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Decision support for firm performance by real options analytics
Author(s) -
Power Bernadette,
Reid Gavin C.
Publication year - 2018
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2867
Subject(s) - valuation (finance) , analytics , investment (military) , exploit , action (physics) , decision support system , microeconomics , econometrics , industrial organization , computer science , economics , business , finance , database , artificial intelligence , physics , computer security , quantum mechanics , politics , political science , law
This paper develops a real options decision support tool for raising the performance of the firm. It shows how entrepreneurs can use our intuitive tool quickly to assess the nature and type of action required for improved performance. This exploits our estimated econometric relationship between precipitators of entrepreneurial opportunities, time until exercise, and firm performance. Our 3D chromaticity plots show how staging investments, investment time, and firm performance support entrepreneurial decisions to embed, or to expedite, investments. Speedy entrepreneurial action is securely supported with this tool, without expertise in econometric estimation or in formulae for real options valuation.