PhD Seminar
PhD Seminar by
Szabolcs Slilard Sebrek, Carlos III University
Visiting PhD student at INO
Intra-Industry Diversification via Option Lens: Technological Investments in the Security Software Industry, 1989-2003
Abstract:
We argue that in highly dynamic and uncertain environments, some firms commit effective strategies based on real options reasoning (ROR). By this fashion, organizational technological resource investments are manifested in enhanced capabilities, firms possess which serve well at intra-industry diversifications, namely at new market niche entrance. Drawn from the previous scholarly work, we apply three different technological options, namely patents, strategic technology alliances and technology joint ventures which open the door to technological investments. The paper thoroughly introduces their option characteristics according to ROR and reveals the effect of each option on intra-industry diversification. The results, we obtained, demonstrate that separately all the three types of real options influence positively firm entrance in thus far not populated market niches. Comparing the two forms of inter-organizational cooperation, we found that technology joint ventures, compared to strategic technology alliances, enhance more firms’ expansion ambitions. Moreover, when firms apply a wide and composite portfolio of real options, the propensity for intra-industry diversification is also affected positively.