Real options and resource reallocation processes
Author: Adner, Ron INSEAD Area: StrategyIn: Advances in Strategic Management, vol. 24, 2007 Language: EnglishDescription: p. 363-372.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Decision making using a real options lens can be an important guide for resource allocation in organisations. This guide, however, makes some key assumptions about the nature of subsequent resource reallocation processes in the organisation. This article considers some potential drivers and consequences of mismatches between initial resource allocation logics and subsequent reallocation realities, highlighting a process of rational escalation in the presence of sunk costs. It also presents a new perspective on the traditional stage gate process, and considers some recent empirical evidence on the efficiency of resource reallocation processes in organisations.| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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Decision making using a real options lens can be an important guide for resource allocation in organisations. This guide, however, makes some key assumptions about the nature of subsequent resource reallocation processes in the organisation. This article considers some potential drivers and consequences of mismatches between initial resource allocation logics and subsequent reallocation realities, highlighting a process of rational escalation in the presence of sunk costs. It also presents a new perspective on the traditional stage gate process, and considers some recent empirical evidence on the efficiency of resource reallocation processes in organisations.
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