Pre-decision control mechanisms of strategic investment decision - A multiple case study on the application and dynamism of pre-decision controls in Swedish real estate companies

Abstract: Summary Title - Pre-decision control mechanisms of strategic investment decision - A multiple case study on the application and dynamism of pre-decision controls in Swedish real estate companies Hand-In Date - 28 May 2023 Seminar date - 31 May 2023 Course - BUSN79 Degree Project: Accounting and Finance Authors - Thomas Lo & Yumeng Guo Advisor - Anders Anell Five Keywords - Strategic investment decision (SID), Pre-decision control, Commercial real estate, Property investment, Uncertainty Purpose - The purpose of this study is to investigate how pre-decision control mechanisms are applied in strategic investment decisions, and what contextual factors could influence the pre-decision control mechanisms. To fufill the purpose, the study examined the use of pre-decision controls in different strategic investment decision processes and the relationship between contextual factors and the dimensions of applied pre-decision controls, with a main focus on current increasing uncertainty. Methodology - We follow a multiple case study approach where empirical data is gathered from five Swedish commercial real estate companies by conducting semi-structured interviews. Theoretical perspectives - The theoretical framework of this study has four dimensions: (i) The definition, characteristics, and process of SID/SIDM (e.g. Harris,1999; Alkaraan & Northcott, 2007; Northcott & Alkaraan, 2007), (ii) the definition, investment, and property management of real estate (e.g. Hamelink, 2000; Tan, Cai & Chen, 2022; Jones & Trevillions, 2022), (iii) the use and effect of pre-decision control mechanisms (e.g. Alkaraan & Northcott, 2007; Emmanuel, Harris & Komakech, 2010), and (iv) the dynamism of pre-decision control mechanisms in relation to internal and external factors (e.g. Slagmulder, 1997; Huikku, Karjalainen & Seppälä, 2018). Empirical foundation - The empirical data is structured as follows: 1) The introduction of case companies and their SID/SIDM process, 2) Findings on the applied pre-decision controls throughout the SID process, 3) The focus and locus of pre-decision controls, 4) The perceived effect of pre-decision controls, and 5) the dynamism of pre-decision controls in relation to contextual factors. Conclusion - This thesis provided empirical evidence that pre-decision controls are widely used by Swedish real estate companies. Based on the SID process by Alkaraan and Northcott (2007), pre-decision controls with different emphases exist in each stage of SID. In the case companies, applied pre-decision controls have more similarities than differences. We conclude that the differences in pre-decision control mechanisms could be attributed to the factors such as organisational strategies, geographical focus, and property portfolio. In the context of the dynamism of pre-decision controls, we contribute to previous studies by investigating some propositions and conclusions by Slagmulder (1997), and Huikku, Karjalainen & Seppälä (2018). Specifically, our study of the changes in pre-decision controls is time-sensitive by taking the current issues into account.