Internet of Things and Their Coming Perspectives: A Real Options Approach

Jorge Tarifa-Fernández, Ana María Sánchez-Pérez and Salvador Cruz-Rambaud
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Jorge Tarifa-Fernández: Department of Economics and Business, University of Almería, 04120 Almería, Spain
Ana María Sánchez-Pérez: Department of Economics and Business, University of Almería, 04120 Almería, Spain
Salvador Cruz-Rambaud: Department of Economics and Business, University of Almería, 04120 Almería, Spain
Authors registered in the RePEc Author Service: Salvador Cruz Rambaud, Sr.

Sustainability, 2019, vol. 11, issue 11, 1-15

Abstract: Internet of things is developing at a dizzying rate, and companies are forced to implement it in order to maintain their operational efficiency. The high flexibility inherent to these technologies makes it necessary to apply an appropriate measure, which properly assesses risks and rewards. Real options methodology is available as a tool which fits the conditions, both economic and strategic, under which investment in internet of things technologies is developed. The contribution of this paper is twofold. On the one hand, it offers an adequate tool to assess the strategic value of investment in internet of things technologies. On the other hand, it tries to raise awareness among managers of internet of things technologies because of their potential to contribute to economic and social progress. The results of the research described in this paper highlight the importance of taking action as quickly as possible if companies want to obtain the best possible performance. In order to enhance the understanding of internet of things technologies investment, this paper provides a methodology to assess the implementation of internet of things technologies by using the real options approach; in particular, the option to expand has been proposed for use in the decision-making process.

Keywords: development; digitalization; investment; Industry 4.0; technological innovation; real options (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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