Direct investment in modern economy and the role played by companies to that effect

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Abstract

The financial theory has taken on the increase of the present value of the shareholders' and associates' fortune and turned it into the essential objective of economic activity. Uncertainty does not affect only economic decisions but also our everyday life: a company must decide on the stock it acquires before knowing precisely what the demand will be; a person engaged in litigation must choose between reaching an agreement and taking the risk of going to trial; a speculative investor must decide whether to purchase an asset or not, before knowing if it can be sold for profit. This article includes a macroeconomic approach to investment, the investigation tackling the part played by the gross capital formation in Romania's economic growth after the 1989 Revolution, compared to other European countries, as well as the formation and depreciation of the capital stock, set against the background of neoclassical theories. Nevertheless, the most part of the article focuses on the role of the companies in carrying out investments as well as the integration of investment policies within the strategic management of companies. A set of rules regarding the execution of profitable strategic projects is difficult to issue. Managers must be creative and fast in detecting new chances of investment. Virtually, the projects that need to be carried out must refer to the specific competency domains so that they would sustain and improve the competitive advantage. The market niches to be pursued are the ones where there is no competition whereas the ones which are no longer efficient should be dropped. © 2011 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of 7th International Strategic Management Conference.

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APA

Gabriela, I. L. (2011). Direct investment in modern economy and the role played by companies to that effect. In Procedia - Social and Behavioral Sciences (Vol. 24, pp. 1352–1358). https://doi.org/10.1016/j.sbspro.2011.09.023

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