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  • Ambiguity, managerial ability, and growth options

    Rights statement: This is the peer reviewed version of the following article: Driouchi, T., Chen, M., Lyu, Z., Bennett, D.J. and So, R.H. (2021), Ambiguity, Managerial Ability, and Growth Options. Brit J Manage. https://doi.org/10.1111/1467-8551.12534 which has been published in final form at https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12534 This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

    Accepted author manuscript, 601 KB, PDF document

    Embargo ends: 18/07/23

    Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License

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Ambiguity, managerial ability, and growth options

Research output: Contribution to journalJournal articlepeer-review

E-pub ahead of print
  • Tarik Driouchi
  • Mingyu Chen
  • Zhuo Lyu
  • David Bennett
  • Raymond So
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<mark>Journal publication date</mark>18/07/2021
<mark>Journal</mark>British Journal of Management
Number of pages23
Publication StatusE-pub ahead of print
Early online date18/07/21
<mark>Original language</mark>English

Abstract

This paper studies the role of ambiguity and managerial ability in firm growth options from the perspective of behavioural theory. We argue that managerial ability increases both the identification and exploitation of growth options opportunities, but ambiguity reduces strategic growth options value as a result of information incompleteness and non-Bayesian behaviour. Using a dataset of all US-listed firms, we test the joint effects of ambiguity and managerial ability on growth options value after controlling for standard determinants and endogeneity. The results indicate that ambiguity has a negative effect on growth options value, while ability has a positive effect. We also find that the negative association between ambiguity and growth options is less pronounced with higher managerial ability. These findings underscore the importance of firm heterogeneity in the identification, exercise, and management of strategic and innovative real options opportunities. The paper's contribution provides relevant management insights into the behavioural antecedents of real options at the firm level as well as highlights that managerial and behavioural characteristics are important determinants of growth options value.

Bibliographic note

This is the peer reviewed version of the following article: Driouchi, T., Chen, M., Lyu, Z., Bennett, D.J. and So, R.H. (2021), Ambiguity, Managerial Ability, and Growth Options. Brit J Manage. https://doi.org/10.1111/1467-8551.12534 which has been published in final form at https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12534 This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.