This paper presents a framework for valuing managerial flexibility within the context of product standardization. The framework originates in a major standardization problem concerning digital tape recording at Philips Electronics. We use insights from financial option theory to calculate the...

On average the expected value at the moment of commercialization of an R&D project should remain constant during the different stages of new product development. Contrary to this intuition however, we find a systematic, non-constant pattern in the average expected value of an R&D project. First,...