Decision support for firm performance by real options analytics

Bernadette Power; Gavin C. Reid

doi:10.1002/mde.2867

Decision support for firm performance by real options analytics

Research output: Contribution to journal › Article › peer-review

Abstract

This paper develops a real options decision support tool for raising the performance of the firm. It shows how entrepreneurs can use our intuitive tool quickly to assess the nature and type of action required for improved performance. This exploits our estimated econometric relationship between precipitators of entrepreneurial opportunities, time until exercise, and firm performance. Our 3D chromaticity plots show how staging investments, investment time, and firm performance support entrepreneurial decisions to embed, or to expedite, investments. Speedy entrepreneurial action is securely supported with this tool, without expertise in econometric estimation or in formulae for real options valuation.

Original language	English
Pages (from-to)	56-64
Number of pages	9
Journal	Managerial and Decision Economics
Volume	39
Issue number	1
Early online date	23 Jul 2017
DOIs	https://doi.org/10.1002/mde.2867
Publication status	Published - Jan 2018

Keywords

Real options
Decision support
Strategic flexibility
Performance

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10.1002/mde.2867

Reid_2017_MDE_DecisionSupport_AAM
Copyright © 2017 John Wiley & Sons, Ltd. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1002/mde.2867
Accepted author manuscript, 1.32 MB

Cite this

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Decision support for firm performance by real options analytics

Abstract

Keywords

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