The foreign direct investment decision‐making process

Nicos Sykianakis and Athanassios Bellas

Managerial Auditing Journal, 2005, vol. 20, issue 9, 954-969

Abstract: Purpose - This paper aims to provide a better understanding of the foreign direct investment (FDI) decision‐making process, and to explore the roles of management accounting information to that. Design/methodology/approach - An interpretive methodology was preferred, applying the case study method in a Greek company that had engaged in FDIs in the Balkans. In studying FDI decision‐making, the role of context (external environment and organisation) was taken into consideration. Findings - The study reported here reveals that the FDI decision‐making process is cyclical in nature, with information continuously received, processed and used as feedback for subsequent action. This supports the view that the dichotomy between strategy formulation and implementation is a false one. Practical implications - Although the FDI process should be recognised as iterative in nature, evidence from this study suggests that it can be thought of as comprising two main tasks, each of which makes different uses of management accounting information and reflects different decision‐making concerns. The first task concerns the decision whether or not to invest abroad while, the second task concerns decisions about how the project will be developed. Originality/value - The implementation of capital investments enables the participation of various organizational actors trying to influence the final outcome of the process in line with their own interests. The recognition of differential political engagement within these two distinct decision‐making phases has implications for understanding capital investment practice and for reflecting on prior empirical evidence in this domain.

Keywords: International investments; Decision making; Management accounting (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:02686900510625307

DOI: 10.1108/02686900510625307

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