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Author: | Cottrell, T. Sick, G. |
Title: | Real options and follower strategies: the loss of real option value to first-mover advantage |
Journal: | Engineering Economist
2002 : VOL. 47:3, p. 232-263 |
Index terms: | Options Engineering industry Strategic management Competitive advantage |
Language: | eng |
Abstract: | The value in real options comes from the firm's ability to wait until conditions are optimal before moving forward with a project. There may be a loss of this optimal value if decision-makers anticipate preemptive entry by a competitor. Althoug market pioneers may gain first-mover advantages, followers have important advantages as well. In this paper, the authors discuss these follower advantages, providing examples of successful delay in the context of a real option on innovation. |
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