Abstract

The nature of technologies that are exploited through spinout formation are mostly early and uncertain technologies that evolve in highly uncertain markets. The question why these technology and market conditions are favourable for spinout creation has been recognized by research scholars but was not put under a theoretical framework or tested empirically.

The current study explores under which uncertainty conditions that are predominantly to be found in early stage technologies, spinout nativity is more favourable. We view the problem from the theoretical lenses of real-options theory.

Research on real options has encouraged the experimentation and the proactive exploration of uncertainty and has contributed to our understanding of entry decisions under uncertainty. We extend the concepts of real option theory to technology commercialization decisions by taking the perspective that uncertainty influences the value of the technology option. In particular, we examine the effects of exogenous (market) as well as endogenous (technological) uncertainty on spinout activity.

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