Recognizing Risk in Human Capital Investments: A Real Options Approach to Strategic Human Resource Management

An issue that has not yet been explored in the field of strategic human resource management (SHRM) is that of managing the ‘risks’ involved in human capital management of the firm. We address this issue using the real option theory framework. We argue that certain HR practices manage risk and generate opportunities for the firm by creating \u27options\u27 for its human capital management. These HR options help ensure stability of returns from human capital and thus sustain competitive advantage. Different types of HR options and the role of certain HR practices in creation of these options are discussed

An overview on the obsolescence of physical assets for the defence facing the challenges of industry 4.0 and the new operating environments

Libro en Open AccessThis contribution is intended to observe special features presented in physical assets for defence. Particularly, the management of defence assets has to consider not only the reliability, availability, maintainability and other factors frequently used in asset management. On the contrary, such systems should also take into account their adaptation to changing operating environments as well as their capability to changes on the technological context. This study approaches to the current real situation where, due to the diversity of conflicts in our international context, the same type of defence systems must be able to provide services under different boundary conditions in different areas of the globe. At the same time, new concepts from the Industry 4.0 provide quick changes that should be considered along the life cycle of a defence asset. As a finding or consequence, these variations in operating conditions and in technology may accelerate asset degradation by modifying its reliability, its up-to-date status and, in general terms, its end-of-life estimation, depending of course on a diversity of factors. This accelerated deterioration of the asset is often known as “obsolescence” and its implications are often evaluated (when possible), in terms of costs from different natures. The originality of this contribution is the introduction of a discussion on how a proper analysis may help to reduce errors and mistakes in the decision-making process regarding the suitability or not of repairing, replacing, or modernizing the asset or system under study. In other words, the obsolescence analysis, from a reliability and technological point of view, could be used to determine the conservation or not of a specific asset fleet, in order to understand the effects of operational and technology factors variation over the functionality and life cycle cost of physical assets for defence

Real Options Theory for Law Makers

The formulation of legal rules is a challenging issue for lawmakers. Trade-offs are inevitable between providing more guidance by specific rules and enlarging the scope by general rules. Using real options theory we show that the degree of precision should be considered as a degree of flexibility which increases the value of the text. Thus, we derive a normative principle for a draftsman to choose between rules versus standards and to decide when the law should be enacted. In highly innovating environments, delaying the enactment allows lawmakers to obtain more information. Therefore, the lower the degree of precision of the law, the shorter the delay.degree of precision ; flexibility ; obsolescence ; rulemaking

Real Options Theory for Law Maker.

In rapidly changing areas of law, the writing of rules is a challenging issue for lawmakers. Obsolescence impede law to capture the objective of an underlying policy. The legislator, the judge and the regulator are considered as producers of law who have to decide whether or not to invest in a particular type of law. In order to get more information on the context, lawmakers may also choose to wait before investing in law. Using the real options framework, we show that the degree of precision should be considered as a degree of flexibility of legal rules and we describe how it affects the value of the investment. We then analyze the trade-off between waiting and reducing the degree of precision and we show that the degree of precision of legal rules positively affects the value of waiting in lawmaking.Obsolescence, Rulemaking, Degree of Precision, Real Options.

Cost modelling for cloud computing utilisation in long term digital preservation

The rapid increase in volume of digital information can cause concern among organisations regarding manageability, costs and security of their information in the long-term. As cloud computing technology is often used for digital preservation purposes and is still evolving, there is difficulty in determining its long-term costs. This paper presents the development of a generic cost model for public and private clouds utilisation in long term digital preservation (LTDP), considering the impact of uncertainties and obsolescence issues. The cost model consists of rules and assumptions and was built using a combination of activity based and parametric cost estimation techniques. After generation of cost breakdown structures for both clouds, uncertainties and obsolescence were categorised. To quantify impacts of uncertainties on cost, three-point estimate technique was employed and Monte Carlo simulation was applied to generate the probability distribution on each cost driver. A decision support cost estimation tool with dashboard representation of results was developed