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The option‐creating institution: a real options perspective on economic organization

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  • Christopher M. Scherpereel

Abstract

This paper proposes a dynamic framework of economic organization called the option‐creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist‐entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide. Copyright © 2008 John Wiley & Sons, Ltd.

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  • Christopher M. Scherpereel, 2008. "The option‐creating institution: a real options perspective on economic organization," Strategic Management Journal, Wiley Blackwell, vol. 29(5), pages 455-470, May.
    • Handle: RePEc:bla:stratm:v:29:y:2008:i:5:p:455-470
    DOI: 10.1002/smj.671
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    Cited by:

    1. Mohammad Fakhar Manesh & Giulia Flamini & Damiano Petrolo & Rocco Palumbo, 2022. "A round of dancing and then one more: embedding intuition in the ballet of entrepreneurial decision making," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 499-528, June.
    2. Alessandro Zardini & Francesca Ricciardi & Ludovico Bullini Orlandi & Cecilia Rossignoli, 2020. "Business networks as breeding grounds for entrepreneurial options: organizational implications," Review of Managerial Science, Springer, vol. 14(5), pages 1029-1046, October.

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