Real Options and Strategic Investment Decisions: Can They Be of Use to Scholars?

Real options (RO) analysis has been of growing interest to the academic community as a promising approach to supporting investment decisions under uncertainty. In this article we examine an applied investment decision in the telecommunications industry to highlight the main benefits associated with using real options. The paper then discusses the theoretical issues raised by real options. Specifically, we examine two research streams to explain how real options contributes to a theoretical understanding of strategic management, and to better understand the gap between theory and practice of real options. Finally, we lay out an agenda for future research.