This paper develops a realistic real option theory of resource allocation decisions in strategic factor markets. Competitive advantage in factor markets is underpinned by market failures that allow firms to acquire assets at less than their value in use. We recognize that market failure may...

We develop a behavioral theory of real options that relaxes the informational and behavioral assumptions underlying applications of financial options theory to real assets. To do so, we augment real option theory's focus on uncertain future asset values (prospective uncertainty) with feedback...

Recommended readings (Machine generated): Abernathy, W.J. and Utterback, J.M. (1978), 'Patterns of innovation in technology', Technology Review, 80 (7), 40-47. -- Chesbrough, H. (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston, MA: Harvard Business...