The adoption of radical and incremental innovations: an empirical analysis
Management Science
Mastering the dynamics of innovation: how companies can seize opportunities in the face of technological change
Net gain: expanding markets through virtual communities
Net gain: expanding markets through virtual communities
A Case for Using Real Options Pricing Analysis to Evaluate Information Technology Project Investment
Information Systems Research
Information Systems Research
The Impact of E-Commerce Announcements on the Market Value of Firms
Information Systems Research
Real Options and IT Platform Adoption: Implications for Theory and Practice
Information Systems Research
Synthetic Worlds: The Business and Culture of Online Games
Synthetic Worlds: The Business and Culture of Online Games
Information Systems Research
Value Implications of Investments in Information Technology
Management Science
Prioritizing a Portfolio of Information Technology Investment Projects
Journal of Management Information Systems
Journal of Management Information Systems
Do Markets Prefer Open or Proprietary Standards for XML Standardization? An Event Study
International Journal of Electronic Commerce
Journal of Management Information Systems
Virtual worlds as a medium for advertising
ACM SIGMIS Database
Information Systems Research
Changing the Competitive Landscape: Continuous Innovation Through IT-Enabled Knowledge Capabilities
Information Systems Research
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Virtual worlds are relatively nascent IT platforms with the potential to radically transform business processes and generate significant payoffs. However, in striving to achieve specific outcomes, firms may incur significant risks. Although many companies claim to have attained substantial benefits from their virtual world initiatives, many others have recently scaled down or even abandoned their experimental virtual world projects. This paper assesses the value proposition of virtual world initiatives from the real options perspective. Specifically, we argue that virtual worlds act as a firm's growth option, and we adopt the lens of real options to evaluate the value of this emerging and uncertain technological platform. We employ the event study method to assess the stock market's perception of the future revenue streams of 261 virtual world initiatives announced between 2006 and 2008. Our results indicate that, overall, the market reacts positively to virtual world initiatives. Our findings also show that investors' reactions to virtual world initiatives are contingent on four key characteristics of virtual world initiatives: interpretive flexibility (i.e., technologies that allow managers to experiment), divisibility (i.e., ability to incrementally implement the technology), strategic importance (i.e., an initiative that affects a process of strategic importance to the firm), and exploitable absorptive capacity (i.e., ability to exploit the knowledge acquired through the initiative). We discuss the key implications for real-world practitioners and suggest directions for future research.