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dc.contributor.authorRoemer, Ellen*
dc.contributor.authorRese, M.*
dc.date.accessioned2009-12-16T09:30:32Z
dc.date.available2009-12-16T09:30:32Z
dc.date.issued2004
dc.identifier.citationRoemer, E. and Rese, M. (2004). Managing commitments and flexibility by real options. Industrial Marketing Management. Vol. 33, No. 6, pp. 501-512.en
dc.identifier.urihttp://hdl.handle.net/10454/4114
dc.descriptionNoen
dc.description.abstractIn the past, transaction cost economics (TCE) literature has largely stressed the benefits of contractual commitments in relationships. TCE traditionally recommends safeguarding specific assets against holdup, thus reducing behavioral uncertainty. In contrast, the reverse side of the coin has been disregarded for a long time. Firms may lose some of their flexibility and thus the opportunity to benefit from future emerging business activities due to prior contractual commitments. Flexibility becomes especially important in dynamic environments where there is rapid technological change. To manage the emergent trade-off between contractual commitments and flexibility in dynamic markets, the authors propose a real options approach. The value of a firm's flexibility to switch to a new trading partner is represented by a real switching option. It can be shown how contractual commitments directly affect the value of the switching option. To clarify, the authors numerically analyze the respective trade-off and derive implications for an optimal choice of contractual commitments.en
dc.language.isoenen
dc.relation.isreferencedbyhttp://dx.doi.org/10.1016/j.indmarman.2004.03.003en
dc.subjectRelationshipsen
dc.subjectFlexibilityen
dc.subjectEnvironmental Uncertaintyen
dc.subjectCosten
dc.titleManaging commitments and flexibility by real optionsen
dc.status.refereedYesen
dc.typeArticleen
dc.type.versionNo full-text available in the repositoryen


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