When to pull the plug and when to take the plunge : timing strategic decisions about new ventures

Bakker, Rene M., Shepherd, Dean A., & Davidsson, Per (2014) When to pull the plug and when to take the plunge : timing strategic decisions about new ventures. In Humphreys, J. (Ed.) Best Paper Proceedings: The Power of Words, Academy of Management, Philadelphia, United States of America.

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Abstract

It is not uncommon for firms to explore a new venture under the belief it will generate profits, only to find out later that although costs accumulated, profits did not materialize. To manage the high level of uncertainty involved in this process, new ventures are generally designed as vehicles of exploration (Wu, 2012) that allow for a staged investment of resources, starting with small initial investments that can be scaled up or discontinued as uncertainty is resolved over time (Folta, 1998; Li and Chi, 2013). As such, new ventures provide firms a vehicle by which they can probe an uncertain future (Brown and Eisenhardt, 1997) without fully committing early on to an irreversible course of action (Folta, Johnson, and O’Brien, 2006). Our focus in the present paper is on the timing of strategic decisions that firms make regarding their exploration ventures. Prior research in the fields of entrepreneurship, real options reasoning, and decision speed has demonstrated a link between the timing of making decisions and performance (Baum and Wally, 2003; Eisenhardt, 1989; Judge and Miller, 1991). The antecedents to the timing of decisions, however, are less understood and pose an interesting dilemma.

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ID Code: 75913
Item Type: Conference Paper
Refereed: No
Additional Information: The 74th Annual Meeting of the Academy of Management (1 – 5 August 2014)
Keywords: Timing, Strategic Decisions, New Ventures
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300) > Entrepreneurship (150304)
Divisions: Current > Research Centres > Australian Centre for Entrepreneurship
Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Management
Funding:
Copyright Owner: Copyright 2014 Please consult the authors
Deposited On: 03 Sep 2014 23:02
Last Modified: 06 Sep 2014 06:19

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