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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
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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- Summer '14
- The Land