Managing uncertainty in innovation: The applicability of both real options and path dependency theory

A debate exists on the applicability of real options theory versus path dependency to managing innovation. However, this debate is nascent in terms of empirical studies on what managers actually do in managing innovative opportunities. The value of each perspective is explored by utilizing empirical data from case studies of biopharmaceutical companies to develop grounded theory and a better understanding of the use of options theory and path dependent models in managing innovation. The empirical data suggest that not all of the arguments of the theoretical discourse may be relevant for particular cases and in fact may be the opposite of what is presupposed.