Ambiguity, Managerial Ability, and Growth Options

• This paper studies the role of ambiguity and managerial ability in firm growth options from the perspective of behavioural theory. We argue that managerial ability increases both the identification and exploitation of growth options opportunities, but ambiguity reduces strategic growth options value as a result of information incompleteness and non-Bayesian behaviour. Using a dataset of all US-listed firms, we test the joint effects of ambiguity and managerial ability on growth options value after controlling for standard determinants and endogeneity. The results indicate that ambiguity has a negative effect on growth options value, while ability has a positive effect. We also find that the negative association between ambiguity and growth options is less pronounced with higher managerial ability. These findings underscore the importance of firm heterogeneity in the identification, exercise, and management of strategic and innovative real options opportunities. The paper's contribution provides relevant management insights into the behavioural antecedents of real options at the firm level as well as highlights that managerial and behavioural characteristics are important determinants of growth options value.

Ämnesord

TEKNIK OCH TEKNOLOGIER  -- Annan teknik (hsv//swe)

ENGINEERING AND TECHNOLOGY  -- Other Engineering and Technologies (hsv//eng)

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

SAMHÄLLSVETENSKAP  -- Medie- och kommunikationsvetenskap -- Systemvetenskap, informationssystem och informatik med samhällsvetenskaplig inriktning (hsv//swe)

SOCIAL SCIENCES  -- Media and Communications -- Information Systems, Social aspects (hsv//eng)

Nyckelord

ambiguity

real options

behavioural theory

managerial ability

Publikations- och innehållstyp

art (ämneskategori)

ref (ämneskategori)