Real Options and Strategic Investment Decisions: Can They Be of Use to Scholars?

Krychowski, Charlotte; Quélin, Bertrand V.
May 2010
Academy of Management Perspectives;May2010, Vol. 24 Issue 2, p65
Academic Journal
Real options (RO) analysis has been of growing interest to the academic community as a promising approach to supporting investment decisions under uncertainty. In this article we examine an applied investment decision in the telecommunications industry to highlight the main benefits associated with using real options. The paper then discusses the theoretical issues raised by real options. Specifically, we examine two research streams to explain how real options contributes to a theoretical understanding of strategic management, and to better understand the gap between theory and practice of real options. Finally, we lay out an agenda for future research.


Related Articles

  • COPING WITH UNCERTAINTY: REAL OPTIONS. Stoian, Mirela Madalina; Stoian, Rares Gabriel // Metalurgia International;Jun2012, Vol. 17 Issue 6, p157 

    Net present value was until recently the standard valuation methodology in selecting investment projects. In an ever complex world in which the uncertainty about the future seems to grow, the NPV investment decision is as a "now or never" proposition. The incapability of it to cope with an ever...

  • Robust Adversarial Risk Analysis: A Level-k Approach. McLay, Laura; Rothschild, Casey; Guikema, Seth // Decision Analysis;Mar2012, Vol. 9 Issue 1, p41 

    Adversarial risk analysis is an active and important area of decision analytic research. Both single-actor decision analysis and multiple-actor game theory have been applied to this problem, with game theoretic methods being particularly popular. Although game theory models do explicitly capture...

  • Learning Bayesian Network to Explore Connectivity of Risk Factors in Enterprise Risk Management. Namwongse, Paradee; Limpiyakorn, Yachai // International Journal of Computer Science Issues (IJCSI);Mar2012, Vol. 9 Issue 2, p61 

    Enterprise Risk Management provides a holistic top-down view of key risks facing an organization. Developing techniques that can exhibit the inter-connectivity of risks are required to effectively manage risks on an enterprise-wide. This research thus proposed Bayesian Network learning technique...

  • Risk Analysis: Strategic Investment. Kannadhasan, M.; Nandagopal, R. // SCMS Journal of Indian Management;Dec2010, Vol. 7 Issue 4, p13 

    This paper examines whether Business Strategy as one of the contingency variables influences the extent of usage of Risk Analysis (RA) in Strategic Investment Decisions (SIDs) or not. To understand the relationship, this paper developed and tested a structural mode/ /inking business strategy and...

  • CHAPTER 7: Incorporating judgments into decisions.  // Numbers Guide;2003, p137 

    Most business decisions involve uncertainty or risk. This chapter outlines techniques which aid decision-making under such conditions and shows you how to bring judgment into the analysis. This allows you to combine the rigour of numerical methods with the strength of managerial experience. Even...

  • Scale construction from a decisional viewpoint. Smithson, Michael // Minds & Machines;Aug2006, Vol. 16 Issue 3, p339 

    Many quantitative scales are constructed using cutoffs on a continuum with scores assigned to the cutoffs. This paper develops a framework for using or constructing such scales from a decision-making standpoint. It addresses questions such as: How many distinct thresholds or cutoffs on a scale...

  • Taming chance: Risk and the quantification of uncertainty. Kadvany, John // Policy Sciences;Feb96, Vol. 29 Issue 1, p1 

    The quantification of uncertainty through probability is central to definitions of risk used in environmental policy analysis. This essay explores the translation of unquantified uncertainty into probability and the expression of allied philosophical problems in the practice of environmental...

  • Risk Intelligence. Evans, Dylan // Risk Intelligence;2/6/2014, p1 

    Every day, people face decisions small and large that must be made without a clear picture of the risks involved. In Risk Intelligence, Dylan Evans provides the tools and techniques to make such decisions easier and more fruitful. It turns out that different people have different levels of risk...

  • INCERTIDUMBRE Y POLÍTICAS AMBIENTALES. Kwiatkowska, Teresa; Szatzschneider, Wojciech // Ludus Vitalis;2012, Vol. 20 Issue 37, p71 

    Nature did not endow us with clear set of laws. Successful solution to any environmental problem implies working within Knightian uncertainty that explicitly deals with decision making under conditions of unstructured randomness. A 'wild' type of randomness that we will never discern, due to its...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics