How do real options come into existence? A step toward an option- based theory of the firm

Thierry BURGER-HELMCHEN ()

Finance from EconWPA

Abstract: To be relevant to a firm a real option needs to fit into a theory of the firm explaining its existence, exercise conditions and value. We make 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. We explain the creation of a real option as an entrepreneurial process which transform inventive ideas into profitable innovation. The subsequent development of competence necessary to exercise the option gives boundaries, based on theories of the firm, for the often overoptimistic real option evaluation.

Keywords: Real Option; Theory of the Firm; Capabilities (search for similar items in EconPapers)
JEL-codes: G (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-ent
Date: 2004-09-28
Note: Type of Document - pdf; pages: 30
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0409054

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