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Valuation of innovation projects with high uncertainty: Reasons behind the search for real options

2018; Elsevier BV; Volume: 49; Linguagem: Inglês

10.1016/j.jengtecman.2018.08.001

1879-1719

Vinícius Chagas Brasil, Mário Sérgio Salerno, Leonardo Augusto de Vasconcelos Gomes,

Intellectual Capital and Performance Analysis

Real Options (RO) has been indicated to valuate projects with high uncertainty. However, literature points to challenges and asks for an organizational understanding of its use. So: Why do managers search for the RO approach to valuate radical innovation projects? Based on five in-depth case studies, we discuss hidden organizational and managerial issues related to the search for RO to valuate radical innovation. We argue that managers search for RO to cope with the "paradox of organizational fit", and later, to deal with the "newness prison", employing RO Structuring and RO Integration to allow exposure to radical innovation.