Fig. 3

Probabilities of the four strategies under ambiguity when the profitability of the future innovation, \(\mu\), varies. \(PC\), \(PB\), \(PL\), and \(PG\) represent the probabilities of pursuing compulsive, buy-and-hold, leapfrog, and laggard strategies, respectively. Parameter \(c\) represents the degree of ambiguity perceived by managers. When \(c=0.5\), ambiguity is absent, implying that managers are neutral toward ambiguity. The upper left figure illustrates Fig. 2 in Grenadier and Weiss (1997). As \(c\) decreases, the degree of ambiguity increases. Here, \(c=0.2\) represents the highest degree of ambiguity perceived by managers. As the profitability of future innovation increases, \(PC\) and \(PL\) increase, whereas \(PB\) and \(PG\) decrease