CAPITAL INVESTMENT DECISION: IMPACT FROM EXTENT OF ENVIRONMENTAL SCANNING

Abstract

Current thinking in corporate long-range planning tends to emphasize the need for, and value of, environmental information. Many scholars proposed that environmental information is crucial to modern corporate planning and for firms to remain competitive, particularly when making capital investment decision. Such information is generated outside the firm’s official jurisdiction. Unfortunately, little is known of the extent of environmental scanning done by decision makers when making capital investment decision. This paper reports on a study undertaken to determine the extent of environmental scanning in relations to the quality of investment decision made. This study examines the relationship between environmental scanning behavior and the quality of investment decisions made by managers. Result from 118 useable questionnaires by higher-level managers in Malaysia shows that; in making capital investment decision, most of the environment scan was related to competitor information, technology information and economic information. Out of this information, information made related to competitor and economics leads to high quality decision.

Keywords: Environmental Scanning, Capital Investment, Decision-making Quality