Confronted with an uncertain future driven by heightened global competition, rapid technological change, and volatile energy prices, a growing number of managers have responded by becoming more flexible in their use of resources. For example, their firms have increased the use of temporary employees, adopted just-in-time production systems, and grouped people into work teams that can be reorganized rapidly as business conditions change. What these strategies have in common is the conversion of fixed into variable costs, which helps insulate profits against unforeseen disruptions in business conditions. This preference for flexibility is even stronger for financing and investment decisions. For example, because most financial transactions occur in an environment characterized by asymmetric information, investors prefer liquid securities and engage in practices such as the sequential financing of venture capital deals. Moreover, many executives have begun to treat capital project proposals as a series of real options, enabling them to gauge how improvements in the timing of investment expenditures can increase the firm's value. The way these practices reduce uncertainty is by shortening the investment time horizon, which is crucial for companies that must invest in long-term, often irreversible assets. Neoclassical economists support this quest for flexibility on the presumption that it improves allocative efficiency, despite the fact that it usually increases wage and employment insecurity. However, as Glen Atkinson noted, the tradeoff between equity and