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Real options theory in international business

  • Tailan ChiEmail author
  • Jing Li
  • Lenos G Trigeorgis
  • Andrianos E Tsekrekos
Review Article

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.

Keywords

real options theory market entry or exit entry mode multinational network multinational enterprises (MNEs) firm performance 

Résumé

Au cours du dernier quart de siècle, on a assisté à une croissance substantielle des applications de la théorie des options réelles (TOR) à la recherche en international business (IB). Dans cette étude, nous expliquons les concepts fondamentaux de la TOR dans le contexte de l’IB et discutons des contributions de la recherche fondée sur la TOR à trois questions fondamentales de l’IB: le moment et l’échelle de l’entrée ou de la sortie du marché, le mode d’entrée et la forme de gouvernance, et le rôle des réseaux multinationaux. Sur la base de notre analyse, nous proposons une vision TOR holiste de l’entreprise multinationale qui synthétise les connaissances des études existantes. Enfin, pour aller de l’avant, nous mettons en lumière les questions et les défis clés des travaux actuels sur la TOR, donnons une définition plus précise de l’incertitude exogène et endogène, suggérons des modèles empiriques pour tester des prédictions TOR uniques et explorons les domaines où la TOR peut être combinée à d’autres perspectives théoriques pour mieux comprendre les phénomènes de l’IB.

Resumen

El último cuarto de siglo ha sido testigo de crecimiento sustancial en las aplicaciones de la teoría de opciones reales (ROT por sus iniciales en inglés) para la investigación en negocios internacionales. En esta revisión, explicamos el núcleo de los conceptos de la teoría de opciones reales en el contexto de negocios internacionales y discutimos las contribuciones de la investigación basada en teoría de opciones reales en tres temas centrales de negocios internacionales: el momento, la escala de entrada o salida del mercado y la forma de gobernanza, y el papel de las redes multinacionales. Con base en nuestra revisión, proponemos una visión holística de la teoría de opciones reales de la empresa multinacional que sintetiza los aportes de los estudios existentes. Finalmente, para mover el campo hacia adelante, resaltamos las preguntas clave y los retos en el trabajo actual basado en la teoría de opciones reales, damos una definición más precisa de la incertidumbre exógena y endógena, proponemos diseños empíricos para probar predicciones únicas de la teoría de opciones reales, y exploramos áreas donde la teoría de opciones reales puede ser combinada con otras perspectivas teóricas para entender mejor los fenómenos de negocios internacionales.

Resumo

O último quarto de século testemunhou um crescimento substancial de aplicações da teoria de opções reais (ROT) para a pesquisa em negócios internacionais (IB). Nesta revisão, explicamos os principais conceitos de ROT no contexto de IB e discutimos as contribuições da pesquisa baseada em ROT para três questões centrais em IB: tempo e escala de entrada ou saída de mercado, modo de entrada e forma de governança, e o papel das redes multinacionais. Com base em nossa revisão, propomos uma visão holística de ROT da empresa multinacional que sintetiza as percepções de estudos existentes. Finalmente, para avançar no campo, destacamos questões centrais e desafios do corrente trabalho baseado em ROT, fornecemos uma definição mais precisa da incerteza endógena e exógena, sugerimos designs empíricos para testar previsões únicas de ROT e exploramos áreas em que ROT pode ser combinada com outras perspectivas teóricas para entender melhor os fenômenos de IB.

摘要

在过去的四分之一世纪里,实物期权理论(ROT)在国际商务(IB)研究中的应用有大幅的增长。在本综述中,我们阐述了IB情境下核心ROT的概念,并讨论了基于ROT的研究对IB的三个核心议题的贡献:市场进入或退出的时机和规模,进入模式和治理形式,以及跨国网络的作用。基于我们的综述,我们提出了综合现有研究见解的对跨国企业的整体ROT观。最后,为了推动这一领域的发展,我们强调当前基于ROT的工作中的关键问题和挑战,提供更精确的外生和内生不确定性定义,建议用于测试独特ROT预测的实证设计,并探索ROT能与其它理论视角相结合的领域,去更好地认识IB现象。

Notes

Supplementary material

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Supplementary material 1 (DOCX 106 kb)

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Copyright information

© Academy of International Business 2019

Authors and Affiliations

  • Tailan Chi
    • 1
    Email author
  • Jing Li
    • 2
  • Lenos G Trigeorgis
    • 3
  • Andrianos E Tsekrekos
    • 4
  1. 1.School of BusinessUniversity of KansasLawrenceUSA
  2. 2.Beedie School of BusinessSimon Fraser UniversityBurnabyCanada
  3. 3.Department of Accounting and Financial Management, King’s Business SchoolKing’s College LondonLondonUK
  4. 4.Department of Accounting and FinanceAthens University of Economics and Business (A.U.E.B.)AthensGreece

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