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Real Options and International Investment
The application of real options theory to the decision making of multinational enterprises (MNEs) is an exciting new area of research within the field of international business. Such contributions will make existing theories in international business (such as internalization theory) dynamic and more realistic. This important collection presents 20 of the most significant articles that apply real options theory to international business and strategic management.
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Critical Acclaim
Contributors
Contents
More Information
The application of real options theory to the decision making of multinational enterprises (MNEs) is an exciting new area of research within the field of international business. Such contributions will make existing theories in international business (such as internalization theory) dynamic and more realistic. This important collection presents 20 of the most significant articles that apply real options theory to international business and strategic management.
The volume organizes the recent literature so that further advances can be made by international business scholars to capitalize on the power and usefulness of the real options approach. Part I includes articles that help to clarify the definitions of real options and the boundaries of applying real options theory to analyze the decision making of firms. Part II consists of applications to operational flexibility of the multinational network. Part III comprises applications to market entry modes among which joint ventures are most widely studied. Part IV refers to applications to market entry timing. Part V includes several applications to strategic management.
The volume organizes the recent literature so that further advances can be made by international business scholars to capitalize on the power and usefulness of the real options approach. Part I includes articles that help to clarify the definitions of real options and the boundaries of applying real options theory to analyze the decision making of firms. Part II consists of applications to operational flexibility of the multinational network. Part III comprises applications to market entry modes among which joint ventures are most widely studied. Part IV refers to applications to market entry timing. Part V includes several applications to strategic management.
Critical Acclaim
‘A common criticism of economic theory is that its approach is static rather than dynamic, and that it ignores the impact of uncertainty on decisions. Real option theory shows that this criticism is unfounded. Real option theory explores the logic of flexibility – a crucial aspect of corporate strategy in a volatile and competitive environment. The editors have done a brilliant job in bringing together key contributions within a clear and logical structure. This book is an essential reference source for anyone working in this exciting area of research.’
– Mark Casson, University of Reading, UK
– Mark Casson, University of Reading, UK
Contributors
20 articles, dating from 1976 to 2004
Contributors include: R. Adner, P.J. Buckley, J.M. Campa, M. Casson, T.B. Folta, B. Kogut, D.A. Levinthal, K.D. Miller, S. Rangan, J.J. Reuer
Contributors include: R. Adner, P.J. Buckley, J.M. Campa, M. Casson, T.B. Folta, B. Kogut, D.A. Levinthal, K.D. Miller, S. Rangan, J.J. Reuer
Contents
Contents:
Acknowledgements
Introduction Alan M. Rugman and Jing Li
PART I THE REAL OPTIONS APPROACH TO INTERNATIONAL BUSINESS AND STRATEGY
1. Peter J. Buckley, Mark Casson and Mohammed Azzim Gulamhussen (2002), ‘Internationalisation – Real Options, Knowledge Management and the Uppsala Approach’
2. Peter J. Buckley and Mark C. Casson (1998), ‘Models of the Multinational Enterprise’
3. Ron Adner and Daniel A. Levinthal (2004), ‘What is Not a Real Option: Considering Boundaries for the Application of Real Options to Business Strategy’
PART II APPLICATIONS OF REAL OPTIONS TO MULTINATIONAL AND OPERATIONAL FLEXIBILITY
4. Alan M. Rugman (1976), ‘Risk Reduction by International Diversification’
5. Bruce Kogut and Nalin Kulatilaka (1994), ‘Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network’
6. José Manuel Campa (1994), ‘Multinational Investment Under Uncertainty in the Chemical Processing Industries’
7. Subramanian Rangan (1998), ‘Do Multinationals Operate Flexibly? Theory and Evidence’
8. Kent D. Miller and Jeffrey J. Reuer (1998), ‘Firm Strategy and Economic Exposure To Foreign Exchange Rate Movements’
9. Jeffrey J. Reuer and Michael J. Leiblein (2000), ‘Downside Risk Implications of Multinationality and International Joint Ventures’
PART III REAL OPTIONS AND MARKET ENTRY MODES
10. Bruce Kogut (1991), ‘Joint Ventures and the Option to Expand and Acquire’
11. Tailan Chi and Donald J. McGuire (1996), ‘Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes’
12. Timothy B. Folta (1998), ‘Governance and Uncertainty: The Trade-off Between Administrative Control and Commitment’
13. Tailan Chi (2000), ‘Option to Acquire or Divest a Joint Venture’
PART IV REAL OPTIONS AND MARKET ENTRY TIMING
14. Peter J. Buckley and Mark Casson (1981), ‘The Optimal Timing of a Foreign Direct Investment’
15. Pietra Rivoli and Eugene Salorio (1996), ‘Foreign Direct Investment and Investment Under Uncertainty’
16. Timothy B. Folta and Kent D. Miller (2002), ‘Real Options in Equity Partnerships’
17. Timothy B. Folta and Jonathan P. O’Brien (2004), ‘Entry in the Presence of Dueling Options’
PART V REAL OPTIONS AND STRATEGIC MANAGEMENT
18. Edward H. Bowman and Dileep Hurry (1993), ‘Strategy Through the Option Lens: An Integrated View of Resource Investments and the Incremental-Choice Process’
19. Rita Gunther McGrath (1997), ‘A Real Options Logic for Initiating Technology Positioning Investments’
20. Bruce Kogut and Nalin Kulatilaka (2001), ‘Capabilities as Real Options’
Name Index
Acknowledgements
Introduction Alan M. Rugman and Jing Li
PART I THE REAL OPTIONS APPROACH TO INTERNATIONAL BUSINESS AND STRATEGY
1. Peter J. Buckley, Mark Casson and Mohammed Azzim Gulamhussen (2002), ‘Internationalisation – Real Options, Knowledge Management and the Uppsala Approach’
2. Peter J. Buckley and Mark C. Casson (1998), ‘Models of the Multinational Enterprise’
3. Ron Adner and Daniel A. Levinthal (2004), ‘What is Not a Real Option: Considering Boundaries for the Application of Real Options to Business Strategy’
PART II APPLICATIONS OF REAL OPTIONS TO MULTINATIONAL AND OPERATIONAL FLEXIBILITY
4. Alan M. Rugman (1976), ‘Risk Reduction by International Diversification’
5. Bruce Kogut and Nalin Kulatilaka (1994), ‘Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network’
6. José Manuel Campa (1994), ‘Multinational Investment Under Uncertainty in the Chemical Processing Industries’
7. Subramanian Rangan (1998), ‘Do Multinationals Operate Flexibly? Theory and Evidence’
8. Kent D. Miller and Jeffrey J. Reuer (1998), ‘Firm Strategy and Economic Exposure To Foreign Exchange Rate Movements’
9. Jeffrey J. Reuer and Michael J. Leiblein (2000), ‘Downside Risk Implications of Multinationality and International Joint Ventures’
PART III REAL OPTIONS AND MARKET ENTRY MODES
10. Bruce Kogut (1991), ‘Joint Ventures and the Option to Expand and Acquire’
11. Tailan Chi and Donald J. McGuire (1996), ‘Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes’
12. Timothy B. Folta (1998), ‘Governance and Uncertainty: The Trade-off Between Administrative Control and Commitment’
13. Tailan Chi (2000), ‘Option to Acquire or Divest a Joint Venture’
PART IV REAL OPTIONS AND MARKET ENTRY TIMING
14. Peter J. Buckley and Mark Casson (1981), ‘The Optimal Timing of a Foreign Direct Investment’
15. Pietra Rivoli and Eugene Salorio (1996), ‘Foreign Direct Investment and Investment Under Uncertainty’
16. Timothy B. Folta and Kent D. Miller (2002), ‘Real Options in Equity Partnerships’
17. Timothy B. Folta and Jonathan P. O’Brien (2004), ‘Entry in the Presence of Dueling Options’
PART V REAL OPTIONS AND STRATEGIC MANAGEMENT
18. Edward H. Bowman and Dileep Hurry (1993), ‘Strategy Through the Option Lens: An Integrated View of Resource Investments and the Incremental-Choice Process’
19. Rita Gunther McGrath (1997), ‘A Real Options Logic for Initiating Technology Positioning Investments’
20. Bruce Kogut and Nalin Kulatilaka (2001), ‘Capabilities as Real Options’
Name Index
