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Seizing Value Opportunities

  • Chandra S. Mishra
Chapter
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Abstract

Entrepreneurial organizations are constantly seeking value opportunities to build and sustain competitive advantage. Entrepreneurial incentives empower decision makers to overcome traditional behavioral bounds, and enhance their ability to recognize and seize cognitively distant opportunities in a timely manner. Entrepreneurial incentives enhance a manager’s promotion focus tempered by a mild prevention focus. Opportunity options are unrealized value potential embodied in a firm’s core resources. Adverse incentives associated with exploiting value opportunities include managerial overcommitment, overinvestment, underinvestment, and managerial overconfidence. Slack enables a firm to exploit growth opportunities; however, slack engenders agency costs in the absence of growth opportunities. The greater the uncertainty, the more time left for the opportunity to expire, the greater the present value of the opportunity, or the lower the investment required to exploit the opportunity, the more valuable is the opportunity option. When a value opportunity is seized, a sequence of real options results, which enhances the firm’s combinative capabilities that reconfigures firm’s capabilities. Prospectors and analyzers pursue cognitively distant opportunities.

Keywords

Cash Flow Real Option Entrepreneurial Incentive Growth Opportunity Free Cash Flow 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Chandra S. Mishra
    • 1
  1. 1.Florida Atlantic UniversityBoca RatonUSA

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