THE ART OF MAKING RATIONAL INVESTMENT DECISIONS ‘The fall of theories and the rise of heroes?’

Abstract

The purpose of this paper aims to explain the production of rationality for organizations and present how managers engage in investment decisions, recognize the underlying factors affecting the decision-making process, and eventually describe how organizations engineer rationality in their investment processes. This paper presents two different industries; manufacturing and investment, and draw upon similarities and differences between them with the ambition to compare the definition and the standardization of rationality in the firms’ investment activities. In order to gain a deeper understanding of the complexities and ambiguities of investment activities, as well as providing an additional dimension to the study, two advisory firms have been interviewed. The study is qualitative in its nature and builds on the concept of performativity, where the practical usage of an aspect of economic theory, not only are used by investment actors, but also shapes investment practices (MacKenzie, 2007). Previous studies on performativity related to decision-making have presented a gap between how actors make sense of these economic assumptions, and to what extent these assumptions are implemented into practice. Furthermore, this study aims to provide new insights and understandings in how normative economic theory becomes infused into investment activities and therefore asserts a practical relevance for decision-making. Finally, this paper, inspire a further discussion on how rationality can be efficiently and accurately produced in the investment process for organizations operating on a globalized market characterized by digitalization, shorter business-cycles and increased competition.