Assessing Blockchain Investments through the Learning Option: An Application to the Automotive and Aerospace Industry

Ana María Sánchez Pérez, Jorge Tarifa Fernández and Salvador Cruz Rambaud
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Ana María Sánchez Pérez: Department of Economics and Business, University of Almería, 04120 Almería, Spain
Jorge Tarifa Fernández: Department of Economics and Business, University of Almería, 04120 Almería, Spain

Mathematics, 2020, vol. 8, issue 12, 1-13

Abstract: Blockchain technology has demonstrated huge potential in providing simplicity and efficiency for different industries. However, its implementation in the automotive and aerospace industry is quite slow because of its difficulty to show value creation. Real option methodology, specifically the learning option, is an assessment tool which fits the conditions under which investment in blockchain technology is carried out. Thus, its application can help managers to wisely invest in this technology despite the complexity of this industry. This study offers a suitable tool to assess the strategic value of an investment in blockchain technology from a conservative position by using the real option approach, particularly the learning option. Specifically, this paper provides the mathematical expression to obtain the value of a project which includes the learning option for n periods. Likewise, it tries to raise awareness among managers of the importance to gather relevant information before making irreversible decisions. The results show that, despite the high profitability of the analyzed sector and the strategic value added by the learning option to the investment, the value of this option remains constant over the project lifespan. This indicates that the blockchain investment has to be implemented as soon as possible given that it is a highly profitable project whose value increases very slowly by waiting to get more new information. In this way, the immediate investment in blockchain technology in the automotive and aerospace industry is recommended to reap the competitive advantages offered by digital technologies.

Keywords: blockchain technology; real options; automotive and aerospace industry; learning option (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2020
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