Intellectual capital and real options: agency theory and the dynamics of R&D investments
by Andreas Andrikopoulos
International Journal of Learning and Intellectual Capital (IJLIC), Vol. 5, No. 1, 2008

Abstract: The real-options approach to R&D investment can be expanded through the integration of explicit modelling for knowledge value dynamics as well as agency-theoretic analysis. Our objective is to combine the market-related dynamics of the demand for R&D products with the firm-specific organisational dynamics of knowledge accumulation and value creation through knowledge. This objective is accomplished using the partially complete markets framework in real options. We introduce the knowledge-related significance of option-pricing parameters and show how these parameters affect investment policies and agency conflicts in R&D and intellectual capital decision making.

Online publication date: Sat, 21-Jun-2008

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