Skip Navigation



ICC Advance Access published online on May 15, 2009
Industrial and Corporate Change, doi:10.1093/icc/dtp014
This Article
Right arrow Full Text
Right arrow Full Text (PDF)
Right arrow All Versions of this Article:
18/5/807    most recent
dtp014v1
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by O'Brien, J.
Right arrow Articles by Folta, T.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© The Author 2009. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.

Sunk costs, uncertainty and market exit: A real options perspective

Jonathan O'Brien and Timothy Folta

Correspondence: Jonathan OBrien, Rensselaer Polytechnic Institute, Management & Organization, Lally School of Management, 101 8th Street, Troy, New York 12180, USA. e-mail: obriej8{at}rpi.edu

Correspondence: Timothy Folta, Purdue University, Krannert Graduate School of management, West Lafayette, Indiana, USA, and EM Lyon, Ecully, France.

In 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.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.