The option-creating institution: A real options perspective on economic organization

Research output: Contribution to journalArticle

25 Citations (Scopus)

Abstract

This paper proposes a dynamic framework of economic organization called the option-creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist-entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide.

Original languageEnglish (US)
Pages (from-to)455-470
Number of pages16
JournalStrategic Management Journal
Volume29
Issue number5
DOIs
StatePublished - May 2008

Fingerprint

Economics
Real options
Economic organization
Governance structure
Risk preferences
Intuition
Entrepreneurs
Decision maker
Economic activity
Economics of organization

Keywords

  • Coordination
  • Exchange
  • Governance
  • Real options
  • Theory of the firm
  • Transaction cost

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation
  • Strategy and Management

Cite this

The option-creating institution : A real options perspective on economic organization. / Scherpereel, Christopher M.

In: Strategic Management Journal, Vol. 29, No. 5, 05.2008, p. 455-470.

Research output: Contribution to journalArticle

@article{8f08e7928e8b432d973c356457b5d83f,
title = "The option-creating institution: A real options perspective on economic organization",
abstract = "This paper proposes a dynamic framework of economic organization called the option-creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist-entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide.",
keywords = "Coordination, Exchange, Governance, Real options, Theory of the firm, Transaction cost",
author = "Scherpereel, {Christopher M}",
year = "2008",
month = "5",
doi = "10.1002/smj.671",
language = "English (US)",
volume = "29",
pages = "455--470",
journal = "Strategic Management Journal",
issn = "0143-2095",
publisher = "John Wiley and Sons Ltd",
number = "5",

}

TY - JOUR

T1 - The option-creating institution

T2 - A real options perspective on economic organization

AU - Scherpereel, Christopher M

PY - 2008/5

Y1 - 2008/5

N2 - This paper proposes a dynamic framework of economic organization called the option-creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist-entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide.

AB - This paper proposes a dynamic framework of economic organization called the option-creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist-entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide.

KW - Coordination

KW - Exchange

KW - Governance

KW - Real options

KW - Theory of the firm

KW - Transaction cost

UR - http://www.scopus.com/inward/record.url?scp=42149118341&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=42149118341&partnerID=8YFLogxK

U2 - 10.1002/smj.671

DO - 10.1002/smj.671

M3 - Article

AN - SCOPUS:42149118341

VL - 29

SP - 455

EP - 470

JO - Strategic Management Journal

JF - Strategic Management Journal

SN - 0143-2095

IS - 5

ER -