The production of strategic and financial rationales in capital investments: Judgments based on intuitive expertise |
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| Institution: | 1. Department of Business Studies, Uppsala University, Box 513, SE-751 20, Uppsala, Sweden;2. Department of Business Studies, Uppsala University, Sweden;1. Department of Accounting and Finance, University of Bristol, Priory Road, Bristol, BS8 1TN, United Kingdom;2. Alliance Manchester Business School, The University of Manchester, AMBS Building, Booth Street West, Manchester, M15 6PB, United Kingdom;1. Shenzhen Audencia Business School, Shenzhen University, Shenzhen, 518060, China;2. Audencia Business School, Nantes, 44300, France;3. Department of Finance, Strome College of Business, Old Dominion University, Norfolk, VA, 23529, USA;4. Department of Accounting, College of Business, San Francisco State University, San Francisco, CA, 94132, USA;1. University Rey Juan Carlos, Paseo Artilleros s/n, 28032, Madrid, Spain;2. Santalucía and Universidad Complutense de Madrid, Spain;3. Universidad Complutense de Madrid and Instituto Complutense de Análisis Económico, Spain;1. Department of Economics and Management “Marco Fanno”, University of Padua, Italy;2. School of Business and Management, Centre for Research Into Sustainability (CRIS), Centre for Critical and Historical Research on Organisation and Society (CHRONOS), Royal Holloway University of London, Egham, Surrey, TW20 0EX, UK;1. School of Commerce, University of South Australia, Adelaide, Australia;2. Institute of Management Accountants, Montvale, NJ, USA |
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| Abstract: | This paper's aim is to examine how strategic and financial rationales are produced in strategic capital investments. Informed by literature on capital investments, strategic fit, and intuitive expertise, the study examines the production of strategic and financial rationales and how they are related. This is done by conducting a detailed case study of how these rationales are described in decision documents and how the documents were produced. The setting is an acquisition by a large, successful serial acquirer.The analysis reveals how the production of strategic and financial rationales is based on judgments of a myriad of data using rough estimates. We argue that these judgments are made through an intuitive process based on expertise. The study contributes to the literature by surfacing individuals' intuitive expertise as an important ‘hidden’ activity of judgment in strategic investment decision-making. Thus, the study shows, and brings theoretical underpinnings, to how the presence of expertise and the character of the tasks can result in appropriate intuitive judgments positively affecting strategic investment decision-making. |
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| Keywords: | Acquisition Capital investment Intuition Intuitive expertise Merger Strategic fit |
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