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"Real Options: Taking Stock and Looking Ahead"

Yong Li, Barclay James, Ravi Madhavan, and Joseph T. Mahoney


First Author :

Yong Li
Strategic Management
State University of New York at Buffalo, School of Management
326B Jacobs Management Center
Amherst, NY 14260

(716) 645-2522

Second Author :

Barclay James
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street, 350A Wohlers Hall
Champaign, IL 61820

(217) 333-2420

Third Author :

Ravi Madhavan
Business Administration
University of Pittsburgh, Katz Graduate School of Business
236 Mervis Hall
Pittsburgh, PA 15260

(412) 648-1530

Fourth Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
140C Wohlers Hall
Champaign, IL 61820

(217) 244-8257

Abstract :
We discuss recent developments in real options theory and its applications to strategic management research, examine the potential difficulties in implementing real options in theory and practice, and propose several areas for future research. Our review shows that real options theory has provided important insights into investment and exit decisions as well as into the choice of investment modes. In addition, extant research studies have contributed substantially to our understanding of whether and how organizations can benefit from real options. Future research that addresses difficulties in applications will further advance both real options theory and practice in strategic management.
Keywords :
endogenous uncertainty, performance, Real options, strategic management
Manuscript Received : 2006
Manuscript Published : 2006
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