Which Types of Investments Benefit from Retaining the Flexibility to Terminate?

The author is indebted to many industry professionals for their patience in answering questions, including James Bradshaw, David Cormican, David Doyle, Naz Haider, Sandra Leviton, Cynthia Littleton, Adrian McDonald, Chris Regina, Garret Schneider, Lloyd Segan, and Amy Wasserman. In addition, the author is grateful for the constructive feedback given by Pierre Azoulay, Mitali Banerjee, Alessandro Bonatti, Brittany Bond, Olivier Chatain, Jerker Denrell, John Eklund, Glenn Ellison, Robert Gibbons, Shane Greenstein, Aleksandra Kacperczyk, Aseem Kaul, Minjae Kim, Joshua Krieger, Danielle Li, Hong Luo, Matt Marx, Denisa Mindruta, Tomasz Obloj, Gonçalo Pacheco de Almeida, Parag Pathak, Scott Stern, Donald Sull, Jeroen Van den bosch, Theresa Veer, Ezra Zuckerman, and Sam Zyontz as well as conference and seminar participants at NBER, MIT, Harvard University, University of Utah, HEC Paris, DRUID, AOM, SMS, and the Wharton School of the University of Pennsylvania. Finally, the author thanks the anonymous reviewers at Strategy Science for their patience and sharp, constructive comments, as well as editors Ron Adner and Daniel Levinthal.