Sunk costs, uncertainty and market exit: A real options perspective
AbstractIn this article, we examine whether the option value of keeping an operation alive will deter firms from exiting an industry. We find that uncertainty dissuades firms from exiting an industry, but only when the sunk costs of entering and exiting that industry are sizeable. Moreover, we argue and find that sunk costs can be influenced by the technological intensity of an industry, by the extent to which a firm competes on the basis of innovation, and by the firm's diversification strategy. Copyright 2009 The Author 2009. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.
Download InfoIf 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.
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 InfoArticle provided by Oxford University Press in its journal Industrial and Corporate Change.
Volume (Year): 18 (2009)
Issue (Month): 5 (October)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://icc.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sandri, Serena & Schade, Christian & Mußhoff, Oliver & Odening, Martin, 2010.
"Holding on for too long? An experimental study on inertia in entrepreneurs' and non-entrepreneurs' disinvestment choices,"
Journal of Economic Behavior & Organization, Elsevier,
Elsevier, vol. 76(1), pages 30-44, October.
- Sandri, Serena & Schade, Christian & Musshoff, Oliver & Odening, Martin, 2010. "Holding on for too long? An experimental study on inertia in entrepreneurs’ and non-entrepreneurs’ disinvestment choices," Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers, Humboldt University Berlin, Department of Agricultural Economics 59518, Humboldt University Berlin, Department of Agricultural Economics.
- Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012.
"The determinants of firm exit in the French food industries,"
Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics,
INRA Department of Economics, vol. 93(2), pages 193-212.
- Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Post-Print, HAL hal-00939376, HAL.
- Pierre Blanchard & Jean Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Working Papers, Institut National de la Recherche Agronomique, France 167136, Institut National de la Recherche Agronomique, France.
- Simone Pieralli & Silke Hüttel & Martin Odening, 2013. "A model of firm exit under inefficiency and uncertainty," EcoMod2013, EcoMod 5236, EcoMod.
- Sangcheol Song, 2014. "Entry mode irreversibility, host market uncertainty, and foreign subsidiary exits," Asia Pacific Journal of Management, Springer, Springer, vol. 31(2), pages 455-471, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.