Improving financial decision making within German SMEs by incorporating digitalization within an expanded FAP model.

Herrmann, Matthias (2023) Improving financial decision making within German SMEs by incorporating digitalization within an expanded FAP model. DBA thesis, University of Gloucestershire. doi:10.46289/YY99V7M3

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Financial decision making is a key element for any German company. SMEs are the backbone of German industry and make a key contribution to employment, innovation and growth. This research project explores the methods relied upon by German SMEs regarding financial decision making and the need to consider digitalization in the decision making process. This promotes better financial decision making in practice and contributes to theory. Using a mixed-method approach including a case study, this research project explores the need for digitalization and improved financial decision making in SMEs by interviewing members of senior management. The research paradigm is pragmatism, which is also a key element in practice for senior management (Madden, 2021). This study shows that senior managers in German SMEs understand the importance of digitalization in the context of financial decision making, yet do not include aspects of digitalization in their appraisal of financial matters. A risk that also arises as companies frequently to do not properly understand their own profile and respective, individual, degree of digitalization. This research project provides an improved and more advanced financial appraisal model and includes digitalization aspects in the overall decision making process. German SMEs that will utilize the improved FAP model in the future will have the opportunity to make better financial decisions. The findings show the need for an improved FAP model and the promotion of improved financial decision making models. Currently, many companies rely on standard NPV calculations as their sole decision making model, with most relying on a single variable. Relying on a single variable poses risk of not capturing other relevant elements within financial decision-making. This improved financial decision making model includes an index for strategy, project risk and digitalization as well as the NPV calculation. By employing the improved FAP model, any German SME will gain the opportunity to improve its financial decision making as well as to include the key staff members in the decision making process to take better informed financial decisions. Furthermore, the research results based on the case study and the interviews with managers of German SMEs provide additional insights into the current situation of German SMEs in the context of this research project.

Item Type: Thesis (DBA)
Thesis Advisors:
Thesis AdvisorEmailURL
Uncontrolled Keywords: German SMEs; financial decision making; Financial Appraisal Profile Model (FAP Model); Digitalization; Senior management, decision making
Subjects: H Social Sciences > HG Finance > HG4001 Finance management. Business finance
Divisions: Schools and Research Institutes > School of Business, Computing and Social Sciences
Depositing User: Susan Turner
Date Deposited: 10 Jan 2024 16:41
Last Modified: 10 Jan 2024 16:45

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