These studies have typically used survey techniques

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Unformatted text preview: or example, Schuyler, 1997). As will be discussed in more detail in Chapter 4, utilising survey techniques for data collection has precluded the researchers from conducting an investigation of why companies endorse the use of some techniques and yet fail to implement others and, more importantly, it prevents the identification of the decision analysis techniques which perform best (that is, where the predicted outcome from the technique is close to the actual outcome) (Clemen, 1999). As will be seen in section 3.4, the failure of these earlier studies to investigate such issues has contributed to the divide between the behavioural decision theorists and decision analysts, and to the gulf between current practice and current capability in decision analysis highlighted above (Clemen, 1999). Evidently then, since the empirical research conducted to date has limitations, there is a need for a study to establish common practice in investment appraisal. This is the second research question that this thesis aims to address. The current study will use a qualitative methodology. This will allow the researcher not only to establish which decision analysis techniques companies are currently using, but also to investigate other, “softer” issues. For example, if the study confirms the earlier empirical studies that there is difference between the techniques described in the academic investment decision-making literature (which will be identified by 19 answering the first research question proposed in Chapter 1) and those which companies choose to use, it will explore this issue. Furthermore, since previous research has suggested that the relationship between the conceptualisation of risk and uncertainty in the organisation and the techniques or method of coping with risk and uncertainty adopted by decision-makers (see section 2.2), this will also be investigated. The researcher will then be able to offer insights into how the results from the decision analysis techniques are integrated into the organisational investment decision-making process. Attention is now focussed on the source of the third research question which aims to establish whether there is a relationship between the use of decision analysis techniques by organisations and organisational performance. The next section examines the evolution of the decision theory literature from classical decision theory through to the potentially useful technology of decision analysis and the more recent contributions of behavioural decision theory. The current debates in the decision theory literature are then reviewed and this indicates the need for a study that investigates the relationship between use of decision analysis in investment appraisal decision-making and organisational performance. In section 2.5, a hypothesis is advanced for empirical testing. 2.4 THE EVOLUTION OF DECISION THEORY Consider first the status of systematic reasoning about human action. With stylistic changes the following, written by Laplac...
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