Resource title

Expansion options: evaluating strategic opportunities from research projects

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The financial value of research projects is difficult to assess because they are highly uncertain. Too often, the result is either an overly conservative approach to strategic innovation, based on financial analyses stressing the quantifiable cost side, or an overly aggressive approach based on optimistic qualitative portfolios ignoring economic realities. In uncertain projects, managerial flexibility can be transparently represented in decision trees. The authors argue in this article that a major part of the value of research projects may come from expansion options. An expansion option is the opportunity to use the technology or competence developed in one project for an unconnected (and typically not plannable) application.

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2000/2000-13.pdf

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Copyright INSEAD. All rights reserved