Imperial College London
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Dr Jan-Michael Ross

Business School

Associate Professor of Strategy
 
 
 
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Contact

 

+44 (0)20 7594 5105jan.ross Website

 
 
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Location

 

276Business School BuildingSouth Kensington Campus

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Summary

 

Publications

Citation

BibTex format

@article{Ross:2018:10.1002/sej.1275,
author = {Ross, J-M and Fisch, JH and Varga, E},
doi = {10.1002/sej.1275},
journal = {Strategic Entrepreneurship Journal},
pages = {335--353},
title = {Unlocking the value of real options: how firm-specific learning conditions affect R&D investments under uncertainty},
url = {http://dx.doi.org/10.1002/sej.1275},
volume = {12},
year = {2018}
}
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RIS format (EndNote, RefMan)

TY  - JOUR
AB  - Research SummaryWhy do some firms increase R&D investments in the face of uncertainty, while others do not? Contrary to common wisdom, this study posits that uncertainty prompts firms to invest in R&D. The value to invest under uncertainty is, however, bounded by a firm's learning conditions (i.e., human capital, relatedness of innovation activities, and industry maturity). An empirical test on a crossindustry panel of 551 business divisions of manufacturing firms reveals how organizationenvironment interactions determine the firmspecific value to invest in learning prior to fullscale commercialization. The insights help to bridge real options theory and the learning literature.Managerial SummaryUncertainty about the market environment makes investment decisions in R&D and the commercialization of new products a challenge: should firms “wait and see” until uncertainty resolves to avoid the risk of betting on the wrong product or commit further resources regardless? Our analysis suggests that manufacturing firms often take a mixed approach (“act and see”). While deferring investments in the commercialization of new products, they undertake further R&D to inform decision making by insights that would otherwise be unavailable. However, we find that the benefit of such practice depends on the learning conditions of the individual firm. What is risky for firms with disadvantages in human capital and technology development is value enhancing for firms with good foundations for learning through R&D.
AU  - Ross,J-M
AU  - Fisch,JH
AU  - Varga,E
DO  - 10.1002/sej.1275
EP  - 353
PY  - 2018///
SN  - 1932-4391
SP  - 335
TI  - Unlocking the value of real options: how firm-specific learning conditions affect R&D investments under uncertainty
T2  - Strategic Entrepreneurship Journal
UR  - http://dx.doi.org/10.1002/sej.1275
UR  - http://hdl.handle.net/10044/1/50460
VL  - 12
ER  -
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