IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v38y2017i1p42-63.html
   My bibliography  Save this article

Real options theory in strategic management

Author

Listed:
  • Rodolphe Durand
  • Robert M. Grant
  • Tammy L. Madsen
  • Lenos Trigeorgis
  • Jeffrey J. Reuer

Abstract

No abstract is available for this item.

Suggested Citation

  • Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Lenos Trigeorgis & Jeffrey J. Reuer, 2017. "Real options theory in strategic management," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 42-63, January.
    • Handle: RePEc:bla:stratm:v:38:y:2017:i:1:p:42-63
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/smj.2593
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Linda Allen & Christos Pantzalis, 1996. "Valuation of the operating Flexibility of Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(4), pages 633-653, December.
    2. Bruce Kogut & Udo Zander, 1992. "Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology," Organization Science, INFORMS, vol. 3(3), pages 383-397, August.
    3. Bruce Kogut, 1984. "Normative Observations on the International Value-Added Chain and Strategic Groups," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(2), pages 151-167, June.
    4. David J. Teece, 2003. "Competition, Cooperation, and Innovation Organizational Arrangements for Regimes of Rapid Technological Progress," World Scientific Book Chapters, in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 16, pages 447-474, World Scientific Publishing Co. Pte. Ltd..
    5. Pindyck, Robert S., 1993. "Investments of uncertain cost," Journal of Financial Economics, Elsevier, vol. 34(1), pages 53-76, August.
    6. Andrew B. Abel & Avinash K. Dixit & Janice C. Eberly & Robert S. Pindyck, 1996. "Options, the Value of Capital, and Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 753-777.
    7. Arkadiy V. Sakhartov & Timothy B. Folta, 2014. "Resource relatedness, redeployability, and firm value," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1781-1797, December.
    8. Dennis P. Quinn & Pietra Rivoli, 1991. "The Effects of American- and Japanese-Style Employment and Compensation Practices on Innovation," Organization Science, INFORMS, vol. 2(4), pages 323-341, November.
    9. Abel, Andrew B & Eberly, Janice C, 1994. "A Unified Model of Investment under Uncertainty," American Economic Review, American Economic Association, vol. 84(5), pages 1369-1384, December.
    10. Bruce Kogut & Nalin Kulatilaka, 2001. "Capabilities as Real Options," Organization Science, INFORMS, vol. 12(6), pages 744-758, December.
    11. Subramanian Rangan, 1998. "Do Multinationals Operate Flexibly? Theory and Evidence," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(2), pages 217-237, June.
    12. Trigeorgis, Lenos, 1993. "The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(1), pages 1-20, March.
    13. Li, Yong, 2008. "Duration analysis of venture capital staging: A real options perspective," Journal of Business Venturing, Elsevier, vol. 23(5), pages 497-512, September.
    14. Jan Hendrik Fisch & Miriam Zschoche, 2012. "The role of operational flexibility in the expansion of international production networks," Strategic Management Journal, Wiley Blackwell, vol. 33(13), pages 1540-1556, December.
    15. Tailan Chi, 2000. "Option to acquire or divest a joint venture," Strategic Management Journal, Wiley Blackwell, vol. 21(6), pages 665-687, June.
    16. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
    17. Caves,Richard E., 2007. "Multinational Enterprise and Economic Analysis," Cambridge Books, Cambridge University Press, number 9780521677530.
    18. Lenos Trigeorgis, 1993. "Real Options and Interactions With Financial Flexibility," Financial Management, Financial Management Association, vol. 22(3), Fall.
    19. Panos Kouvelis & Kostas Axarloglou & Vikas Sinha, 2001. "Exchange Rates and the Choice of Ownership Structure of Production Facilities," Management Science, INFORMS, vol. 47(8), pages 1063-1080, August.
    20. Estrada, Isabel & de la Fuente, Gabriel & Martín-Cruz, Natalia, 2010. "Technological joint venture formation under the real options approach," Research Policy, Elsevier, vol. 39(9), pages 1185-1197, November.
    21. José Manuel Campa, 1994. "Multinational Investment under Uncertainty in the Chemical Processing Industries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(3), pages 557-578, September.
    22. Caves,Richard E., 2007. "Multinational Enterprise and Economic Analysis," Cambridge Books, Cambridge University Press, number 9780521860130.
    23. Trigeorgis, Lenos & Lambertides, Neophytos, 2014. "The Role of Growth Options in Explaining Stock Returns," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(3), pages 749-771, June.
    24. Vicky Henderson, 2002. "Valuation Of Claims On Nontraded Assets Using Utility Maximization," Mathematical Finance, Wiley Blackwell, vol. 12(4), pages 351-373, October.
    25. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 707-727.
    26. Edward H. Bowman & Gary T. Moskowitz, 2001. "Real Options Analysis and Strategic Decision Making," Organization Science, INFORMS, vol. 12(6), pages 772-777, December.
    27. Jeffrey J. Reuer & Tony W. Tong, 2010. "Discovering Valuable Growth Opportunities: An Analysis of Equity Alliances with IPO Firms," Organization Science, INFORMS, vol. 21(1), pages 202-215, February.
    28. Alberto Moel, 2002. "When Are Real Options Exercised? An Empirical Study of Mine Closings," Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 35-64, March.
    29. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
    30. Peter J. Buckley & Mark Casson, 2010. "Models of the Multinational Enterprise," Palgrave Macmillan Books, in: The Multinational Enterprise Revisited, chapter 7, pages 147-176, Palgrave Macmillan.
    31. Birger Wernerfelt & Aneel Karnani, 1987. "Competitive strategy under uncertainty," Strategic Management Journal, Wiley Blackwell, vol. 8(2), pages 187-194, March.
    32. Seung‐Hyun Lee & Sangcheol Song, 2012. "Host country uncertainty, intra‐MNC production shifts, and subsidiary performance," Strategic Management Journal, Wiley Blackwell, vol. 33(11), pages 1331-1340, November.
    33. Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
    34. Alexander Triantis, 2005. "Realizing the Potential of Real Options: Does Theory Meet Practice?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 17(2), pages 8-16, March.
    35. Daniel W. Elfenbein & Anne Marie Knott, 2015. "Time to exit: Rational, behavioral, and organizational delays," Strategic Management Journal, Wiley Blackwell, vol. 36(7), pages 957-975, July.
    36. Jonathan B. Berk & Richard C. Green & Vasant Naik, 1999. "Optimal Investment, Growth Options, and Security Returns," Journal of Finance, American Finance Association, vol. 54(5), pages 1553-1607, October.
    37. Shih-Fen S Chen, 2010. "A general TCE model of international business institutions: Market failure and reciprocity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 935-959, August.
    38. Ming-Jer Chen & Danny Miller, 2015. "Reconceptualizing competitive dynamics: A multidimensional framework," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 758-775, May.
    39. Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
    40. Pietra Rivoli & Eugene Salorio, 1996. "Foreign Direct Investment and Investment under Uncertainty," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 335-357, June.
    41. Tony W Tong & Jeffrey J Reuer, 2007. "Real options in multinational corporations: organizational challenges and risk implications," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 215-230, March.
    42. Kent D. Miller & Zur Shapira, 2004. "An empirical test of heuristics and biases affecting real option valuation," Strategic Management Journal, Wiley Blackwell, vol. 25(3), pages 269-284, March.
    43. Arvids A. Ziedonis, 2007. "Real Options in Technology Licensing," Management Science, INFORMS, vol. 53(10), pages 1618-1633, October.
    44. Tailan Chi & Donald J McGuire, 1996. "Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 285-307, June.
    45. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    46. Arnd Huchzermeier & Morris A. Cohen, 1996. "Valuing Operational Flexibility Under Exchange Rate Risk," Operations Research, INFORMS, vol. 44(1), pages 100-113, February.
    47. Sadanand, Asha & Sadanand, Venkatraman, 1996. "Firm Scale and the Endogenous Timing of Entry: a Choice between Commitment and Flexibility," Journal of Economic Theory, Elsevier, vol. 70(2), pages 516-530, August.
    48. Sea‐Jin Chang & Philip M. Rosenzweig, 2001. "The choice of entry mode in sequential foreign direct investment," Strategic Management Journal, Wiley Blackwell, vol. 22(8), pages 747-776, August.
    49. Tailan Chi & Anju Seth, 2009. "A dynamic model of the choice of mode for exploiting complementary capabilities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(3), pages 365-387, April.
    50. Lukas, Elmar & Reuer, Jeffrey J. & Welling, Andreas, 2012. "Earnouts in mergers and acquisitions: A game-theoretic option pricing approach," European Journal of Operational Research, Elsevier, vol. 223(1), pages 256-263.
    51. Naga Lakshmi Damaraju & Jay B. Barney & Anil K. Makhija, 2015. "Real options in divestment alternatives," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 728-744, May.
    52. Kent D Miller & Jeffrey J Reuer, 1998. "Firm Strategy and Economic Exposure to Foreign Exchange Rate Movements," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(3), pages 493-513, September.
    53. Richard J. Arend & Darryl A. Seale, 2005. "Modeling alliance activity: an iterated prisoners' dilemma with exit option," Strategic Management Journal, Wiley Blackwell, vol. 26(11), pages 1057-1074, November.
    54. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
    55. Nalin Kulatilaka & Enrico C. Perotti, 1998. "Strategic Growth Options," Management Science, INFORMS, vol. 44(8), pages 1021-1031, August.
    56. Driouchi, Tarik & Bennett, David, 2011. "Real options in multinational decision-making: Managerial awareness and risk implications," Journal of World Business, Elsevier, vol. 46(2), pages 205-219, April.
    57. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September.
    58. Bruce Kogut & Nalin Kulatilaka, 1994. "Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network," Management Science, INFORMS, vol. 40(1), pages 123-139, January.
    59. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages 97-116, March.
    60. Baldwin, Carliss Y, 1982. "Optimal Sequential Investment When Capital Is Not Readily Reversible," Journal of Finance, American Finance Association, vol. 37(3), pages 763-782, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tailan Chi & Jing Li & Lenos G Trigeorgis & Andrianos E Tsekrekos, 2019. "Real options theory in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 525-553, June.
    2. Li, Yong & James, Barclay & Madhavan, Ravi & Mahoney, Joseph T., 2006. "Real Options: Taking Stock and Looking Ahead," Working Papers 06-0114, University of Illinois at Urbana-Champaign, College of Business.
    3. Driouchi, Tarik & Bennett, David, 2011. "Real options in multinational decision-making: Managerial awareness and risk implications," Journal of World Business, Elsevier, vol. 46(2), pages 205-219, April.
    4. Li, Jing & Rugman, Alan M., 2007. "Real options and the theory of foreign direct investment," International Business Review, Elsevier, vol. 16(6), pages 687-712, December.
    5. Sears, Joshua B., 2019. "A real options model of market entry: Endogenous uncertainty and exogenous uncertainty," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    6. Sophocles P. Ioulianou & Michael J. Leiblein & Lenos Trigeorgis, 2021. "Multinationality, portfolio diversification, and asymmetric MNE performance: The moderating role of real options awareness," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 388-408, April.
    7. Sharon Belenzon & Victor Manuel Bennett & Andrea Patacconi, 2019. "Flexible Production and Entry: Institutional, Technological, and Organizational Determinants," Strategy Science, INFORMS, vol. 4(3), pages 193-216, September.
    8. Cuypers, I.R.P., 2009. "Essays on equity joint ventures, uncertainty and experience," Other publications TiSEM 8dc79e86-c625-467f-a450-8, Tilburg University, School of Economics and Management.
    9. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.
    10. Song, Sangcheol, 2015. "Exchange rate challenges, flexible intra-firm adjustments, and subsidiary longevity," Journal of World Business, Elsevier, vol. 50(1), pages 36-45.
    11. Ioulianou, Sophocles & Trigeorgis, Lenos & Driouchi, Tarik, 2017. "Multinationality and firm value: The role of real options awareness," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 77-96.
    12. Song, Sangcheol, 2022. "Determining investment size and local embeddedness under host market uncertainty and growth rates," International Business Review, Elsevier, vol. 31(2).
    13. Sharon Belenzon & Victor Manuel Bennett & Andrea Patacconi, 2019. "Flexible Production and Entry: Institutional, Technological, and Organizational Determinants," NBER Working Papers 25659, National Bureau of Economic Research, Inc.
    14. Song, Sangcheol, 2020. "Actualization of growth potential in international joint ventures: The moderating effects of localization strategies," Journal of World Business, Elsevier, vol. 55(2).
    15. Lander, Diane M. & Pinches, George E., 1998. "Challenges to the Practical Implementation of Modeling and Valuing Real Options," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(3, Part 2), pages 537-567.
    16. Carlos Andrés Zapata Quimbayo, 2020. "OPCIONES REALES Una guía teórico-práctica para la valoración de inversiones bajo incertidumbre mediante modelos en tiempo discreto y simulación de Monte Carlo," Books, Universidad Externado de Colombia, Facultad de Finanzas, Gobierno y Relaciones Internacionales, number 138, April.
    17. Tony Tong & Jing Li, 2008. "Real options and MNE strategies in Asia Pacific," Asia Pacific Journal of Management, Springer, vol. 25(1), pages 153-169, January.
    18. Chris Changwha Chung & Seung-Hyun Lee & Jeoung-Yul Lee, 2013. "Dual-Option Subsidiaries and Exit Decisions During Times of Economic Crisis," Management International Review, Springer, vol. 53(4), pages 555-577, August.
    19. Hart E. Posen & Michael J. Leiblein & John S. Chen, 2018. "Toward a behavioral theory of real options: Noisy signals, bias, and learning," Strategic Management Journal, Wiley Blackwell, vol. 39(4), pages 1112-1138, April.
    20. Han T. J. Smit & Lenos Trigeorgis, 2017. "Strategic NPV: Real Options and Strategic Games under Different Information Structures," Strategic Management Journal, Wiley Blackwell, vol. 38(13), pages 2555-2578, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:38:y:2017:i:1:p:42-63. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.