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Titolo:
A case for using real options pricing analysis to evaluate information technology project investments
Autore:
Benaroch, M; Kauffman, RJ;
Indirizzi:
Syracuse Univ, Sch Management, Syracuse, NY 13244 USA Syracuse Univ Syracuse NY USA 13244 ch Management, Syracuse, NY 13244 USA Univ Minnesota, Carlson Sch Management, Minneapolis, MN 55455 USA Univ Minnesota Minneapolis MN USA 55455 gement, Minneapolis, MN 55455 USA
Titolo Testata:
INFORMATION SYSTEMS RESEARCH
fascicolo: 1, volume: 10, anno: 1999,
pagine: 70 - 86
SICI:
1047-7047(199903)10:1<70:ACFURO>2.0.ZU;2-G
Fonte:
ISI
Lingua:
ENG
Keywords:
IT investment evaluation; real options; option pricing methods; Black-Scholes model; electronic banking networks; POS debit systems;
Tipo documento:
Article
Natura:
Periodico
Settore Disciplinare:
Social & Behavioral Sciences
Citazioni:
19
Recensione:
Indirizzi per estratti:
Indirizzo: Benaroch, M Syracuse Univ, Sch Management, Syracuse, NY 13244 USA SyracuseUniv Syracuse NY USA 13244 t, Syracuse, NY 13244 USA
Citazione:
M. Benaroch e R.J. Kauffman, "A case for using real options pricing analysis to evaluate information technology project investments", INF SYST R, 10(1), 1999, pp. 70-86

Abstract

The application of fundamental option pricing models (OPMs), such as the binomial and the Black-Scholes models, to problems in information technology(IT) investment decision he application of fundamental option pricing models (OPMs), such as the binomial and making have been the subject nf some debate in the last few years Prior research for example has made the case that pricing "real options" in real world operational and strategic settings offers the potential for useful insights in the evaluation of irreversible investments under uncertainty. However, most authors in the IS literature have made their cases using illustrative, rather than actual real world examples, and have always concluded with caveats and questions for future research about the applicability of such methods in practice. This paper makes three important contributions in this context: (1) it provides a formal theoretical grounding for the validity of the Black-Scholes option pricing modelin the context of the spectrum of capital budgeting methods that might be employed to assess IT investments; (2) it shows why the assumptions of boththe Black-Scholes and the binomial option pricing models place constraintson the range of IT investment situations that one can evaluate that are similar to those implied by traditional capital budgeting methods such as discounted cash flow analysis; and (3) it presents the first application of the Black-Scholes model that uses a real world business situation involving IT as its test bed. Our application focuses on an analysis of the timing of the deployment of point-of-sale (POS) debit services by the Yankee 24 shared electronic banking network of New England. This application enables us tomake the case for the generalizability of the approach we discuss to four IT investment settings.

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Documento generato il 11/08/20 alle ore 15:18:19