Keywords
Citation
(2014), "2013 Awards for Excellence", International Journal of Managerial Finance, Vol. 10 No. 1. https://doi.org/10.1108/IJMF-02-2014-001
Publisher
:Emerald Group Publishing Limited
2013 Awards for Excellence
Article Type: 2013 Awards for Excellence From: International Journal of Managerial Finance, Volume 10, Issue 1
The following article was selected for this year's Outstanding Paper Award for International Journal of Managerial Finance
"New venture start-ups and technological innovation"
George W. Blazenko, Andrey D. Pavlov and Freda Eddy-Sumeke
Faculty of Business Administration, Simon Fraser University, Vancouver, Canada
Purpose – The purpose of this paper is to compare investment in innovation (e.g. R&D) between new venture start-ups before commercialization and operating businesses after commercialization.
Design/methodology/approach – Real options methods were used to model a new venture
start-up as a perpetual call option on an operating business that grows with R&D. The operating
business uses R&D to improve actual earnings while the start-up uses R&D to improve prospective
earnings. When the start-up entrepreneur commercializes his/her new product, device, or service
with conventional investment (e.g. plant, property, and equipment to begin production), prospective earnings convert into actual earnings.
Findings – The ability of the start-up entrepreneur to avoid commercialization costs upon failed
R&D makes R&D more valuable to the start-up entrepreneur than to the manager of the already
operating business (for whom commercialization costs are sunk) and despite R&D costs that the
start-up incurs without the revenues that only commercialization generates. The value of R&D to the start-up can be so great that the entrepreneur invests in R&D before the manager of an otherwise similar operating business in similar business conditions
Originality/value – Without favoring either a priori, the authors show that under broad circumstances, a new venture start-up undertakes R&D before an already operating business. The authors also discuss the empirical implications of the results.
Keywords Business formation, Commercialization, Innovation, New ventures, Real options, Research and development, Start-ups
www.emeraldinsight.com/10.1108/17439131211201013
This article originally appeared in Volume 8 Number 1, 2012, International Journal of Managerial Finance
The following articles were selected for this year's Highly Commended Award
"Working capital management and firms' performance in emerging markets: the case of Jordan"
Bana Abuzayed
This article originally appeared in Volume 8 Number 2, 2012, International Journal of Managerial Finance
"Ownership structure, earnings management and acquiring firm post-merger market performance: evidence from Canada"
Claude Francoeur, Walid Ben Amar and Philémon Rakoto
This article originally appeared in Volume 8 Number 2, 2012, International Journal of Managerial Finance
"Baltic states and the euro: a spectral analysis of the 2007 financial crisis"
David Gray
This article originally appeared in Volume 8 Number 2, 2012, International Journal of Managerial Finance
Outstanding Reviewers
Assistant Professor Li-Anne Woo and Dr Lorenzo Casavecchia