded on 03/30/2014.
- Summer '14
- The Land