Real operating options and foreign direct investment: A synthetic approach
The ability to change tactical direction in response to new information can contribute significant increments to value. Investments possessing this flexibility have the characteristics of options. Research and development is an obvious example. Oil exploration and mining fall into this category, levels of exploration and investment being highly contingent upon oil prices prevailing. International investment is also an example. Often, it begins with a small commitment which may be scaled upwards or curtailed, depending upon outturns achieved. In this article, the literature on real options is briefly surveyed and an attempt is made, using deductive methods, to develop a model to explain the mode of internationalization by the firm, by incorporating real options concepts as an augmentation to existing foreign direct investment (FDI) theories. Indeed, the theory of FDI produces only partial insights without extending its horizons to embrace ideas based upon net present value inclusive of the promise given by real options.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 14 (1996)
Issue (Month): 3 (June)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic|
When requesting a correction, please mention this item's handle: RePEc:eee:eurman:v:14:y:1996:i:3:p:304-314. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.