Embedding real options in scenario planning: A new methodological approach

Giampiero Favato and Riccardo Vecchiato

Technological Forecasting and Social Change, 2017, vol. 124, issue C, 135-149

Abstract: The main goal of this paper is to explore whether and how we might integrate real options analysis into scenario planning in order to overcome the limitations and enhance the benefits of both techniques. So far scholars have emphasized that the main advantages of scenarios consist in developing the learning and adaptive skills of organizations. We thus investigate how to develop further these learning skills. Our paper contributes to the strategic management literature in three ways. First, it illustrates a new and simplified methodological approach to real option valuation. Second, it embeds this methodological approach into the 2×2 scenario matrix technique. Third, it deepens our understanding of the advantages that the combined use of scenarios and real options might bring to each technique.

Keywords: Scenario planning; Real options; Organizational learning; Pay-off method; 2×2 scenario matrix (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:124:y:2017:i:c:p:135-149

DOI: 10.1016/j.techfore.2016.05.016

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