DEVELOPMENT OF REAL OPTION THEORY IN THE LAST 20 YEARS

Andrea Rozsa ()
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Andrea Rozsa: University of Debrecen, Faculty of Economics

Annals of Faculty of Economics, 2016, vol. 1, issue 1, 698-709

Abstract: The main goal of this study is to offer an overview on the real option theory in the past two decades. The beginnings of real option researches go back to the 1980s, with their first applications deployed in the natural resource extraction industries. A further important milestone of development came in 1996, when upon Lenos Trigeorgis’ initiative a series of annual real option conferences was launched. This year witnesses the staging of the 20th conference, and therefore it can be taken as a worthy occasion for having an overview on the main literary guidelines of the theory with emphasis on the key outcomes. The first part of my study details the most important results of real option financial valuation. The second part sheds light on the potential relationship of strategic management and real options in the light of literary researches. The third section focuses on the real option results of strategic decision-making. The interpretation of the real option procedure as an organizational process gives way to linking the results of strategic management to those of financial management by creating an integrated organizational decision-making model. This statement will be backed by the results pertaining to the real option organizational models.

Keywords: real option; investment valuation; strategic decision-making; organisational development (search for similar items in EconPapers)
JEL-codes: G31 L21 (search for similar items in EconPapers)
Date: 2016
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