Real Options Theory and International Strategy: A Critical Review
Advances in Strategic Management, Vol. 24, 67-101, 2007
42 Pages Posted: 24 Oct 2013
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: Suggested Citation