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Real Options Reasoning and the Internationalization of Small Firms: A Review and Agenda for Future Research

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  • Jamshid Alinasab

    (University of Otago)

  • Richard A. Hunt

    (Pamplin College of Business, Virginia Polytechnic Institute)

Abstract

This study systematically reviews real options reasoning (ROR) in small-firm internationalization from 1999 to 2024, clarifying how ROR has been conceptually fragmented and often misunderstood in entrepreneurial contexts. Unlike prior work focused on large firms with broad strategic choice sets, our review emphasizes how resource-constrained ventures employ ROR heuristically, through staged, incremental commitments, to navigate foreign market uncertainty. Positioning ROR as a dynamic decision framework, we contrast it with alternative logics such as effectuation, the Uppsala model, and transaction cost economics. We develop a novel conceptual integration that reveals new research opportunities in entrepreneurial cognition, co-creation, and adaptive decision-making. By situating ROR in the constrained realities of small firms, this review advances a more grounded understanding of how these ventures manage downside risk, leverage networks, and sustain flexible paths to international growth.

Suggested Citation

  • Jamshid Alinasab & Richard A. Hunt, 2025. "Real Options Reasoning and the Internationalization of Small Firms: A Review and Agenda for Future Research," Management International Review, Springer, vol. 65(5), pages 821-849, October.
    • Handle: RePEc:spr:manint:v:65:y:2025:i:5:d:10.1007_s11575-025-00584-6
    DOI: 10.1007/s11575-025-00584-6
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