Real options application on innovation and R&D projects

• Autor(a) principal: Guerra, Ivan Alexandre Costa
• Data de Publicação: 2022
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/25240
• topic: Innovation; Research; Development; Opções reais -- Real options; Evolution; Managerial flexibility; Análise dinâmica -- Dynamic analysis; Inovação; I&D -- Investigação e desenvolvimento; Evolução; Flexibilidade de gestão

Some would say that innovation is one of the key points that brought the world to what we know it to be. Much like everything in life, there are pros and cons. The human species has paved ways to evolve and change the life experience, many times negatively affecting our surroundings and other species. Hope leads us to believe that the course of action is changing and being increasingly attentive towards all the factors, and that innovation along with other concepts will be able to provide sustainability and get us to the next level of evolution. Contemporary economic and corporate finance theory highlights the relevance of project valuation under a dynamic approach and the rationale behind making room to incorporate a company’s contractual claims on projects, commonly known as real options. The combination of these two concepts results in an iterative and adaptation-ready process, which may be able to result in higher payoffs and better results both for innovation and research & development (R&D) projects. Having read what scholars in the finance and innovation theories have written and how they have analysed the junction of both, in this dissertation, we propose an extension to the existing valuation methodologies with the existence of an “early launch” optimal decision for certain projects, resulting in higher payoffs and stronger positioning in a competitive market.