Managers and Productive Investment Decisions : The Impact of Uncertainty and Risk Aversion

The benefits of productive investment projects are difficult to ascertain due to the long-term nature of these investments.The risk-taking approaches of these investors are often ignored.This research examines the individual and combined effect of risk aversion and uncertainty on productive investment decisions.A theoretical approach to understanding uncertainty and risk aversion is presented within the literature review, and based on the previous research, five hypotheses are proposed. The qualitative data for this study were provided by the Banque de France database of economic and financial behavior of small- and medium-sized enterprises (SMEs).The data were collected via a computer-assisted questionnaire regarding factors including management style and strategic positioning.The variables of the study and the data analysis are described. The results of the study indicate 1) a negative, significant correlation exists between uncertainty, risk aversion, and productive investment, and 2) a positive correlation exists between the level of productive investment and the lack of manager participation in the firm's capital.The research also highlights the risky and non-risky factors that influence the strategic decision-making process.The limitations of this study are discussed, including the use of secondary data that was not specifically designed to assess the variables focused on in this study.(AKP)