Option-based management of technology investment risk

Research output: Contribution to journalArticlepeer-review

57 Scopus citations

Abstract

Real operating (flexibility) options embedded in a technology investment are valuable because they allow management to take rational, value-adding actions that could favorably affect operational traits of the investment (timing, scale, scope, etc.). These options, however, are not inherent in technology investments. Rather, they usually must be carefully planned and designed to fit each investment differently. Building on concepts from the area of financial risk management, this paper presents a methodology for planning the creation of specific operating options designed to maximize the value of a technology investment in light of the risks underlying that investment. The paper also illustrates the use of the methodology in the context of a Web-based information technology investment.

Original languageEnglish (US)
Pages (from-to)428-444
Number of pages17
JournalIEEE Transactions on Engineering Management
Volume48
Issue number4
DOIs
StatePublished - Nov 2001

Keywords

  • Investment risk
  • Investment structure
  • Project management
  • Real options
  • Risk management
  • Technology investment

ASJC Scopus subject areas

  • Strategy and Management
  • Electrical and Electronic Engineering

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