Driving Forces of the Investment Decision Process in a Technology Firm. A multifaceted understanding of the investment behaviour of individuals and the firm
Abstract: AbstractEvery company has the goal to maximize shareholder wealth by allocating funds to the most profitable investments. A company’s survival is dependent on its ability to stay competitive and maintain market share. In a company there is always a selection of potential investments, therefore the investment decision process is crucial. This thesis analyzes individuals’ behavior in the investment decision process of an organization as well as investigating the synopsis view of finance and management as opposed to seeing them as opposites. The Bower-Burgelman process model was adopted in this study as a tool to investigate the investment decision process. A case study was conducted on a large technology firm with heavy R&D and long product horizon. From the findings, Company X has a primary focus on technology and financial objectives are less prioritized, since a majority of the employees have a technical background. The primary findings are forces such as individuals’ behavior, principal-agent problem, overconfidence, over-optimism, self-attribution bias, and selection bias affect the investment decision process. Conclusively, the research confirms that there is a clear linkage between behavior, management, and finance that impacts the investment selection and shareholder wealth.
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