Bibliography

The valuation decision-making process:  making smart bets

Keywords: ambiguity, IRR (internal rate of return), mathiness, sources of uncertainties, ROI (return on investment), uncertainty, valuation methods

• (Book) Blastland, M. & A. Dilnot (2007) The Tiger That Isn’t. Seeing through a world of numbers
• (Book) Christensen, C. M., Kaufman, S. P., & Shih, W. C. (2010). Innovation killers: how financial tools destroy your capacity to do new things. Harvard Business Review Press.
• (Book) Goldfarb, B., & Kirsch, D. A. (2019). Bubbles and Crashes: The Boom and Bust of Technological Innovation. Stanford University Press.
• (Books) Keen, S. (2011). Debunking Economics: The Naked Emperor Dethroned?-Revised, Expanded and Integrated Edition. Zed Books.
• (Book) Kindleberger, Charles Poor, and Robert O’Keefe. Manias, panics, and crashes. Palgrave Macmillan, 2001.
• (Books) Knight, F. H. (2012). Risk, uncertainty and profit. Courier Corporation.
• (Book) Mackay, C. (2002). Extraordinary popular delusions and the madness of crowds. Barnes & Noble.
• (Video) David Rose, How to pitch to a VC (TED talk)
• (Article) Åstebro, T., & Elhedhli, S. (2006). The effectiveness of simple decision heuristics: Forecasting commercial success for early-stage ventures. Management Science, 52(3), 395-409.
• (Article) Berkovitch, E., & Israel, R. (2004). Why the NPV criterion does not maximize NPV. The Review of Financial Studies, 17(1), 239-255.
• (Article) Brun, E., Saetre, A.S., & Gjelsvik, M. (2009). Classification of ambiguity in new product development projects. European Journal of Innovation Management, 12(1), 62-85.
• (Article) Cassar, G. (2010). Are individuals entering self‐employment overly optimistic? An empirical test of plans and projections on nascent entrepreneur expectations. Strategic Management Journal, 31(8), 822-840.
• (Article) Cooper, A. C., Woo, C. Y., & Dunkelberg, W. C. (1988). Entrepreneurs’ perceived chances for success. Journal of Business Venturing, 3(2), 97-108.
• (Article) Chaney, P. K., Devinney, T. M., & Winer, R. S. (1991). The impact of new product introductions on the market value of firms. Journal of Business, 573-610.
• (Article) Cohen, L., Diether, K., & Malloy, C. (2013). Misvaluing innovation. The Review of Financial Studies, 26(3), 635-666.
• (Article) Denrell, J., & Fang, C. (2010). Predicting the next big thing: Success as a signal of poor judgment. Management Science, 56(10), 1653-1667.
• (Article) Fourcade, M. (2011). Cents and sensibility: economic valuation and the nature of “nature”. American Journal of Sociology, 116(6), 1721-77.
• (Article) Ghosal, Vivek, and Prakash Loungani. “The differential impact of uncertainty on investment in small and large businesses.” Review of Economics and Statistics 82.2 (2000): 338-343.
• (Article) Hering, T., Olbrich, M., & Steinrucke, M. (2006). Valuation of start-up internet companies. International Journal of Technology Management, 33(4), 406-419.
• (Article) O’Connor, G.C., & Rice, M.P. (2013). A comprehensive model of uncertainty associated with radical innovation. Journal of Product Innovation Management, 30(S1), 2-18.
• (Article) Segal, Gill, Ivan Shaliastovich, and Amir Yaron. “Good and bad uncertainty: Macroeconomic and financial market implications.” Journal of Financial Economics 117.2 (2015): 369-397.
• (Article) Shepherd, D. A., & Zacharakis, A. (2002). Venture capitalists’ expertise: A call for research into decision aids and cognitive feedback. Journal of Business Venturing, 17(1), 1-20.
• (Article) von Gelderen, M., Frese, M., & Thurik, R. (2000). Strategies, uncertainty and performance of small business startups. Small Business Economics, 15(3), 165-181.

Carefully using net present value (NPV) to value business models

Keywords: cost of capital, Discounted Cash Flow, Final Value, Net Present Value, opportunity cost, real options, risk premium, WACC

• (Book) Copeland, Thomas E., Tim Koller, and Jack Murrin. “Valuation: measuring and managing the value of companies.” (1991).
• (Video) Startup Valuation made simple by Serious Funding: The VC Method
• (Article) Adner, R., & Levinthal, D.A. (2004). What is not a real option: Considering boundaries for the application of real options to business strategy. Academy of Management Review, 29(1), 74-85.
• (Article) Gunther McGrath, R., & Nerkar, A. (2004). Real options reasoning and a new look at the R&D investment strategies of pharmaceutical firms. Strategic Management Journal, 25(1), 1-21.
• (Article) Hanafizadeh, P., & Latif, V. (2011). Robust net present value. Mathematical and Computer Modelling, 54(1), 233-242.
• (Article) Jacob, W.F., & Kwak, Y.H. (2003). In search of innovative techniques to evaluate pharmaceutical R&D projects. Technovation, 23(4), 291-296.
• (Article) Lint, O., & Pennings, E. (1998). R&D as an option on market introduction. R&D Management, 28(4), 279-287
• (Article) Loch, C. H., & Bode‐Greuel, K. (2001). Evaluating growth options as sources of value for pharmaceutical research projects. R&D Management, 31(2), 231-248.
• (Article)  Mitchell, G. R., & Hamilton, W. F. (2007). Managing R&D as a strategic option. Research-Technology Management, 50(2), 41-50.
• (Article) Newton, D. P., Paxson, D. A., & Widdicks, M. (2004). Real R&D options 1. International Journal of Management Reviews, 5(2), 113-130.
• (Article) Pakes, A. (1984). Patents as options: Some estimates of the value of holding European patent stocks (No. w1340). National Bureau of Economic Research.
• (Article) Robichek, Alexander A., and Stewart C. Myers. “Conceptual problems in the use of risk‐adjusted discount rates.” The Journal of Finance 21.4 (1966): 727-730.
• (Article) Romer, P (2015). Mathiness in the Theory of Economic Growth. American Economic Review, 105(5), 89-93.
• (Article) Ross, S.A. (1995). Uses, abuses, and alternatives to the net-present-value rule. Financial Management, 24(3), 96-102.
• (Article) Wonglimpiyarat, J. (2018). What is it about strategic implications of using financial models in the process of technology management?. The Journal of High Technology Management Research. https://doi.org/10.1016/j.hitech.2018.12.001

Integrating known risks and potential uncertainties:

Keywords: black swans, Monte-Carlo simulations, risk management, scenario planning, sensitivity analysis

• (Book) Arend, R.A. (2024) Uncertainty in Strategic Decision Making: Analysis, Categorization, Causation and Resolution. Palgrave Macmillan
• (Book) Gilovich, T., D. Griffin and D. Kahneman, Heuristics and Biases: The Psychology of Intuitive Judgment, , Cambridge University Press, 2002
• (Book) Razgaitis, R. (2003) Dealmaking using real options and Monte-Carlo Analysis. John Wiley, Hoboken NJ
• (Book) Silver, N. (2012) The Signal and the Noise: Why So Many Predictions Fail—But Some Don’t. Penguin Press
• (Video) HBR: The Six-Minute Guide to Making Better High-Stakes Decisions, Sarah Cliffe
• (Video) Shell, Navigating an Uncertain Future
• (Article) Angus, R. W., Packard, M. D., & Clark, B. B. (2022). Distinguishing unpredictability from uncertainty in entrepreneurial action theory. Small Business Economics, 1-23.
• (Article) Bodwell, W., & Chermack, T. J. (2010). Organizational ambidexterity: Integrating deliberate and emergent strategy with scenario planning. Technological Forecasting and Social Change, 77(2), 193-202.
• (Article) Boudreau, K. J., Guinan, E. C., Lakhani, K. R., & Riedl, C. (2016). Looking across and looking beyond the knowledge frontier: Intellectual distance, novelty, and resource allocation in science. Management Science, 62(10), 2765-2783.
• (Article) Bylund, P.L., & McCaffrey, M. (2017). A theory of entrepreneurship and institutional uncertainty, Journal of Business Venturing, 32(5), 461-475.
• (Article) Cornelius, P., Van de Putte, A., & Romani, M. (2005). Three decades of scenario planning in shell. California Management Review, 48(1), 92-109.
• (Article) Courtney, Hugh. “Decision-driven scenarios for assessing four levels of uncertainty.” Strategy & Leadership 31.1 (2003): 14-22.
• (Article) Das, T. K., & Teng, B. S. (1999). Cognitive biases and strategic decision processes: An integrative perspective. Journal of Management Studies, 36(6), 757-778
• (Article) Denning, S. (2006). Effective storytelling: strategic business narrative techniques. Strategy & Leadership, 34(1), 42-48.
• (Article) Denrell, J., Fang, C., & Liu, C. (2014). Perspective—Chance explanations in the management sciences. Organization Science, 26(3), 923-940.
• (Article) Dow, J., & da Costa Werlang, S. R. (1992). Uncertainty aversion, risk aversion, and the optimal choice of portfolio. Econometrica: Journal of the Econometric Society, 197-204.
• (Article) Goodwin, P., & Wright, G. (2010). The limits of forecasting methods in anticipating rare events. Technological forecasting and social change, 77(3), 355-368.
• (Article) Hanafizadeh, Payam, Abolfazl Kazazi, and Azam Jalili Bolhasani. “Portfolio design for investment companies through scenario planning.” Management Decision 49.4 (2011): 513-532.
• (Article) Jalonen, H. (2012). The uncertainty of innovation: a systematic review of the literature. Journal of Management Research, 4(1), 1.
• (Article) Jovanović, Petar. “Application of sensitivity analysis in investment project evaluation under uncertainty and risk.” International Journal of Project Management 17.4 (1999): 217-222.
• (Article) Kenney, H.S., & Pelley, B. (2014). Stories that drive the future: how narratives can improve scenario planning. Strategy & Leadership, 42(5), 28-33.
• (Article) Keizer, J. A., Vos, J. P., & Halman, J. I. (2005). Risks in new product development: devising a reference tool. R&D Management, 35(3), 297-309.
• (Article) Kim, L. (1998). Crisis construction and organizational learning: Capability building in catching-up at Hyundai Motor. Organization Science, 9(4), 506-521.
• (Article) Kleinknecht, A., & Van Der Panne, G. (2012). Predicting new product sales: The post-launch performance of 215 innovators. International Journal of Innovation Management, 16(02), 1250011.
• (Article) Mendonça, S., e Cunha, M. P., Ruff, F., & Kaivo-oja, J. (2009). Venturing into the wilderness: Preparing for wild cards in the civil aircraft and asset-management industries. Long Range Planning, 42(1), 23-41..
• (Article) Postma, T. J., & Liebl, F. (2005). How to improve scenario analysis as a strategic management tool?. Technological Forecasting and Social Change, 72(2), 161-173.
• (Article) Ruff, Frank. “Corporate foresight: integrating the future business environment into innovation and strategy.” International Journal of Technology Management 34.3-4 (2006): 278-295.
• (Article) Van Groenendaal, Willem JH. “Estimating NPV variability for deterministic models.” European Journal of Operational Research 107.1 (1998): 202-213.
• (Article) Vecchiato, R. (2019). Scenario Planning, Cognition, and Strategic Investment Decisions in a Turbulent Environment. Long Range Planning. (in press) https://doi.org/10.1016/j.lrp.2019.01.002
• (Article) Vettorello, M., Eisenbart, B., & Ranscombe, C. (2021). The Innovation System Roadmap: A novel approach to instil futures‐oriented reasoning in strategic decision making. Creativity and Innovation Management.
• (Article) Wiltbank, R., Read, S., Dew, N., & Sarasvathy, S. D. (2009). Prediction and control under uncertainty: Outcomes in angel investing. Journal of Business Venturing, 24(2), 116-133.
• (Article) Xu, Chonggang, and George Zdzislaw Gertner. “Uncertainty and sensitivity analysis for models with correlated parameters.” Reliability Engineering & System Safety 93.10 (2008): 1563-1573.

(c) Prof. Benoit Gailly, Louvain School of Management