Title: Intellectual capital and real options: agency theory and the dynamics of R&D investments

Authors: Andreas Andrikopoulos

Addresses: Department of Financial and Management Engineering, University of the Aegean, 31 Fostini Str, 82 100, Chios, Greece; 18 D. Palantza Str, 173 42, Athens, Greece

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.

Keywords: real options; intellectual capital; agency theory; R&D investment; research and development; modelling; knowledge accumulation; value creation; knowledge value dynamics; organisational dynamics; option pricing; investment policies; agency conflicts.

DOI: 10.1504/IJLIC.2008.018880

International Journal of Learning and Intellectual Capital, 2008 Vol.5 No.1, pp.20 - 32

Published online: 21 Jun 2008 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article