Investment in New Manufacturing Systems: An Italian-based empirical analysis

Abstract

This study reports the findings of a survey investigation into investment decision making practices, especially in relation to investment in advanced manufacturing technologies (AMT), of  Italian manufacturing companies. The results from a large scale questionnaire survey indicate that non-financial/investment criteria are very important in justifying AMT, while little evidence emerge of non-financial criteria for capital investment decision making in non-AMT. Expectations that investments in AMT firms use more sophisticated financial appraisal and risk analysis techniques than non-AMT firms were not supported by the data. The method differs from prior studies because it test three hypotheses considering (fully integrated) CIM firms versus all other firms. Expectations that CIM firms use more investment appraisal sophistication than all others firms were supported by the data. In particular, the data and the interviews confirm that large firms use in percentage more CIM, the justification approaches for CIM tend to use more than all other investments, a combination of sophisticated financial and risk analysis techniques and non-financial investment criteria, especially in relation to strategic benefits such as improved flexibility, quality and capability.