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Corporate Entrepreneurship and Real Options in Transitional Policy Environments: Theory Development

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  • Jonathan P. Doh
  • John A. Pearce

Abstract

ABSTRACT We develop a theoretical framework for describing, modelling, and predicting entrepreneurial strategies by corporations in transitional public policy environments. Drawing on research in entrepreneurship, real options, and strategic management under uncertainty, we demonstrate how corporations affected by government policy can use entrepreneurial strategies to exploit discontinuities generated by uncertain and unstable public policy environments. We argue that specific strategies will be effective depending on the degree and slope/inflection profile of policy change. Four strategies are identified: preemptive, optioned, synchronized, and adaptive. We develop propositions and provide illustrations to show how each of these strategies has helped firms respond to transitional policy environments. We conclude by offering a discussion of the utility and limitations of the framework and its potential application to other managerial circumstances in which uncertainty is pervasive, and by describing opportunities for further research, including empirical testing of our model.

Suggested Citation

  • Jonathan P. Doh & John A. Pearce, 2004. "Corporate Entrepreneurship and Real Options in Transitional Policy Environments: Theory Development," Journal of Management Studies, Wiley Blackwell, vol. 41(4), pages 645-664, June.
  • Handle: RePEc:bla:jomstd:v:41:y:2004:i:4:p:645-664
    DOI: 10.1111/j.1467-6486.2004.00448.x
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    Cited by:

    1. Deryck J Van Rensburg, 2015. "The Promise of Corporate Entrepreneurship: A Review of Data Analytic Strategies," Business and Management Research, Business and Management Research, Sciedu Press, vol. 4(1), pages 59-73, March.
    2. Dai, Weiqi & Si, Steven, 2018. "Government policies and firms' entrepreneurial orientation: Strategic choice and institutional perspectives," Journal of Business Research, Elsevier, vol. 93(C), pages 23-36.
    3. Andrés, Pablo de & Fuente, Gabriel de la & Velasco, Pilar, 2021. "Exercising a firm’s growth options: A portfolio approach," Journal of Business Research, Elsevier, vol. 132(C), pages 571-585.
    4. Mike Peng & Jessie Zhou, 2005. "How Network Strategies and Institutional Transitions Evolve in Asia," Asia Pacific Journal of Management, Springer, vol. 22(4), pages 321-336, December.
    5. Lai, Jung-Ho & Chang, Shao-Chi & Chen, Sheng-Syan, 2010. "Is experience valuable in international strategic alliances?," Journal of International Management, Elsevier, vol. 16(3), pages 247-261, September.
    6. Greiner, Michael & Lee, Jaegul, 2020. "A supply-side approach to corporate political activity: Performance consequences of ideologically driven CPA," Journal of Business Research, Elsevier, vol. 115(C), pages 25-37.
    7. Volker H. Hoffmann & Thomas Trautmann & Jens Hamprecht, 2009. "Regulatory Uncertainty: A Reason to Postpone Investments? Not Necessarily," Journal of Management Studies, Wiley Blackwell, vol. 46(7), pages 1227-1253, November.
    8. Sunny Sun & Xiaoming Yang & Weiwen Li, 2014. "Variance-enhancing corporate entrepreneurship under deregulation: An option portfolio approach," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 733-761, September.
    9. Shardul Phadnis & Nitin Joglekar, 2021. "Configuring Supply Chain Dyads for Regulatory Disruptions: A Behavioral Study of Scenarios," Production and Operations Management, Production and Operations Management Society, vol. 30(4), pages 1014-1033, April.
    10. Rodriguez Lopez, Juan Miguel & Sakhel, Alice & Busch, Timo, 2017. "Corporate investments and environmental regulation: The role of regulatory uncertainty, regulation-induced uncertainty, and investment history," European Management Journal, Elsevier, vol. 35(1), pages 91-101.
    11. Tailan Chi & Jing Li & Lenos G Trigeorgis & Andrianos E Tsekrekos, 2019. "Real options theory in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 525-553, June.
    12. Ye, Qiaozhi & Huang, Ronghong & Tan, Kelvin Jui Keng, 2023. "Missing the boat: Regulatory approval delay and investment project outcomes," The British Accounting Review, Elsevier, vol. 55(6).
    13. David Urbano & Andreu Turro & Mike Wright & Shaker Zahra, 2022. "Corporate entrepreneurship: a systematic literature review and future research agenda," Small Business Economics, Springer, vol. 59(4), pages 1541-1565, December.
    14. Jiménez, Alfredo & Luis-Rico, Isabel & Benito-Osorio, Diana, 2014. "The influence of political risk on the scope of internationalization of regulated companies: Insights from a Spanish sample," Journal of World Business, Elsevier, vol. 49(3), pages 301-311.
    15. Lee, Seung-Hyun & Peng, Mike W. & Song, Sangcheol, 2013. "Governments, entrepreneurs, and positive externalities: A real options perspective," European Management Journal, Elsevier, vol. 31(4), pages 333-347.
    16. Christian Engau & Volker Hoffmann, 2011. "Corporate response strategies to regulatory uncertainty: evidence from uncertainty about post-Kyoto regulation," Policy Sciences, Springer;Society of Policy Sciences, vol. 44(1), pages 53-80, March.

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