Real Options Theory and International Strategy: A Critical Review

Advances in Strategic Management, Vol. 24, 67-101, 2007

42 Pages Posted: 24 Oct 2013

See all articles by Jing Li

Jing Li

Simon Fraser University

Date Written: 2007

Abstract

The application of real options theory to international strategy has surged in recent years. However, it is still a relatively new and loosely defined field, and there are several constraints on practical applications of this powerful theory. To move forward this field, the paper first provides a systematic analysis of theoretical and empirical contributions of real options theory to three critical issues in international strategy: (1) valuing multinational networks, (2) assessing market entry modes, and (3) evaluating market entry timing. The paper further suggests that future studies can focus on a refined treatment of uncertainty and the development of a dynamic theory in international strategy. Five testable propositions are developed in these directions.

Keywords: real options theory, international strategy, entry mode, entry timing, multinationality

JEL Classification: F21, F23, D81

Suggested Citation

Li, Jing, Real Options Theory and International Strategy: A Critical Review (2007). Advances in Strategic Management, Vol. 24, 67-101, 2007, Available at SSRN: https://ssrn.com/abstract=961265

Jing Li (Contact Author)

Simon Fraser University ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

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