FOLTA, Timothy B <br/><br/>
Real options in equity partnerships 

 -  2002 
<br/><br/> We examine factors influencing the decision to acquire additional equity in partner firms in research-intensive industries. This decisions involves choosing between flexibility and commitment. Option theory motivates hypotheses regarding the effects of uncertainty, valuation of developing technologies, and the threath of preemptive rivalry. Our main hypothesis is that the resolution of unceratinty for high-value technologies motivates commitment decisions. We also argue that when the underlying growth option is at risk or preemption by rivals, greater uncertainty encourages commitment. An event history model tests these hypotheses using data from minory investments in the biotechnology industry