Real options theory in international business
Date
2019Author
Chi, TailanLi, Jing
Trigeorgis, Lenos G.
Tsekrekos, Andrianos E.
Source
Journal of International Business StudiesVolume
50Issue
4Pages
525-553Google Scholar check
Metadata
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Abstract The last quarter century has witnessed substantial growth in applications of real options theory (ROT) to international business (IB) research. In this review, we explicate the core ROT concepts in the IB context and discuss the contributions of ROT-based research to three core IB issues: timing and scale of market entry or exit, entry mode and governance form, and the role of multinational networks. Based on our review, we propose a holistic ROT view of the multinational enterprise that synthesizes the insights of existing studies. Finally, to move the field forward, we highlight key questions and challenges in current ROT-based work, provide a more precise definition of exogenous and endogenous uncertainty, suggest empirical designs to test unique ROT predictions, and explore areas where ROT can be combined with other theoretical perspectives to better understand IB phenomena.