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Interactive effects of multiple types of exogenous uncertainty and prior experience on strategic investment decisions: A real options perspective

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  • Li, Hong
  • Lucas, Gerardus J.M.

Abstract

Real Options Theory (ROT) is recognized as a powerful framework to understand strategic investment decisions under exogenous uncertainty. While ROT has studied multiple types of exogenous uncertainty, whether those have interacting effects has not been systematically addressed. We propose that ROT should start incorporating interactions between multiple exogenous uncertainties in its explanations of strategic investment decisions. In addition, our proposal accounts for direct and indirect paths by which exogenous uncertainty may exert influence as well as for the role of prior experience of making similar strategic investments. We chose patenting to illustrate our proposal to extend ROT. We empirically test our predictions using a sample of Chinese listed firms. Our findings confirm our proposal that different types of exogenous uncertainty can affect a strategic investment decision in distinct ways. Thus, ROT research can be enhanced by considering interactions between distinct types of exogenous uncertainty.

Suggested Citation

  • Li, Hong & Lucas, Gerardus J.M., 2026. "Interactive effects of multiple types of exogenous uncertainty and prior experience on strategic investment decisions: A real options perspective," Journal of Business Research, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:jbrese:v:208:y:2026:i:c:s0148296326001153
    DOI: 10.1016/j.jbusres.2026.116081
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