TY - JOUR
T1 - Accounting for strategic investment decision-making under extreme uncertainty
AU - Elmassri, Moataz
AU - Harris, Elaine
AU - CARTER, David
PY - 2016
Y1 - 2016
N2 - This study focuses on processes employed by organisational managers making strategic investment decisions (SIDs) in an environment of extreme uncertainty in post-revolution Egypt. Our study illustrates how significant social, political and economic uncertainty impacts upon the utility of capital investment appraisal techniques employed in management accounting decision-making. To engage in this analysis, we employ strong structuration theory as a lens to examine how local Egyptian managers (agents-in-focus) respond to the impact of emergent structures that emanate from the post-revolutionary context in their strategic investment decision-making (SIDM). Our empirical evidence includes focused interviews with twenty-one local managers to understand the experience of accounting for decision-making under extreme uncertainty. Our analysis demonstrates that non-financial considerations and objectives take precedence over the technical ‘accounting’ measures, for example net present value (NPV) in post-revolution SIDM processes. In particular, recognising and responding to shifting labour power and short-term sacrifices (such as rejecting merger opportunities) become comparatively more important than the pre-supposed rationality of the NPV criteria. However, as multi-national corporations insist on the calculation of NPV by their Egyptian subsidiaries, local managers reproduce the imperfect NPV as a communication tool in relation to capital investment decisions, whilst resisting its persuasiveness in favour of more qualitative criteria.
AB - This study focuses on processes employed by organisational managers making strategic investment decisions (SIDs) in an environment of extreme uncertainty in post-revolution Egypt. Our study illustrates how significant social, political and economic uncertainty impacts upon the utility of capital investment appraisal techniques employed in management accounting decision-making. To engage in this analysis, we employ strong structuration theory as a lens to examine how local Egyptian managers (agents-in-focus) respond to the impact of emergent structures that emanate from the post-revolutionary context in their strategic investment decision-making (SIDM). Our empirical evidence includes focused interviews with twenty-one local managers to understand the experience of accounting for decision-making under extreme uncertainty. Our analysis demonstrates that non-financial considerations and objectives take precedence over the technical ‘accounting’ measures, for example net present value (NPV) in post-revolution SIDM processes. In particular, recognising and responding to shifting labour power and short-term sacrifices (such as rejecting merger opportunities) become comparatively more important than the pre-supposed rationality of the NPV criteria. However, as multi-national corporations insist on the calculation of NPV by their Egyptian subsidiaries, local managers reproduce the imperfect NPV as a communication tool in relation to capital investment decisions, whilst resisting its persuasiveness in favour of more qualitative criteria.
KW - Strategic investment decisions
KW - Strong structuration theory
KW - Extreme uncertainty
KW - Net present value
KW - Egypt
KW - Strategic management accounting
KW - Ownership structure
KW - Political structure
UR - http://www.scopus.com/inward/record.url?scp=84954286709&partnerID=8YFLogxK
UR - http://www.mendeley.com/research/accounting-strategic-investment-decisionmaking-under-extreme-uncertainty
U2 - 10.1016/j.bar.2015.12.002
DO - 10.1016/j.bar.2015.12.002
M3 - Article
SN - 0890-8389
VL - 48
SP - 151
EP - 168
JO - The British Accounting Review
JF - The British Accounting Review
IS - 2
ER -