Business Education in a Liberal Arts College: A Real-Option Advantage
Kavous Ardalan
Marist College, U.S.A.
Volume 14: 2019, pp. 315-326; ABSTRACT
The purpose of this paper is to emphasize the advantage of gaining business education in a liberal arts educational context. This paper shows that an investment in a liberal arts education can be regarded as a “real option”, and that a liberal arts education becomes more valuable in a changing, uncertain world. For this purpose, first, the paper discusses how a liberal arts education instills in students the flexibility of properly adapting to a rapidly changing, uncertain world. Then, the paper discusses “real options”, which is a byproduct of the “financial option pricing theory”, according to which the value of an “option” increases continuously as uncertainty increases. This means that in a changing and uncertain world, management may have valuable flexibility to respond profitably to unexpected events. Such management flexibility expands an investment’s options value. Similarly, successful liberal arts students, who gain flexibility through a liberal arts education, keep their options open in a rapidly changing, uncertain world. In other words, in the same way that real options adds value to a rigid project valuation method, a liberal arts education adds value to a specialized education.
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