Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management
AbstractThis work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.
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Bibliographic InfoPaper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2006-31.
Date of creation: 2006
Date of revision:
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Real Option; Theory of the Firm; Entrepreneurship; Dynamic Capabilities.;
Other versions of this item:
- Thierry Burger-Helmchen, 2007. "Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 59(4), pages 387-405, October.
- L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- M19 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-16 (All new papers)
- NEP-CSE-2006-12-16 (Economics of Strategic Management)
- NEP-ENT-2006-12-16 (Entrepreneurship)
- NEP-INO-2006-12-16 (Innovation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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