An empirical study of capital budgeting practices for strategic investments in CIM technologies
Slagmulder, Regine Bruggeman, Werner Van Wassenhove, L.
Slagmulder, Regine
Bruggeman, Werner
Van Wassenhove, L.
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Publication Type
Journal article
Editor
Supervisor
Publication Year
1995
Journal
International Journal of Production Economics
Book
Publication Volume
40
Publication Issue
2-3
Publication Begin page
121
Publication End page
152
Publication NUmber of pages
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Abstract
In recent years, an increasing number of companies have been struggling to justify strategic technology investments using traditional capital budgeting systems. The existing accounting-based decision models (such as discounted cash-flow) are said to be no longer adequate to help evaluate investments in technological innovation, mainly because of the strategic, intangible nature of the benefits involved. Some light is shed on the problem by examining the capital budgeting practices of firms with regard to strategic investments in computer-integrated manufacturing (CIM) technologies. Questionnaire data are used to provide a better insight into ways in which manufacturing firms go about controlling major investments in new process technologies. In addition, tentative findings are presented about hypothesized relationships between characteristics of the investment decision making process and the perceived ex post financial performance of CIM investments.