Real options and real tradeoffs

Article Abstract:

An argument is made regarding the applicability of real options logic to strategically interesting settings in which firms can act to affect the set of possible outcomes. It is found that by treating the challenges as simple problems of implementation, the commentaries ignore the strategic tradeoffs implied by efficient abandonment processes and therefore fail to clarify where the logic of real options is likely to be more helpful to strategy thinking.

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Do real options lead to escalation of commitment?

Article Abstract:

A study is conducted to examine that unconstrained real options can lead to escalation of commitment and to identify contexts in which escalation of commitment is likely. These situations fall primarily outside the realm of unregulated for-profit organizations and also that the predictions of agency and attribution theories counter the predictions of the escalation of commitment framework.

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