Real Options Reasoning, Real Options Pricing, Real Options… Nothing: Twenty Years After Real Options Lost the Debate

Are real options useful for management research? Twenty years ago, this topic was hotly debated in the Academy Management Review. The major charge to real options was that the theory, in its existing state, was limitedly applicable to management research. What appeared to be only a minor, accompanying caveat was that the theory lacked conceptual uniqueness. Whereas responses of the advocates of real options to the latter caveat were disparate, the limitations posed in the former charge were deemed naturally remediable and, thus, not limiting the use of real options. Such responses left a strong impression that real options lost the debate. Following that outcome, the use of real options in management research started to stagnate. This study carefully reviews positions of the two opposing parties in the debate, establishes the conceptual uniqueness of real options, and outlines solutions to the charges to the applicability of real options to management research.