Research notes and commentaries: real options in equity partnerships

摘要

ew examine factors influencing the decision to acquire additional equity in partner firms in research-intensive industries. This decision involves choosing between flexibility and commit- ment. Option theory motivates hypotheses regarding the effects of uncertainty, valuation of developing technologies, and the threat of preemptive rivalry. Our main hypothesis is that the resolution of uncertainty for high-value technologies motivates commitment decisions. We also argue that when the underlying growth option is at risk of preemption by rivals, greater uncer- tainty encourages commitment. An event history model tests these hypotheses using data from minority investments in the biotechnology industry.