Investment could be defined as the act of incurring immediate costs with the expectation of future returns. An investment project, as every asset has a value. Thus, for successfully investing in and managing these assets is crucial not only recognizing what the value is but also the sources of this value (Damodaran, 2002). Most investment decisions share three important characteristics in diffe...

Nonprofit board members and administrators have a responsibility to 1) ensure that their organization’s return on investment (ROI) in fundraising is reasonable through good internal management practices, and 2) communicate to their constituents and the general public that fundraising is an investment in achieving the goals, objectives and anticipated outcomes described in the organization’s str...

This article shows through a simple model that there is a monotonic relationship between the competitiveness of the product market and firms’ demand for insurance. The more competitive the product market is, the more likely firms competing in the market will acquire insurance or purchase full coverage. This holds true no matter whether firms exhibit risk aversion or not in their preferences. In...

Valuing IT investments in hypercompetitive business environments remains an elusive task as traditional valuation tools fail to model inherent uncertainty. Real-options analysis presents a viable alternative to traditional valuation tools in planning and valuing IT investments in uncertain business environments. While much has been written about the quantitative and valuation aspects of real op...

This paper discusses the changes in Information Technology (IT) investment philosophy of both private and public sector companies. Based on the available published material in scholarly journals and magazines, our analysis is focused on the USA and the UK. The paper analyzes the past and current behaviors of business investments in technology and the factors that have prompted companies to chan...

In this study we develop implications for the return distribution of firms with embedded strategic growth options. In our model we integrate real option theory with a Cournot-Nash framework where two firms choose output levels endogenously and may have investment-timing differences. Simulations of the returns of the strategic growth option show that traditional option variables, such as the val...

Effective IT governance is an important requirement for strategic IT-based change. The extant literature focuses on which IT decisions should be governed and who is accountable for them. However, in multi-business organizations there is little theoretical guidance on which decisions should be made at the corporate and strategic business unit (SBU) levels, or when such decisions should be made a...

We develop an integrated real options and industrial organization framework to quantify the strategic option value of technology investments. Strategic investments (e.g., R&D, capacity expansion or strategic acquisitions) are difficult to analyze based on standard approaches. Yet, it is these decisions that determine a firm’s competitive success in a changing technological and competitive lands...

The increasing dependency of many businesses with information technology (IT)and the high percentage of the IT investment in all invested capital in businessenvironment ask for more attention to this important driver of business. Thelimitation of capital budget forces the managers to look for more wise investment inIT. There are many cost-cutting techniques in the literature and each of them ha...