Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management

Thierry BURGER-HELMCHEN ()

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg

Abstract: This work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.

Keywords: Real Option; Theory of the Firm; Entrepreneurship; Dynamic Capabilities. (search for similar items in EconPapers)
JEL-codes: L29 D83 M13 M19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-ent and nep-ino
Date: 2006
View list of references

Downloads: (external link)
http://cournot2.u-strasbg.fr/users/beta/publications/2006/2006-31.pdf (application/pdf)

Related works:
Journal Article: Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ulp:sbbeta:2006-31

Access Statistics for this paper

More papers in Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg
Contact information at EDIRC.
Series data maintained by ().