Real Option Appraisal in R & D Outsourcing

Real Option Appraisal in R & D Outsourcing

Qing Cao (University of Missouri - Kansas City, USA) and Karyl B. Leggio (University of Missouri - Kansas City, USA)
Copyright: © 2007 |Pages: 13
DOI: 10.4018/978-1-59904-195-7.ch016


This chapter will stress MIS’ strides in R&D outsourcing, and it will also detail the risks and uncertainty associated with the process of outsourcing core areas of the business such as R&D. Moreover, the chapter will propose the use of real option analysis to assist in the decisions of: “Why should a firm outsource R&D?” and “How does a company select a viable vendor using a two-stage process?” The purposes of this chapter include: a discussion of the cutting edge usage of outsourcing for R&D; and, to alleviate the R&D outsourcing risks, we will explore the two-stage vendor selection approach in information technology outsourcing using real options analysis.

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