Paying attention to real options

Research output: Contribution to journalArticlepeer-review

36 Scopus citations

Abstract

The strategy literature is increasingly focused on the need to create dynamic capabilities to respond with innovative product offerings in 'hypercompetitive' environments. The real options approach offers hope for managers facing such threatening environments by highlighting methods to hold options on a variety of possible future states, thereby reducing risk without bearing all the costs. However, extant real options literature, stemming from rational-based financial assumptions, does not consider attention as a limited resource. Real options are valued on the assumption that management can exploit the flexibility inherent in projects, and so require management attention to obtain their full theoretical value. This paper brings attentional constraints to bear on the real options framework and describes a conceptual framework that illustrates the real option value realization process.

Original languageEnglish (US)
Pages (from-to)61-72
Number of pages12
JournalR and D Management
Volume35
Issue number1
DOIs
StatePublished - Jan 2005
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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