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Management Accounting Research
Management Accounting Research
journal homepage: www.elsevier.com/locate/mar
Strategic investment decision making practices: A contextual approach
Chris Carra,∗, Katja Kolehmainenb, Falconer Mitchella
代写留学生论文a The University of Edinburgh Management School, William Robertson Building, 50 George Square, Edinburgh EH8 9 JY, United Kingdom
b Aalto University School of Economics, P.O. Box 1210, 00101 Helsinki, Finland
a r t i c l e i n f o
Keywords:
Strategic investment decisions Strategic management accounting Contingency approach Vehicle components
Telecommunications
a b s t r a c t
This paper proposes a contextual approach to explaining differences in strategic investmentdecision (SID) making practices. First, a systematic contextual framework is developed fromthe existing research literature. Then this framework’s potential for explaining differencesin SID making practices is explored through 14 case studies of U.K., U.S. and Japanese companiesfrom both stable and dynamic business sectors. Our findings suggest substantialSID differences across our four contextual categories of market creators, value creators, refocusersnd restructurers. The differences relate to the emphasis on strategic versus financial
considerations, the thoroughness and rigidity of financial analysis, the attitudes towardincorporating less easily quantifiable factors and the level of hurdle rates.
© 2010 Elsevier Ltd. All rights reserved.
1. Introduction
The literature on strategic investment decision (SID)
making practices1 has provided ample evidence of the generaluse of capital budgeting techniques, such as DCF (e.g.Alkaraan and Northcott, 2006; Arnold and Hatzopoulos,
2000; Farragher et al., 1999; Graham and Harvey, 2001;Pike, 1996). Indeed, most research in the field has aimedat presenting an overview of prevailing corporate practicewith regard to which techniques are being used (e.g.
Arnold and Hatzopoulos, 2000; Farragher et al., 1999; Pike,∗ Corresponding author.
1 The term strategic investment decision (SID) refers to a decision on a
substantial investment which has a significant effect on long-term performance
and the organisation as a whole (Carr and Tomkins, 1996, 1998).
Capital budgeting literature has not always distinguished more strategic
types of investment (e.g. Graham and Harvey, 2001; King, 1975; Klammer,
1972; Klammer and Walker, 1984; Pike, 1983; Sihler, 1964); but a substantial
body of research now attests to the importance of this distinction
(Alkaraan and Northcott, 2006; Butler et al., 1993; Marsh et al., 1988;
Oldcorn and Parker, 1996).
1983, 1996; Sandahl and Sjögren, 2003). However, there
is still a need to know more about how these techniques
are being used (Alkaraan and Northcott, 2006; Butler et
al., 1991) and how these practices may vary across various
contextual settings (Haka, 1987; Slagmulder et al., 1995;
Verbeeten, 2006). Furthermore, sociologists would argue
for yet deeper investigation of the organisational processes
entailed (Miller and O’Leary, 2005, 2007).
Field study evidence also further indicates that SIDs
are not always primarily based on financial considerations
and there may be considerable differences in the
extent to which strategic versus financial considerations
are emphasised in their evaluation (Butler et al., 1991;
Carr and Tomkins, 1996, 199