The concept of real options acknowledges that downside risk is limited and upward potential is maximized if management can alter the sequence of actions and investment. However, real options generally require control over the underlying asset whereas financial options typically do not. To gain more insight in this issue, we describe three option valuations in a real R&D setting throughout time. We find that the (endogenous) dynamics of strategic management and of the technologies themselves played a dominant role in the actual outcome of the cases that we studied. From an options perspective, our findings stimulate the application of advanced models, while from a wider managerial perspective, we suggest to combine option models with scoring methods in order to keep matters realistic, broadly understandable and manageable.
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