DEVELOPMENT OF REAL OPTION THEORY IN THE LAST 20 YEARS
And ea Rózsa
Uni e si y o Deb ecen, Facul y o Economics, Ins i u e o Accoun ing and Finance, Deb ecen,
Hunga y [email p o ec ed]nideb.hu
Abs ac :
The main goal o his s udy is o o e an o e iew on he eal op ion heo y in he pas wo decades.
The beginnings o eal op ion esea ches go back o he 1980s, wi h hei i s applica ions deployed in
he na u al esou ce ex ac ion indus ies. A u he impo an miles one o de elopmen came in 1996,
when upon Lenos T igeo gis’ ini ia i e a se ies o annual eal op ion con e ences was launched. This
yea wi nesses he s aging o he 20 h con e ence, and he e o e i can be aken as a wo hy occasion
o ha ing an o e iew on he main li e a y guidelines o he heo y wi h emphasis on he key
ou comes. The i s pa o my s udy de ails he mos impo an esul s o eal op ion inancial
alua ion. The second pa sheds ligh on he po en ial ela ionship o s a egic managemen and eal
op ions in he ligh o li e a y esea ches. The hi d sec ion ocuses on he eal op ion esul s o
s a egic decision-making. The in e p e a ion o he eal op ion p ocedu e as an o ganiza ional p ocess
gi es way o linking he esul s o s a egic managemen o hose o inancial managemen by c ea ing
an in eg a ed o ganiza ional decision-making model. This s a emen will be backed by he esul s
pe aining o he eal op ion o ganiza ional models.
Keywo ds: eal op ion, in es men alua ion, s a egic decision-making, o ganisa ional de elopmen
JEL classi ica ion: G31, L21
1. In oduc ion and esea ch ques ion
In ecen decades, he business en i onmen has unde gone conside able ans o ma ion, and
consequen ly he adi ional models o in es men alua ion and he heo e ical app oaches o
co po a e s a egy-making ha e also been al e ed. In in es men alua ion heo y, he eal op ion
app oach and alua ion eme ged a e he inancial op ion analogy. This app oach has become
especially impo an in ela ion o s aged p ojec s ha a e ha d o e en impossible o e alua e wi h
con en ional me hods o discoun ed cash low, s ill ca y s a egic bene i s. Value-adding s a egic
in es men s a e also closely associa ed wi h he mos ecen heo ies o co po a e s a egy. This line
o hinking is ep esen ed by he heo y o dynamic capabili ies, as well as knowledge-based
app oaches o s a egic and co po a e heo y, which ega ds he alua ion o s a egic in es men s and
he managemen o in-p ocess changes as a sou ce o co po a e knowledge and o ganiza ional
po en ials. Consequen ly, o in eg a ed co po a e managemen , he challenge o he day is how
manage ial decision-making p ocedu es emb acing inancial, p oduc ion and s a egic p ocesses can
be made e en mo e e icien wi h he applica ion o he eal op ions me hodology.
I was S ewa Mye s o i s concei e he op ion-based idea o assessing u u e oppo uni ies ha a e
inhe en in p ojec s. In 1977, he was s udying he po en ials o using op ion-p icing in he ield o eal-
es a e p ope y in es men s, whe e he unde s ood ex a alue added by lexibili y as de e ed lea ning
(Csapi, 2013a). In 1984, Mye s also poin ed ou ha con en ional alua ion me hods based on
discoun ed cash low a e no able o handle p ojec s encompassing bo h p oduc ion and s a egic
op ions, and he e o e p oposed op ion p icing is o be used o alua ion pu poses. This basic
p inciple o med he ounda ions o eal op ion esea ches and hei co po a e applica ions. The
heo e ical and p ac ical scien i ic esul s o he i s decade we e summed up in a dedica ed handbook
by T igeo gis (1996). A u he impo an miles one o de elopmen came in 1996, when upon Lenos
T igeo gis’ ini ia i e a se ies o annual eal op ion con e ences was launched. This yea wi nesses he
s aging o he 20 h con e ence, and he e o e i can be aken as a wo hy occasion o ha ing an
o e iew on he main li e a y guidelines o he heo y wi h emphasis on he key ou comes.
The i s impo an inancial consequence o he eme gence o eal op ion hinking and me hodology
was he in oduc ion o he s a egic NPV ule and he iden i ica ion o he ypes o eal op ions. The
s a egic NPV exp esses wo alue componen s: he con en ional ne p esen alue o di ec cash
lows and lexibili y in p oduc ion, as well as he op ion alue o s a egic in e ela ions (T igeo gis,
1996). Ini ially, i seemed ha s a egic NPV model would c ea e g ounds o he conside a ion o he
alue o in e ela ions among p ojec s and p oduc ion lexibili y, and addi ionally s a egic e ec s.
Howe e , he s udy o long- e m s a egic c i e ia and he ou comes o he scien i ic de elopmen o
s a egic managemen made i ob ious ha he op ion componen o s a egic NPV was no su icien
and adequa e o he examina ion o he s a egic componen s o alue-adding in es men s. This
ecogni ion di ec ed scien i ic a en ion o in eg a ed s a egic decision-making.
The abo e s a emen is also con i med by he su eys o T ian is and Bo ison (2001) wi h la ge
company manage s om 7 indus ies. Acco ding o schola s, he eal op ions echniques and
p ocesses applied in p ac ice can be ca ego ized in h ee g oups (Csapi, 2013a):
- eal op ions hinking (quali a i e analysis o decision-making p oblems, in e p e a ion o
al e na i es),
- eal op ion analy ic ools (applica ion o op ion p icing models in p ojec alua ion),
- eal op ion o ganiza ional p ocess (managemen ool o he iden i ica ion and exploi a ion o
s a egic op ions belonging o he ield o eal op ions).
The signi icance o eal op ion o ganiza ional p ocesses a e unde lined by esea ch and de elopmen
(R&D), pha maceu ical and ad anced manu ac u ing echnology p ojec s ha ea u e sequen ial
s uc u es and special op ion cha ac e is ics. In hese cases, he eal op ions logic is applied as an
analy ic and communica ion ool encompassing he en i e o ganiza ion. The esul s o he line o
hinking emphasizing he eal op ion o ganiza ional alua ion p ocesses addi ionally led o he
mode niza ion o he s a egic ne p esen alue. I was Smi and T igeo gis (2004) o i s p opose he
use o he expanded s a egic NPV. The poin o his model imp o emen was ha o he ea lie
s a egic NPV o mula he au ho s added s a egic op ion alues ha also in eg a ed ce ain esul s
om game heo y.
In he mean ime, he eal op ion app oach gained b oade in e p e a ion as such a o m o
in es men in o physical asse s, human esou ces and o ganiza ional capabili ies ha imp o ed he
abili y o espond o u u e e en s (Kogu and Kula ilaka, 2001). The po en ial co ela ions o
capabili ies, eal op ions and esou ce alloca ion p ocesses we e s udied by Ma i an and Alessand i
(2007), while a compila ion o s udies by Tong and Reue (2007) ocused on he gene al, mul ic i e ia
applicabili y o eal op ions in s a egic managemen .
In iew o D iouchi and Benne ’s indings (2012, p 43), he ela ionship be ween s a egic
managemen and eal op ions can be summed up as ollows: „Resou ces and s a egic in es men s
can be iewed as eal op ions, while go e nance modes and s a egic posi ioning decisions con ain
eal op ion chains. The ad an age o managemen iew is ha i pays mo e a en ion o lea ning,
manage ial compe ences and endogenous unce ain y. S a egic op ion decisions a e gene ally
applied in he ields o a ious o ms o ma ke en ance, manage ial s yles and inno a i e
in es men s. The e o e, co po a e pe o mance is a unc ion o he s uc u e and sequen ial design o
hese ypes o decisions.” The b oade in e p e a ion o eal op ions and he mos ecen esul s o
s a egic managemen esea ches u he con i m he de elopmen o he eal op ion app oach in
connec ion wi h in eg a ed, o ganiza ional p ocesses. D iouchi and Benne ’s analysis (2012) looking
a mo e han 200 p o essional publica ions assessed and sys ema ized he di ec ions o eal op ion
decision-making, applica ions in s a egic and in e na ional p oduc ion p ocesses, as well as empi ical
assessmen s (Table 1).
Table 1. Main di ec ions in eal op ion s udies
Real op ion decision-making
S a egy and in e na ional p oduc ion
Empi ical applica ions
- Real op ion alua ion
- Sha ed o p op ie a y op ions
- Real op ion cha ac e is ics o in es men s
- Real op ions logic
- S a egic g ow h op ions
- E ec s o eal op ions on pe o mance
- Real op ions as capabili ies
- P oduc ion ( lexibili y) op ions
- Real op ion co po a e p ac ices
Sou ce: D iouchi-Benne (2012), p 56.
In he u he pa s o he s udy, I ha e summed up he mos impo an esul s o eal op ion inancial
alua ion, analyzed he po en ial co ela ions be ween s a egic managemen and eal op ions in he
ligh o li e a y esea ches, and inally e alua ed he eal op ion esul s o s a egic decision-making.
2. De elopmen o inancial in es men alua ion using eal op ion app oach
S a ing ou om Mye s’ hough , he heo e ical and co po a e expe s we e aspi ing o e eal a ious
ypes o eal op ions, and iden i y he mos usable op ion models o he e alua ion o he indi idual
eal op ion cases. A he p esen , he associa ed li e a u e knows a b oad ange o eal op ion ypes
(T igeo gis, 1996; Am am and Kula ilaka, 1999; Smi and T igeo gis, 2004; Rózsa, 2008; Bélyácz,
2011; Csapi, 2013b). The mos common ca ego iza ions a e:
 na u ally occu ing eal op ions (de e men op ion, op ion o abandon, g ow h, s aged and
compound op ions) and eal op ions ha can be inco po a ed wi h ex a cos s (modi ica ion
and lexibili y op ions),
 p oduc op ions, iming op ions and execu ion op ions (Kylaheiko e al., 2002),
 lea ning op ions (Yeo and Qiu, 2003),
 eal op ions along he empo al dimension (de e men , abandonmen ) and size- ela ed
dimension (g ow h, change, expansion, compound, as well as explo a ion, ou sou cing and
ainbow op ions) (Csapi, 2014),
 lexibili y (simple, usually iming op ions connec ed wi h speci ic p ojec s, wi hou s a egic
alues) and s a egic (gene ally g ow h and compound op ions belonging o mul iple p ojec s,
ca ying conside able s a egic alues and leading o new alue-c ea ing p ojec s (Van Aa le,
2013).
Table 2 shows he mos gene al eal op ions ca ego ies, as well as he associa ed indus ies and mos
impo an publica ions.
Table 2. Summa y o he ypes o eal op ions
Op ion ca ego y
Con en s
Fields o applica ion
Publica ions
Op ion o de e
The e is an op ion o acqui e a
aluable land o esou ce.
The company moni o s he ma ke
e en s, ob ains addi ional
in o ma ion by esol ing
unce ain ies ha i in eg a es in o
decision-making.
Na u al esou ce ex ac ion
indus ies, eal es a e
de elopmen s, ag icul u al
indus ies, pape p oduc s
Tou inho (1979); Ti man
(1985); McDonald and Siegel
(1986); Paddock e al. (1988);
Inge soll and Ross (1992);
Ande son (2000)
Op ion o abandon
When ma ke condi ions ake an
un a ou able u n, he company can
e mina e i s ope a ions, sell he
p ojec , and ealize he esidual
alue.
Capi al in ensi e indus ies,
inancial se ices, new p oduc
in oduc ions in unce ain ma ke s
Mye s and Majd (1990);
Be ge e al. (1996); McG a h
(1999); McG a h and Ne ka
(2004)
Time- o-build
op ion, s aged
in es men
sequen ial op ion
The e is an op ion o abandon he
p ojec while i is in p og ess in
case he new in o ma ion is
deemed as un a ou able. The
commencemen o he indi idual
phases is condi ioned on he
success o he p e ious phase. I
can be in e p e ed as a se ious o
successi e op ions.
All he R&D in ensi e sec o s,
especially he pha maceu ical
indus y; capi al-in ensi e p ojec s
calling o long- e m de elopmen
(e.g. la ge- olume cons uc ion
wo ks, powe plan s); s a up o
isky en e p ises
Majd and Pindyck (1987);
Ca (1988); T igeo gis
(1993); Kemna (1993); Pe li z
e al. (1999); Loch and Bode-
G euel (2001); Lin and
Pennings (2001); MacDougall
and Pike (2003)
G ow h op ions
An ea lie in es men is ega ded
as he p econdi ion o ano he
p ojec . The success o he ini ial
in es men can open up new, u u e
in es men op ions o he
company.
In as uc u e-based o s a egic
indus ies: especially high- ech,
R&D, whe e he e a e complex
p oduc gene a ions; s a egic
acquisi ions; mul ina ional ac i i ies;
o ganiza ional capabili ies
Mye s (1977); Kes e (1984);
T igeo gis (1988); Pindyck
(1988); B ealey and Mye s
(1991); Kes e (1993);
Bo issiouk and Peli (2001);
Tong and Reue (2006);
B ou he s and Diko a (2010)
Op ion o al e
Unde a ou able ma ke
condi ions, he company can ex end
he li ecycle o he p ojec , inc ease
he size o se ies p oduc ion o
accele a e esou ce u iliza ion. On
he o he hand, in un a ou able
si ua ions, he company may cu
back p oduc ion, o e en suspend
p oduc ion empo a ily in jus i ied
cases.
Na u al esou ce ex ac ion
indus ies (e.g. mining); design o
equipmen and cons uc ion in
cyclic indus ies; ashion p oduc s;
consume goods; comme cial
p ope ies
McDonald and Siegel (1985);
B ennan and Schwa z
(1985); T igeo gis and Mason
(1987); Pindyck (1988); De
Neu ille (2003); Chung e al
(2010)
Flexibili y op ion,
op ion o swi ch, ,
inpu and ou pu
Unde condi ions o p oduc ion
lexibili y, in case he e a e changes
in he p ices o demand, he
managemen o he company can
change he ou pu s uc u e,
p oduc s uc u e (p oduc ion
lexibili y) o make he same
p oduc s wi h he use o di e en
ypes o inpu s (p ocess lexibili y).
Ou pu changes: In he case o
p oduc s ha a e sold in small
olumes, o a ac luc ua ing
demand (elec onics; oys;
au omobile pa s) Inpu changes:
elec ic powe ; ag icul u al c ops;
chemicals; aw ma e ials equi ing
mechanical p ocessing, pending
oppo uni ies
Ma g abe (1978); Kensinge
(1987); Kula ilaka (1988);
Kula ilaka and T igeo gis
(1994); Lieblein and Mille
(2003); Mol e al (2005)
Compound op ion
Op ions o op ion chains associa ed
wi h o he op ions. Because o he
mu ual dependencies, he alues o
Mos o he eal p ojec s in he
abo e-men ioned indus ies.
B ennan and Schwa z
(1985); T igeo gis (1993);
Kula ilaka (1994); Schwa z
mul iple op ions a e di e en om
he amoun s o he indi idual alues
o he same op ions.
and T igeo gis (2001);
T ian is and Bo ison (2001);
Jiang e al (2009)
Sou ce: ed. by me based on T igeo gis (1996), pp 2–3., as well as D iouchi and Benne (2012).
Acco ding o T igeo gis (1996) ou closed- o m solu ions can be used in eal op ion analysis: Black
and Scholes (1973), Ma g abe (1978), Geske (1979) and Ca (1988). I was in 1973 when Black and
Scholes (B-S) wo ked ou he i s closed- o m solu ion o he alua ion o inancial op ions and
wa an s. Mos o he op ion p icing echniques used nowadays a e some a ia ion o he B-S solu ion
and p ocedu e. The Black-Scholes solu ion is used in he alua ion o de e men , abandonmen and
g ow h op ions. The op ion o eplace a isk-ca ying asse ha did no pay di idends o ano he asse
was e alua ed by Ma g abe in 1978. The only di e ence be ween he B-S and Ma g abe solu ions is
he handling o he exe cise p ice. In he o me model, he exe cise p ice is de e minis ic (i is de ined
in ad ance), whe eas in Ma g abe’s solu ion i is handled as a s ochas ic a iable. The Ma g abe
solu ion is simila ly used in he alua ion o de e men , abandonmen and g ow h op ions. Beyond he
de e minis ic exe cise p ice, Geske’s name is associa ed wi h he solu ion connec ed wi h he
alua ion o compound op ions. Geske’s model is applied in sequen ial (s aged) in es men decisions.
In es men s o his kind a e o en ound in he case o R&D and echnological decisions (Pe li z e al.,
1999). In 1988, Ca de ined his solu ion o compound op ions wi h he applica ion o s ochas ic
exe cise p ices. Ca ’s solu ion can be de ec ed in applica ions ha a e simila o he ones in he
Geske model.
Haah ela (2012) summa izes he a ious eal op ion alua ion app oaches. As an al e na i e o closed-
o m solu ions, he analyzes simula ion-based me hods (Copeland and An ika o , 2001). Ano he
al e na i e is p esen ed by he la ice and ee-based me hods. Haah ela (2010) demons a ed one
example o an enhanced la ice app oach o eal op ion alua ion ecombining inomial la ice wi h
changing ola ili y. Finally, he emphasized he applicabili y o he mos no el uzzy pay-o me hods
(Collan e al., 2009 in Haah ela, 2012).
3. De elopmen o s a egic managemen and po en ial eal op ion ela ions
In co po a e s a egy and he s udy o o ganiza ional decisions, he eal op ion pa adigm o e s an
especially ema kable amewo k o decision-making unde unce ain ies (Sanchez, 2003, D iouchi
and Benne , 2012). Acco ding o Kogu and Kula ilaka (2001), eal op ions as in es men s in o
capabili ies p omo e o ganiza ional lea ning, c ea e alues, and sus ain he compe i i e edge. Ba ne
(2008) claimed ha eal op ion decision-making is he abili y o manage s o ecognize, main ain,
suppo and exploi eal op ion oppo uni ies in hei own speci ic business en i onmen s.
When companies en e a new de elopmen li ecycle, knowledge becomes a undamen al compe ence,
whe eas lea ning se es as he sou ce o ad an age in compe i ion (Mille , 2002). Acco ding o
B äu igam e al. (2003), he eal op ion heo y is sui able o econciling de elopmen phases wi h
inhe en endogenous and exogenous unce ain y ac o s. McG a h e al. (2004) ega ds eal op ions
as he d i ing o ce behind choice and he e ogenei y, and a gues ha eal op ion easoning is a
aluable con ibu ion o he exis ing lea ning, decision-making and o ganiza ional heo ies.
Smi and T igeo gis (2004) summa ize he key esul s conce ning ex e nal and in e nal iews o he
i m and app oaches o s a egy (Table 3).
Table 3. Mos impo an iews o he i m and co po a e s a egy
Types/Scien i ic a ea
Publica ions
Main conce n
Ex e nal
compe i i e ad an age
Po e (1980)
s uc u al condi ions and
compe i o posi ioning
s a egic con lic
Shapi o (1989)
B andenbu ge and Nalebu (1995)
s a egic in e ac ions
In e nal
esou ce-based iew
Rumel (1984), We ne el (1984),
Teece (1980, 1982
asse accumula ion
dynamic capabili ies
P ahalad and Hamel (1990)
Hayes and Wheelw igh (1984)
Teece, Pisano, Shuen (1997)
asse accumula ion, eplicabili y
Linkage
eal op ions and games
Smi and Ankum (1993)
Kula ilaka and Pe o i (1998)
Bowman and Hu y (1993), McG a h (1997)
adjus ing decisions in dynamic
and compe i i e en i onmen
Sou ce: Smi and T igeo gis (2004), pp 39.
In iew o he impo an s a egic implica ions, i can be assumed ha in spi e o i s nume ous
ad an ages s a egic NPV is no sui able o he coo dina ion o s a egic and inancial p inciples,
which aims a he c ea ion o s a egic lexibili y (Rózsa, 2008). In he s a egic NPV model, he abo e-
de ailed long- e m s a egic c i e ia canno be in eg a ed. On he o he hand, i has been e idenced
ha hey a e jus as essen ial pa s o s a egic in es men decision-making as he ma hema ically
mo e manageable u u e cash lows, es imable discoun a es, as well as simple and compound
op ions ha can be assessed wi h he use o inancial op ion models. This se o issues has also
di ec ed he a en ion o schola s o o s a egic decision-making.
4. Analysis o s a egic decision-making conce ning eal op ions
Se e al models ha e been p oposed o ackle he p oblem. These models place emphasis on he
comple ion o s a egic decision-making wi h he eal op ions heo y.
Am am and Kula ilaka’s (1999) model conside s he iden i ica ion o he sou ces o unce ain ies and
decision-making al e na i es as a p incipal o ganiza ional esponsibili y whe e e icien implemen a ion
necessi a es s a egic and inancial eal op ion communica ion. I is ollowed by he selec ion o
alua ion pa ame e s, and hen he execu ion o he op ion alua ion models. Based on he esul s and
he ob ained c i ical s a egic alues, a s a egic decision-making space can be d awn up ha enables
con inuous con ol and he edesigning o p ocesses.
Simila ly, Smi and T igeo gis (2004) ecognized he demand o complexi y – he necessi y o o ge
ela ions be ween inancial and s a egic planning – and i s hey ied o imp o e he decision-making
p ocess by expanding he s a egic NPV. The essence o hei p oposal is exp essed in he ollowing
equa ion.
expanded s a egic NPV = passi e NPV + op ion p emium + s a egic op ion alue
The poin o he heo e ic model imp o emen was ha o he ea lie o m o inancial alua ion he
au ho s added s a egic op ion alues ha also in eg a ed ce ain esul s om game heo y. The
complex model hey ecommended is demons a ed in Table 4.
Table 4. E ec o s a egic planning on he ma ke alue o he company
Ma ke alue (Expanded NPV)
Value con ols
S a egic planning
Valua ion me hodology
STRATEGIC VALUE
S a egic POSITION
Compe i ion s a egy
Game heo y
FLEXIBILITY VALUE
Adap i e capabili ies
S a egic planning
Real op ion alua ion
NET PRESENT VALUE
Compe i i e ad an ages
P ojec planning
Discoun ed cash low
Sou ce: Smi and T igeo gis (2004), pp 4–5.
In my opinion, he Smi and T igeo gis model, while i gi es e y de ailed desc ip ion o s a egic
issues, ails o abandon he undamen al assump ion conce ning he p io i y o inancial decisions.
The si ua ion is simila o hose esea ches and esul s ocusing on eal op ion o ganiza ional
p ocesses ha ela e o he o ma ion o eal op ion alua ion p ocesses. F om among hem, he mos
no able esul s ha e been published by Am am and Kula ilaka (1999), as well as Copeland and
An ika o (2001). The p ima y objec i es o he bo h models a e o acili a e he analysis o p ac ical
cases, as well as simpli y he pe o mance and applica ion o eal op ion calcula ions.
My ea lie s udies (Rózsa, 2008, 2015) call his iew a e e se app oach, and sugges ed ha i should
no be he op ion app oach ega ded as he p ima y aspec in which we y o embed s a egic ac o s,
bu on he o he way ound: we a e a he o conside he ecogni ion, alua ion o op ions, he
applica ion o he op ion app oach i sel as a co po a e capabili y, ac o se ing as he ounda ion o
knowledge. To his end, I ha e de eloped he so-called s a egic eal op ion model (Table 5).
Table 5. The sugges ed s a egic eal model
STRATEGY
REAL OPTION
VALUATION
FEEDBACK
compe i i e ad an age
eal op ion ypes
model selec ion
o ganiza ional asks
knowledge and inno a ion
unce ain y
op ion e alua ion
ope a ing p oblems
con inuous de elopmen
ma ix-based app oach
s a egic decision-making space
changing en i onmen
dynamic capabili ies
op ions o exe cise
condi ions o exe cise
new in o ma ion
Sou ce: Rózsa (2015)

On he basis o my model de elopmen in Rózsa (2008, 2015) I s a ed ha : “In he p ocess o
decision-making and implemen a ion, s a egic, eal op ion, alua ion and eedback analyses ha e o
be pe o med in all he phases o decision-making. I ha e de ined he undamen al ques ions ela ing
o he ou elemen s o he ex ended model as ollows:
- Wha a ole does he p ojec unde e iew ha e in acqui ing compe i i e ad an age, o by
wha s a egic cha ac e is ics does i suppo he sus enance o compe i i e ad an age?
- Wha sou ces o unce ain ies a e an icipa ed o occu ? Wha eal op ion ypes is i wo h
concen a ing on? Which a e he mos impo an ones?
- Wha is he alue o he eal op ions ha a e also inancially assessable? Wha should be he
nex decision?
- Wha o ganiza ional asks ha e o be execu ed in he gi en phases o he p ojec , wha
esponses can be gi en o he ope a ing p oblems occu ing, wha en i onmen al and
in o ma ion changes need o be aken in o conside a ion, and how do hey a ec he
commencemen o he nex phase? “
The oppo uni ies o c ea ing s a egic amewo k sys ems ha e also been analyzed by Csapi (2013),
and by e e encing Ge man sou ces she has p oposed he ollowing s a egic app oach (Table 6).
Table 6. Flowcha o s a egic eal op ion managemen
STRATEGIC ANALYSIS
FORMATION AND SELECTION OF THE
STRATEGY
APPLICATION OF THE STRATEGY
Iden i ica ion o eal op ions
Valua ion o eal op ions
Real op ion managemen
Cap u ing eal op ions
Selec ion o alua ion me hods
Go e nance o eal op ions
Examina ion o he op ion
analogy
De e mina ion o he alua ion pa ame e s
Adjus men o s uc u es and sys ems
P io i iza ion o eal op ions
Implemen a ion o alua ion
P o ision o in o ma ion, aining,
mo i a ion o employees
Sou ce: Csapi (2013)a, p 84.
I can be claimed ha his la e wo models a e in close co ela ion wi h he mos ecen esea ches.
D iouchi and Benne (2012) gi e a de ailed analysis on he ole o eal op ions in s a egic decision-
making, and summa ize he esul s o he mos ecen s udies in he ligh o he eal op ion deba e.
Table 7. P ac ical applica ion o eal op ions
Real op ion ends
S a egic decision-making
Case s udies
Manage ial assessmen s
OPTIMIST
Lin and Pennings (1998)
Lin and Pennings (2001)
Bo issiouk and Peli (2001)
Mille and Pa k (2004)
Rayno and Le oux (2004)
T ian is and Bo ison (2001)
REALIST
Kemna (1993)
De Neu ille (2003)
MacDougall and Pike (2003)
Alessand i e al. (2004)
K ychowski e al. (2010)
Busby and Pi s (1997)
Howell and Jagle (1997)
G aham and Ha ey (2001)
Mille and Shapi a (2004)
Ve bee en (2006)
PESSIMIST
Philippe (2005)
Ryan and Ryan (2002)
Sou ce: D iouchi and Benne (2012), p 55.
5. Conclusions
The main conclusion o he heo e ical de elopmen o eal op ions heo y in he pas 20 yea s is ha
by oday he sys em o eal op ion ools has become an indispensable elemen o co po a e s a egic
decision-making. The s a egic NPV me hod and i s expanded e sion a e b oadly known, and
success ul p ac ical applica ions also exis , especially in pha maceu ical, R&D, ad anced
manu ac u ing echnologies and elec onic ield o in es men s. A he same ime, coo dina ion o
s a egic, p oduc ion and inancial aspec s calls o in eg a ed model de elopmen . The e ha e been
a emp s in he associa ed li e a u e o sa is y his heo e ical demand, bu a u he di ec ion o
esea ch is embodied in i s p ac ical es ing. The po en ial e ec s o he eal op ion app oach on
o ganiza ional p ocesses a e subjec o u he esea ch.
As opposed o he mains eam end o s udies, my sugges ion is ha p e e ence should be gi en o
he e e se app oach, i.e. ha i should no be he op ion app oach ega ded as he p ima y aspec in
which we y o embed s a egic ac o s, bu on he o he way ound: we a e a he o conside he
ecogni ion, alua ion o op ions, he applica ion o he op ion app oach i sel as a co po a e capabili y,
ac o se ing as he ounda ion o knowledge.
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