The investment decision-making in small manufacturing firms: a learning approach

Based on recently completed PhD research, this paper investigates how small manufacturing enterprises make investment decisions. The paper adopts a learning approach as the most appropriate framework for analysing this behaviour. Although there has been a growing recognition of the role of organisational learning in the survival and growth of small firms, there are limited empirical studies to demonstrate the link between learning and organisational effectiveness. This research explores the learning process of owner-managers in relation to their investment decision decision-making behaviour.
The study uses 'Insider accounts' as a qualitative and innovative methodology, which involved in-depth, semi-structured interviews and direct observation, conducted longitudinally in 8 case study companies. ‘Insider accounts’ is a research method, which includes detailed accounts from the actors themselves, incorporating the actual motives and behaviour of owner-managers. The findings suggest that owner-managers rely on experiential learning when making investment decision-making, rather than formalised methods. As a result, conceptualising the small firm investment decision making process within the context of a learning approach holds promise as an explanatory framework for investment behaviour in small firms.

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