scholarly journals Exploring the Link of Real Options Theory with Dynamic Capabilities Framework in Open Innovation-Type Merger and Acquisition Deals

2021 ◽  
Vol 14 (4) ◽  
pp. 168
Author(s):  
Andrejs Čirjevskis
Keyword(s):  
Real Options ◽  
Open Innovation ◽  
Dynamic Capabilities ◽  
Real Option ◽  
Merger And Acquisition ◽  
Real Options Theory ◽  
Strategic Acquisition ◽  
Ict Industry ◽  
Innovation Type ◽  
Options Theory

Although it is well established that acquisition-based dynamic capabilities have important consequences for merger and acquisition (M&A) processes, direct evidence on how real option applications can measure a dynamic capability-based synergy in open innovation-type M&A deals has been scarce. This study draws from seminal research on real options theory to explore some of these benefits and limits to value a synergy in one recent highly strategic acquisition. To strengthen the identification of causal effects, the paper develops the proposition that justifies the role of dynamic capabilities as antecedents of the success of open innovation-type M&A deals in the ICT industry and demonstrates real options’ application to measure M&A synergies. To test the internal and external validity of the proposition, the explorative case study on Samsung’s acquisition of Harman International Industries was analyzed and interpreted. This study contributes important empirical evidence to bear on the literature on open innovation theory, dynamic capabilities framework, and real options theory.

scholarly journals Valuing Dynamic Capabilities-Based Synergies with Real Options

2021 ◽  
Vol 14 (2) ◽  
pp. 69
Author(s):  
Andrejs Čirjevskis
Keyword(s):  
Mergers And Acquisitions ◽  
Real Options ◽  
Dynamic Capabilities ◽  
Information And Communications Technology ◽  
Dynamic Capability ◽  
Communications Technology ◽  
Real Options Theory ◽  
Technology Industry ◽  
Options Theory

Acquisition-based dynamic capabilities have become well established as a new imperative for organizing mergers and acquisitions (M&A) processes. However, understanding the full benefits and possible limits of real options applications to measure a dynamic capability-based synergy in M&A deals remains a challenge. This paper draws on real options theory to explore some of these benefits and limits to value a synergy in two highly strategic M&A deals. More specifically, the author develops the proposition that justifies the role of dynamic capabilities as antecedents of the success of M&A deals in the information and communications technology industry and demonstrates real options application to measure M&A synergies.

Option valuation of Philippine forest plantation leases

2004 ◽  
Vol 9 (3) ◽  
pp. 315-333 ◽  
Author(s):  
ROBERTO C. YAP
Keyword(s):  
Real Options ◽  
Sunk Costs ◽  
Forest Plantation ◽  
Market Uncertainty ◽  
Real Options Theory ◽  
Highly Sensitive ◽  
Future Value ◽  
Plantation Development ◽  
Philippine Government ◽  
Options Theory

The Philippine forest plantation lease is modelled as an option whose value arises from market uncertainty and the irreversibility inherent in sunk costs required to establish plantations. The value of this option could be a significant factor in the planting decisions of leaseholders. Real options theory could help explain why in spite of the prospects of adequate financial returns, Filipino leaseholders are slow to establish plantations. The opportunity cost of investing is demonstrated to be highly sensitive to uncertainty of the future value of the plantation. Real options analysis is also utilized to evaluate policies intended by the Philippine government to promote plantation development.

Research on the Real Options in Investment Decision of Waterway Infrastructure Construction

2013 ◽  
Vol 734-737 ◽  
pp. 1617-1620
Author(s):  
Wei Jin
Keyword(s):  
Real Options ◽  
Carbon Dioxide Emissions ◽  
Capital Investment ◽  
Real Option ◽  
Investment Decision ◽  
Energy Utilization ◽  
Real Options Theory ◽  
The Real ◽  
The Government ◽  
Real Option Method

Developing the waterway infrastructure construction can improve the efficiency of energy utilization, reduce the energy consumption intensity and carbon dioxide emissions. Till the year 2020, China plan to complete 19,000 kilometers high grade channel. Construction of water infrastructure construction requires a large capital investment. However, the main financial source of funding the construction of transportation infrastructure at present in China is special financial allocation of the government. The unitary financing structure as well as the funding pressure has leaded to some serious financing problems. This paper applied the real options theory to the waterway infrastructure construction financing, analyzed the limitations of the NPV method and the advantages of real option method in investment decision of waterway infrastructure construction, and took an example to show its feasibility.

The influence of global uncertainty on the cross-border performance appraisal

2014 ◽  
Vol 43 (1) ◽  
pp. 19-40 ◽  
Author(s):  
Jane Maley ◽  
Robin Kramer
Keyword(s):  
Real Options ◽  
Performance Management ◽  
Performance Appraisal ◽  
Multinational Corporations ◽  
Content Type ◽  
Real Options Theory ◽  
Cross Border ◽  
Global Uncertainty ◽  
Profit Maximisation ◽  
Options Theory

Purpose – The aim of this paper is to examine the practice of performance management in a cross-border context in times of global uncertainty. Design/methodology/approach – This is a conceptual paper. Findings – The findings expose global uncertainty to be wielding a significant influence on performance management. Practical implications – A practical framework is developed using real options theory. This approach offers suggestions for multinational corporations to increase the effectiveness of their performance management while at the same time focusing on profit-maximisation. Originality/value – This paper enhances international management research by recognizing that real options theory can effectively be applied to improve the effectiveness of performance management in global uncertainty.

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