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Terrorism-induced uncertainty and firm R&D investment: A real options view | SpringerLink
Source: link.springer.com
Article summary:
1. Terrorism can reduce aggregate investment levels, including R&D investment.
2. Real options theory suggests that terrorism-induced uncertainty increases the value of the deferral option in R&D, leading firms to reduce their R&D investment.
3. Strong national institutions and multinational firms, larger firms, as well as firms with greater cash flow will be less sensitive to uncertainty in their R&D decisions.
Article analysis:
The article is generally reliable and trustworthy in its reporting of the impact of terrorism on firm R&D investment decisions from a real options view. The authors provide evidence for their claims through a battery of tests based on firm-level panel data from 48 countries, including a quasi-experiment. The article also provides insights into how strong national institutions and multinational firms, larger firms, as well as firms with greater cash flow can mitigate disincentives to invest in R&D stemming from uncertainty caused by terrorism.
The article does not appear to have any potential biases or one-sided reporting; it presents both sides equally and does not contain any promotional content or partiality. It also does not make any unsupported claims or missing points of consideration; all claims are supported by evidence provided in the article. Furthermore, there are no unexplored counterarguments or missing evidence for the claims made; all arguments are explored thoroughly and backed up with evidence from the tests conducted by the authors. Finally, possible risks associated with investing in R&D due to terrorism-induced uncertainty are noted throughout the article.