Strategic Investment Decisions Research Articles

Global chessboard: Analyzing how geopolitical risk shapes renewable energy technology investments.

The allocation of budgets for renewable energy (RE) technology is significantly influenced by geopolitical risks (GPRs), reflecting the intricate interplay among global political dynamics, social media narratives, and the strategic investment decisions essential for advancing sustainable energy solutions. Against the backdrop of increasing worldwide initiatives to transition to RE sources, it is crucial to understand how GPR affects funding allocations, informing policy decisions, and fostering international collaboration to pursue sustainable energy solutions. Existing work probes the nonlinear effect of GPR on RE technology budgets (RTB) within the top 10 economies characterized by substantial research and development investments in RE (China, USA, Germany, Japan, France, South Korea, India, the United Kingdom, Australia, and Italy). Past research largely focused on panel data techniques to delve the interconnection between GPR and RE technology, overlooking the distinctive characteristics of individual economies. Contrarily, existing investigation implements the "Quantile-on-Quantile" tool to explore this association on an economy-particular basis, enhancing the precision of our analysis and offering both a comprehensive global perspective and nuanced perceptions for entire countries. The findings manifest a significant reduction in funding for RE technology associated with GPR across various quantile levels in the chosen economies. The disparities in results spotlight the necessity for policymakers to perform thorough assessments and carry out competent strategies to address the variations in GPR and RTB.

Beyond borders: investigating the impact of the 2023 Israeli–Palestinian conflict on global equity markets

PurposeThe present research study aims to explore the impact of the most recent Israeli–Palestinian conflict, which unfolded in October 2023, on global equity markets, including a wide range of both emerging and developed markets (as per the Morgan Stanley Capital Investment country classification).Design/methodology/approachThe market model of event study methodology, with an estimation window of 200 days and 28-day event window (including event day, i.e. October 7, 2023), has been employed to investigate the event’s impact on the stock markets of different countries, with 24 emerging countries and 23 developed countries. The daily closing prices of the prominent indices of all 47 countries have been analyzed to examine the impact of the conflict on emerging markets, developed markets and overall global equity markets. Additionally, cross-sectional regression analysis has been performed to investigate the possible explanations for abnormal returns.FindingsThe findings of the study suggest the heterogeneous impact of the selected event on different markets. Notably, emerging markets and the overall global equity landscape exhibited substantial negative responses on the event day, as reflected in average abnormal returns of −0.47% and −0.397%, respectively. In contrast, developed markets displayed resilience, with no significant negative impact observed on the day of the event. A closer examination of individual countries revealed diverse reactions, with Poland, Egypt, Greece, Denmark and Portugal standing out for their positive or resilient market responses. Poland, in particular, demonstrated significantly positive cumulative abnormal returns (CARs) of 7.16% in the short-term and 8.59% in the long-term event windows (−7, +7 and −7, +20, respectively), emphasizing its robust performance amid the geopolitical turmoil. The study also found that, during various event windows, specific variables had a significant impact on the CARs.Practical implicationsThe study suggests diversification and monitoring of geopolitical risks are key strategies for investors to enhance portfolio resilience during the Israeli–Palestinian conflict. This study identifies countries such as Poland, Egypt, Greece, Denmark and Portugal with positive or resilient market reactions, providing practical insights for strategic investment decisions. Key takeaways include identifying resilient markets, leveraging opportunistic strategies and navigating market dynamics during geopolitical uncertainties.Originality/valueAs per the authors’ thorough investigation and review of the literature, the present study is the earliest attempt to explore the short-term and long-term impact of the 2023 Israeli–Palestinian conflict on equity markets worldwide using the event study approach and cross-sectional regression analysis.

Agents’ context-specific conduct in making strategic investment decisions

PurposeThis study aims to explore how managers exercise agency in strategic investment decisions (SIDs) by drawing on their knowledgeability of the strategic context. Specifically, the authors address the role of position–practice relations and irresistible causal forces in this conduct.Design/methodology/approachThe authors examine SID-making (SIDM) practices in four case organisations operating in highly competitive markets, conducting interviews with managers at various levels and analysing company documents. Drawing on strong structuration theory, the authors show how managerial decision makers draw upon their knowledge of organisational context when exercising agency in SIDs.FindingsThe authors provide insights into how SIDM behaviour, specifically agents’ conduct, is shaped by a combination of position–practice relations and the agents’ comprehension of their organisation’s context.Research limitations/implicationsThe authors extend the SIDM literature by surfacing the issue of how actors’ conjuncturally-specific knowledge of external structures shapes the general dispositions they draw on in exercising agency in practice.Originality/valueThe authors extend the SIDM literature by surfacing the issue of how actors’ conjuncturally-specific knowledge of external structures shapes the general dispositions they draw on in exercising agency in practice. Particularly, the authors contribute to this literature by identifying irresistible causal forces and illuminating why actors might not resist in SIDM processes, despite having the potential to do so.

INVESTMENT ATTRACTIVENESS OF UKRAINE'S ECONOMY AS A DOMINANT FACTOR IN ATTRACTING INTERNATIONAL CAPITAL: ANALYSIS, PROSPECTS, PRIORITIES

The article analyses and proves the expediency of assessing the investment attractiveness of the Ukrainian economy on the basis of international ratings. The main task of the scientific publication is the analysis of the current state of investment attractiveness of the national economy and the determination of priority directions of its further strategic development. The concretisation of methodological approaches to the assessment of the level of investment attractiveness of the national economy through the prism of rating assessments of various agencies becomes a prerequisite for the formation of modern methods, principles, forms and priority tools of state regulation of this process. The use of innovative methods and methods of conducting scientific research in the context of determining the level of investment attractiveness of the national economy is a fundamental element of the model of successful attraction of investment capital and implementation of long-term strategic investment decisions. The subject of the scientific article is a rating of the investment attractiveness of the national economy from the perspective of the post-war period. The methodology of scientific research is based on the need to determine the level of economic efficiency of investment capital in modern conditions of globalisation transformations in the economy of Ukraine. The paper reveals the main issues of the methodology of investment decision analysis and the definition of criteria of efficiency of investment capital attraction to the national economy. The criteria of selection, justification and adoption of balanced management decisions are detailed and analysed. The purpose of this study is a comprehensive analysis of the state's position in international rating assessments of investment attractiveness, identification of key factors influencing the formation of a high level of investment attractiveness of the Ukrainian economy and search for ways to increase it by attracting additional investment capital. The conclusion of the publication is the search for ways to ensure a high level of investment attractiveness of Ukraine's economy as a dominant factor in attracting international investment capital. The fundamental strategic priority of the state investment policy is to form a comprehensive mechanism for ensuring a high level of investment attractiveness of the economy by developing a long-term programme for ensuring a high level of investment attractiveness of the national economy.

Analysing volatility patterns in emerging markets: symmetric or asymmetric models?

PurposeInvestors aim for returns when investing in stocks, making return volatility a crucial concern. This study compares symmetric and asymmetric GARCH models to forecast volatility in emerging nations like the G4 countries. Accurate volatility forecasting is vital for investors to make well-informed investment decisions, forming the core purpose of this study.Design/methodology/approachFrom January 1993 to May 2021, the study spans four periods, focusing on the global economic crisis of 2008, the Russian crisis of 2015 and the COVID-19 pandemic. Standard generalized autoregressive conditional heteroscedasticity (GARCH), exponential GARCH (E-GARCH) and Glosten-Jagannathan-Runkle GARCH models were employed to analyse the data. Robustness was assessed using the Akaike information criterion, Schwarz information criterion and maximum log-likelihood criteria.FindingsThe study's findings show that the E-GARCH model is the best model for forecasting volatility in emerging nations. This is because the E-GARCH model is able to capture the asymmetric effects of positive and negative shocks on volatility.Originality/valueThis unique study compares symmetric and asymmetric GARCH models for forecasting volatility in emerging nations, a novel approach not explored in prior research. The insights gained can aid investors in constructing more effective risk-adjusted international portfolios, offering a better understanding of stock market volatility to inform strategic investment decisions.

CORPORATE SOCIAL RESPONSIBILITY AND MARKET-BASED PERFORMANCE: EXPLORING BI-DIRECTIONAL RELATIONSHIP IN AN EMERGING ECONOMY

Corporate Social Responsibility (CSR) is a critical indicator for bridging corporately responsible behavior and stakeholder inclusion towards achieving long-term development. While stakeholder and reputation-building theories suggest that CSR can affect organizational performance, slack resource theory proposes organizational performance can affect CSR. Accordingly, it indicates that CSR initiatives and firm performance have a bidirectional relationship. Despite many unidirectional studies conducted to examine CSR and firm performance interplay in diverse contexts, studies on bidirectional analyses to test contrasting theoretical standpoints in a single study are rare. However, examining the bi-directional role of CSR is crucial as it provides insights into using CSR as a strategic investment decision within the competitive organizational context. Therefore, this study aims to examine the relationship between CSR and market-based performance as a bidirectional study from an emerging country perspective. Study data was collected from the sustainability/CSR disclosures in annual reports published between 2011 and 2020 by the top hundred companies (identified based on market capitalization) listed on the Colombo Stock Exchange (CSE) in Sri Lanka using judgmental sampling. The CSR was measured using a weighted CSR score assessed based on a comprehensive CSR index with thirty sub-dimensions. Market-based performance was measured using earnings per share (EPS) and firm value, and the control variables were firm size and leverage. The data was analyzed in two phases to examine the two-way linkage between CSR and market-based performance using the fixed effect panel regression technique. The findings concluded that CSR positively impacts market-based performance, confirming the role of CSR as a strategic driver to enhance future profitability. However, the study could not find any bidirectional impact of market-based performance on CSR in an emerging context. Although higher CSR affects higher external performance, higher market-based performance does not affect increased CSR in Sri Lanka. It may be because external performance indicators represent only the future profitability of firms, and these indicators are generally highly volatile over a long period, especially in emerging countries like Sri Lanka.

The Impact of Financial Indicators on Different Types of Investors

This article begins by delineating the historical trends in stock prices exhibited by three focal companies. A thorough analysis of these stock price trends ensues, accompanied by an elucidation of various investor profiles. Following this, an evaluation of market responsiveness, debt management efficiency, profitability, and prospective developmental trends is conducted through the computation of diverse financial ratios and indicators. A detailed examination of market responsiveness, debt management efficiency, and profitability enables us to attain a deeper comprehension of the financial robustness of these companies. Concurrently, an exploration of their future development trajectories allows us to prognosticate their prospects within the competitive market landscape. This information is of paramount importance for prospective investors, as it can aid them in making judicious investment choices and formulating personalized investment strategies. Ultimately, drawing upon the comprehensive analysis, tailored recommendations are devised for potential investors. These recommendations are meticulously tailored to the specific characteristics of each company, providing invaluable guidance for the strategic orientation and investment decisions of astute investors.

Improvement of Strategic Investment Decision Making Process in Petrochemicals Industry

Joint ventures, commercial conglomerates, and public-private partnerships must go through various stages of planning prior constructing mega-petrochemical projects. One of the most important steps is the Final Investment Decision (FID). Before approving and ordering large-scale petrochemical project construction, corporations and project partners must follow these steps. FID comes after careful preparation and before project implementation. Market attractiveness, proven production technology, and high investment return affect FID. The project's investment return—determined by IRR, NPV, and PP—is the main factor. An approved FID shows the company's willingness to invest and make a profit, while an unapproved FID prevents further losses if the project goes ahead. NPV, IRR, and PP not meeting criteria prevents a final investment decision. Economic return failure is caused by high taxes, total investment costs, product spread, capital costs, and operating costs. This study aims to improve the current techno-economic model in the petrochemicals industry's final investment decision process by investigating the main parameters of existing FID techno-economic models, developing a new model for the industry, and validating its accuracy. This study began by populating relevant final investment decision criteria, assembling production technology techno-economic data, and determining techno-economic parameters. This study is expected to improve the current techno-economic model and allow more projects to achieve successful FID for long-term profit, while preventing further losses if the economic return is still unfavourable by incorporating sensitivity and real option analysis. An improved techno-economic model should meet the needs of the petrochemical industry and provide prominent outputs for business risk management by allowing precise input consideration.

Business Insights Unveiled: A Journey through Linear Programming Problems

This project delves into the world of linear programming problems (LPP), a powerful optimization technique. It delves into the historical background, key features, fundamental assumptions, and wide-ranging applications of LPP. It also explores two hypothetical case studies: one in investment portfolio optimization and the other in advertisement budget allocation. LPP serves as a guiding light in making strategic investment decisions by maximizing returns and minimizing risks. In the context of advertising, it enables efficient budget allocation to reach the maximum audience and achieve the highest impact within constraints. The project emphasizes how LP simplifies complex decision-making processes, highlighting its practicality and relevance across diverse sectors. In essence, linear programming emerges as an indispensable tool for informed, data-driven decision-making, much like a skilled navigator guiding a ship through challenging waters toward its destination.

Investment and Retirement Planning – A Conceptual Analysis

Purpose: The aim of this study is to examine the intricate interplay between investment strategies and retirement planning through a comprehensive conceptual analysis. This study aims to provide a holistic conceptual analysis that guides sound financial decision-making for a secure and fulfilling retirement by thoroughly examining the complex relationship between investment strategies and retirement planning and drawing conclusions from empirical investment and retirement theories.
  
 Theoretical framework: The research draws upon a multidisciplinary approach, integrating theories from finance, economics, and psychology to develop conceptual understanding that illuminates the complex dynamics influencing individuals' investment decisions within the context of retirement planning.
  
 Approach: Employing a qualitative research design, this study utilizes an extensive literature review and content analysis of scholarly articles, reports, and expert opinions to develop a nuanced understanding of the factors shaping investment behaviors and retirement preparedness.
  
 Findings: The results of this analysis highlight the critical role of risk tolerance, financial literacy, psychological biases, and socio-economic factors in shaping individuals' investment choices and retirement planning strategies. Moreover, the study underscores the significance of early and strategic investment decisions in ensuring a financially secure retirement.
  
 Research, practical & social implications: Research, Practical & Social implications: The study's insights offer a valuable resource for financial advisors, policymakers, and individuals seeking to optimize their investment and retirement strategies. By elucidating the underlying mechanisms driving investment behavior, the research informs the development of tailored advice, educational initiatives, and policy interventions that enhance retirement preparedness and overall financial well-being.
  
 Originality/Value: Furthermore, the study contributes to a broader societal understanding of the implications of investment choices on individuals' long-term financial security, thus fostering a more financially resilient aging population. Originality/value: The value of the study lies in its holistic approach to dissecting the intricacies of investment decisions within the realm of retirement planning. By synthesizing diverse theoretical perspectives, this research offers a comprehensive framework for comprehending the multifaceted factors that influence investment behaviors and retirement outcomes. The study's unique contribution lies in its ability to bridge the gap between academic research and practical application, providing actionable insights that have the potential to drive positive financial behaviors and reshape retirement planning paradigms.

Evaluation of network expansion decisions for resilient interdependent critical infrastructures with different topologies

Resilient interdependent critical infrastructures (CIs) can better withstand cascading failures in disruptive events. This study proposes network expansion as a resilience improvement strategy for interdependent CIs and evaluates the influence of topology in interdependent network design for resilience optimization under disruption uncertainty. A resilience score consisting of network complexity and unmet demand metrics is introduced to quantify the resilience of expanded networks. Five synthetic interdependent network instances with random and hub-and-spoke (i.e., cluster) topologies are generated to represent CIs with heterogeneous node functions. Different network expansion opportunities are considered and critical node disruption scenarios are used to evaluate the impact of uncertain disruptions. We apply a two-stage stochastic multi-objective resilience optimization model to determine strategic investment decisions using the expected total cost and expected resilience score as competing objectives. Compromise solutions of expanded network designs are identified from Pareto optimal solutions and they are characterized according to their graph properties. The results show that expanded networks have improved resilience and the extent of improvement is affected by the network topology and type of disruption. Under critical node disruptions, a random network is more resilient than a hub-and-spoke structure due to its better connectivity. Characteristics of highly connected interdependent networks are high average node degree, high clustering coefficient, and low average shortest path length. Resilience improvement is more limited in expanded networks with a hub-and-spoke structure due to the negative impact of hub failures.

Board diversity and corporate propensity to R&D spending

Drawing on collective contributions and group performance perspectives, this paper examines the role of board diversity in firms' R&D investment decisions. Building on a fault-line argument about a team's demographic attributes, this study also decomposes the impact of demographic and cognitive diversity on R&D spending. The study sample contains UK data of non-financial companies covering the period between 2005 and 2018. We employ panel data analysis techniques and control for potential endogeneity issues through the application of the two-step system Generalised Method of Moments (GMM) estimations. The findings demonstrate a positive and significant relationship between board diversity and level of corporate R&D spending. The findings also show cognitive diversity as significantly positively associated with corporate R&D investments. Demographic diversity, however, has an insignificant relationship with corporate spending on R&D. The results further show that demographic diversity negatively moderates the relationship between cognitive diversity and spending on R&D. Our main findings document that the board's attributes as a group significantly influence decisions of strategic importance such as, investment in R&D projects. The findings on sub-dimensions of board diversity imply that as compared to demographic diversity, functional/cognitive diversity is more relevant to strategic decisions and related outcomes. The study has practical implications for shareholders in documenting the importance of board diversity, and policy implications for regulators in highlighting the separate roles of behavioural and cognitive diversity in shaping firms' strategic investment decisions.

Strategic investment strategy for software companies using a multi-criteria decision analysis approach

Strategic investments are crucial for software companies as they determine the direction and growth of the businesses. Parallel to continuous improvements in information technologies, increased customer expectations, and competitive environments, deciding between new investment strategies has become even more important. Despite their prevalence, making these decisions is generally challenging, especially when there are multiple alternatives, conflicting objectives, and a group of decision-makers with different priorities. In this study, we consider this complex issue as a multi-criteria decision-making problem by focusing on a real-life case study from a software company that specializes in selling tools for online education and assessment. We propose a two-level methodology integrating the Best-Worst method (BWM) and Elimination and Choice Translating Reality (ELECTRE-III). In the first step, six criteria that play a role in software investment decisions are defined based on an extensive literature review and expert interviews. Then a group of experts compared these criteria by using BWM, and importance weights were calculated. In the third step, the ELECTRE-III method is utilized to evaluate a set of investment alternatives and provide a ranking. We conclude with insights for both researchers and practitioners who are concerned about strategic investment decisions.

Tata Motors Equity Forecasting System using Machine Learning

The TATA Motors stock prediction system is a machine learning tool that uses regression algorithms to analyze historical data on TATA Motors stock prices, market trends, economic indicators, and industry news. This system aims to help TATA Motors build a business model for the next few months by providing accurate predictions of future stock prices. By mitigating risks associated with investing in the stock market, TATA Motors can make better investment decisions and avoid losses. The system is designed to be user-friendly, with an intuitive interface that makes it easy for TATA Motors employees to input data and access predictions. Furthermore, the system can inform longer-term strategic planning and investment decisions. However, the accuracy of the predictions is reliant on the quality and relevance of the input data. Regular updating and refining of both the input data and the algorithms used to analyze, may be necessary to maintain the system's accuracy.

Investigating the Impact of Capital Expenditures on Firms’ Profitability of Textile Sector of Pakistan

The research objective was to determine the impact of capital expenditure on textile firm’s profitability in Pakistan. For this purpose, study utilizes panel data from the annual reports of firms operating in the textile sector of Pakistan. Quantitative research approach and longitudinal research design was applied. The panel data results indicates that the impact of capital expenditures on firm profitability is significant and positive. The findings suggest that increasing capital expenditures can lead to higher profitability for textile firms in Pakistan. This implies that textile firms in Pakistan should prioritize investments in capital expenditures in order to improve their financial performance. The findings provided by this research could be valuable for textile firms in Pakistan as they seek to make strategic investment decisions. Additionally, policymakers and investors in the textile sector can use the results of this study to inform their decision-making processes and optimize investment strategies. The study's findings could also contribute to a better understanding of the relationship between capital expenditures and firm profitability in the textile sector of Pakistan. The research could also helped to the researchers to conduct their research in future.

Option Contract Pricing Model for Real Option with Right to Sell/Purchase the Project

The study in the article aims to improve the methodology for calculating the price of an option agreement . The subject is calculating the price of the option agreement for a real option with the right to sell / purchase . The hypothesis is that using a more objective calculation formula will increase the efficiency of making the corporation’s strategic investment and management decisions . The method of mathematical modelling is used to refine the methodology for calculating the price of an option agreement within the framework of the ways of real options and discounting cash flows . The article justifies and clarifies the calculation formulas for the price of an option agreement for a real option with the right to sell / purchase . It has been shown that an objective assessment of the value of this option is a powerful tool for making a strategic investment decision . The article’s novelty is the combination of the practice of hedging standards for transactions and methods of real options and discounting cash flows when developing a model for calculating the price of an agreement . The application of a more objective pricing formula for an options contract , limited to the specified project profitability index , confirms the hypothesis . A more objective assessment of the effectiveness of projects with the application of real options is a competitive advantage of the corporation due to the ability to benefit further from risk and uncertainty . The direction of future research is the formalization of the option pricing model for calculating net assets .

The environment and climate change as a primary stakeholder for accommodation suppliers: Stakeholder engagement for Koh Tao and Koh Phi Phi, Thailand

AbstractThis study investigates the potential recognition and engagement of the natural environment as an important factor in strategic investment decisions by accommodation suppliers in a small island context. The investigation, based on empirical data from two Thai islands, Koh Tao and Koh Phi Phi, contributes to the debate if the environment, by focusing on climate change, can be identified as a primary stakeholder for accommodation suppliers. The findings show that strategic investment decisions are influenced by impacts commonly associated with climate change, although a conscious recognition of climate change as a strategic stakeholder or important factor in strategic investment decisions could not be confirmed. Conversely, the element of unconsciousness in the process of recognising climate change in investment decisions sparks questions regarding the degree to which the recognition of business stakeholders requires being a conscious process and if the focus on investments could be another element for stakeholder identification frameworks for businesses.

A Strategic Investment Decision Model for Maximizing Financial Performance: With a Case of Dry Bulk Shipping Business

A Strategic Investment Decision Model for Maximizing Financial Performance: With a Case of Dry Bulk Shipping Business

Social sustainable development green brand value in education impact strategic alliance investment decision evaluation

The green brand is a consumer experience. Educational hospitality attaches importance to green brands, and consumers’ preference for green brands has become the current business practice of environmental protection and sustainable development. Strategic alliances drive competitiveness and exert multiplier effects. Commodity diversification is an important key factor in enhancing competitiveness and sustainable development. This study uses the real options approach to construct a dynamic strategy model, which explains the optimal occupancy pricing threshold and optimal green brand value investment strategy threshold on different influence variables and evaluates the difference between hospitality alliances with green brand restaurants and hospitality providers that create their own brand specialty restaurants. This study provides corresponding strategies for the development of a larger consumer market and market share for hospitality and the feasibility of sustainable development. The results show that the threshold of hospitality alliances with green brand restaurants is lower and will gain higher returns. However, if the economy is booming, it is more advantageous for hospitality alliances to adopt their own innovative brand specialty restaurants. It is recommended that managers consider developing innovative catering services and quality when hospitality faces strong competition. The choice is to form an alliance with a green brand restaurant or create its own brand specialty restaurant to enhance the popularity of hospitality to attract more customers. This will contribute to the sustainable development of hospitality. The results of the analysis provide a reference for managers to make appropriate investment decisions for restaurant management at an appropriate time.

Раціоналізація структури джерел інвестиційної активності промислових підприємств

It is determined that strategic investment flexibility, taking into account the causal-fractal method, is a potential opportunity for industrial enterprises to quickly adjust or develop new strategic financial and investment decisions under changed external or internal conditions of investment activity. Strategic financial decisions should be based on an investment-active search for alternative options, directions and forms, in particular methods of implementation of investment activities. An important condition for determining the period of formation of the general financial and investment strategy of industrial enterprises is the strategic level of economic development and, in particular, the conjuncture of financial market segments with which future financial risk is associated. The conditions for defining the period of rationalization of the structure of sources of investment activity of industrial enterprises with the help of the causal-fractal method are also the sectoral affiliation of enterprises, the level of development, the stage of the life cycle, and others. The use of methods of rationalization of the structure of sources of investment activity of industrial enterprises with the help of the causal-fractal method is proposed, which will increase the level of validity of investment decisions made at industrial enterprises, that in the future will ensure an efficient ratio between risk and profitability of their activities. This methodology can be applied in a very common case of uncertainty in the financial results of enterprises, or the lack of information about the function of distribution of the probability of profit after the implementation of the investment project (which is the basis for the construction of isovariational ellipses of the mathematical expectation of strategic income) and the efficiency of investment portfolios of industrial enterprises.