Advanced Search
MyIDEAS: Login to save this article or follow this journal

Consider your options: changes to strategic value during implementation of advanced manufacturing technology


Author Info

  • MacDougall, Shelley L.
  • Pike, Richard H.
Registered author(s):


    Strategic investments such as flexible manufacturing technology yield benefits to a company beyond the immediate cash flows. These strategic benefits can be captured, to some degree, using real option valuation techniques. However, real option models presume these can be identified and evaluated at an early stage in the investment process. In this paper, the authors argue real option value is often only vaguely defined at the adoption stage and frequently manifest during implementation. By examining four advanced manufacturing technology investments during implementation within different organizations, this study qualitatively explores the changes to original real options as unanticipated problems surface and solutions are found and implemented. The study found that as the companies adapted to implementation setbacks, the form, scale, value and clarity of the real options changed. For three of the companies, the changes to options were negative while the fourth case indicated positive effects. Most prevalent were delays in the earliest possible exercise date. The results highlight the need to consider changes to strategic value as companies adapt to setbacks that arise during project implementation. Implications for the evaluation of such projects are discussed.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Omega.

    Volume (Year): 31 (2003)
    Issue (Month): 1 (February)
    Pages: 1-15

    as in new window
    Handle: RePEc:eee:jomega:v:31:y:2003:i:1:p:1-15

    Contact details of provider:
    Web page:

    Order Information:

    Related research

    Keywords: Implementation Advanced manufacturing technology (AMT) Strategic investments Case study Capital budgeting Real options Investment lag;


    No references listed on IDEAS
    You can help add them by filling out this form.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Zhou, Honggeng & Keong Leong, G. & Jonsson, Patrik & Sum, Chee-Chuong, 2009. "A comparative study of advanced manufacturing technology and manufacturing infrastructure investments in Singapore and Sweden," International Journal of Production Economics, Elsevier, vol. 120(1), pages 42-53, July.
    2. Driouchi, Tarik & Leseure, Michel & Bennett, David, 2009. "A robustness framework for monitoring real options under uncertainty," Omega, Elsevier, vol. 37(3), pages 698-710, June.
    3. Álvarez Echeverría Francisco & López Sarabia Pablo & Venegas Martínez Francisco, 2012. "Valuación financiera de proyectos de inversión en nuevas tecnologías con opciones reales," Contaduría y Administración:Revista Internacional, Accounting and Management: International Journal, vol. 57(3), pages 115-145, julio-sep.
    4. Francisco Álvarez Echeverría & Pablo López Sarabia & Francisco Venegas-Martínez, 2012. "Valuación económica de proyectos energéticos mediante opciones reales: el caso de energía nuclear en México," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 75-98, May.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:31:y:2003:i:1:p:1-15. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.