Real Options Theory and International Strategy: A Critical Review

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Advances in Strategic Management

ISSN: 0742-3322
Series editor(s): Professor Brian Silverman

Subject Area: Strategy

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Document Information:
Title:	Real Options Theory and International Strategy: A Critical Review
Author(s):	Jing Li
Volume:	24 Editor(s): Jeffrey J. Reuer, Tony W. Tong ISBN: 978-0-7623-1427-0 eISBN: 978-1-84950-494-2
Citation:	Jing Li (2007), Real Options Theory and International Strategy: A Critical Review, in Jeffrey J. Reuer, Tony W. Tong (ed.) Real Options Theory (Advances in Strategic Management, Volume 24), Emerald Group Publishing Limited, pp.67-101
DOI:	10.1016/S0742-3322(07)24003-3 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
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.