Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management.

This work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.Real Option, Theory of the Firm, Entrepreneurship, Dynamic Capabilities.

How do real options come into existence? A step toward an option- based theory of the firm

To be relevant to a firm a real option needs to fit into a theory of the firm explaining its existence, exercise conditions and value. We make a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. We explain the creation of a real option as an entrepreneurial process which transform inventive ideas into profitable innovation. The subsequent development of competence necessary to exercise the option gives boundaries, based on theories of the firm, for the often overoptimistic real option evaluation.Real Option, Theory of the Firm, Capabilities

Plural-entrepreneurial activity for a single start-up: a case study.

Based on a longitudinal case study of a high tech start-up, this paper explores how different forms of entrepreneurship coexist and interplay to create a firm’s innovative dynamics. A particular focus is given to knowledge-based entrepreneurship linked to technological innovation and exploitation, service entrepreneurship, and organizational-marketing entrepreneurship. Findings suggest that firms can realize performance benefits when their members divide those entrepreneurial activities between themselves during the launching phase of the firm, and then adapt the configuration of the activities, and their behaviours into a managerial form during the expansion phase of the firm. Our work offers a dynamic view of the conditions a firm has to fulfil to survive in a knowledge-based environment and we analyse the process that produces a good integration of plural-entrepreneurship behaviours.

ARE USERS THE NEXT ENTREPRENEURS? A CASE STUDY ON THE VIDEO GAME INDUSTRY.

Knowledge based-entrepreneurial firms struggle to survive because they must be simultaneously entrepreneurial on several dimensions. Can those firms rely on users to achieve sufficient efficiency in some entrepreneurial dimensions? To answer this question we drew on the entrepreneurial theories of the firm and on the users/innovator literature. In this work we present the plural entrepreneurship framework and then with a longitudinal case study of a mobile phone video-game firm which relies on users to improve their games we show that the user can significantly enhance the efficiency of the innovation of the firm. We also show that the other important dimensions of the firm behavior (organization, business model) can be significantly improved by the implication of users.Plural entrepreneurship; management of innovation; Video-game case study.

Création de la firme et genèse de l’organisation, une approche évolutionniste du processus entrepreneurial.

Ce travail définit la notion de processus entrepreneurial dans un cadre évolutionniste. Il apporte un éclairage sur la formation de la firme et de l’organisation. En ouvrant la « boîte noire » du processus entrepreneurial, nous montrons que ce mécanisme peut être découpé en étapes conformes aux caractéristiques des modèles évolutionnistes (variation, sélection, rétention). Le modèle conceptuel proposé s’appuie sur les notions de vision (fruit de la variation), de communautés (lieu de sélection), et de routines (rétention).Théorie évolutionniste, Entrepreneuriat, Communautés, Création, Approche conceptuelle.

Option chain and change management : a structural equation application.

The aim of this work is to establish empirically with a structural equation model (SEM) the existence of links between the options perceived by the members of an industry, the expectation of future rents produced by the exercise of these options and firm or industry specific factors. The theoretical part of this work is based on the notion of option chain developed by Bowman and Hurry (1993). The empirical part is on the video-game industry. A questionnaire based dataset on 211 video-game creators allows us to represent the concepts of potential and real option from a strategic point of view. The study shows that the relations between perceived opportunities, capacities building and rent expectations are shared by the members of this industry and can be expressed as options.Real options, Innovation and change management, structural equation analysis, video-game industry.

Bank lending networks, experience, reputation, and borrowing costs.

We investigate the network structure of syndicated lending markets and evaluate the impact of lenders’ network centrality, considered as measures of their experience and reputation, on borrowing costs. We show that the market for syndicated loans is a “small world” characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social capital. We then show that lenders’ experience and reputation play a significant role in reducing loan spreads and thus increasing borrower’s wealth.agency costs, bank syndicate, experience, loan syndication, reputation, small world, social network analysis.

Rules of Thumb and Real Option Decision Biases for Optimally Imperfect Decisions

Investment decisions about an uncertain project are a difficult task. A decision maker can use calculation techniques such as net present value or real option. The accuracy of the technique employed can provide a significant modification to the final decision. Each of these techniques makes the assumption that the decision maker acts in a neutral way without any cognitive bias, such as overconfidence in his or her opinion. Much research in behavioural finance show that pessimistic or optimistic feelings of the decision maker can potentially lead to wrong decisions. We explore the relation of some decision biases and the use of evaluation techniques. By employing simulations, we show that the choices of a specific technique can emphasise or reduce decision bias and investment errors