Title : Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management
Author(s) : Thierry BURGER-HELMCHEN
Abstract : This work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.
Key-words : Real Option, Theory of the Firm, Entrepreneurship, Dynamic Capabilities
JEL Classification : L29, D83, M13, M19.