The Application of a Segmented Conjoint Methodology to International Capital Budgeting Decisions

Abstract

In this methodology case study, conjoint analysis is used to determine the importance of factors that influence international capital budgeting decisions by multinational corporations. Finance directors from some of the world's largest multinationals evaluated investment opportunities in different countries, within a multi-criteria decision-making setting. Analysis of "partworth" utilities reveals the importance of the dimensions of these decisions, and the relationship between attributes of these dimensions. The partworth utilities are then used as an input to a discriminant and cluster analysis which reveals further interesting results.

Keywords: conjoint analysis, international capital budgeing, political risk, cluster, discriminant, multi-criteria decision-making, research methodology

JEL Classification: C44, G31, F23