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Is real options reasoning a cause or consequence of dynamic capability?
Author(s) -
Jahanshahi Asghar Afshar,
Nawaser Khaled
Publication year - 2018
Publication title -
strategic change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.527
H-Index - 16
eISSN - 1099-1697
pISSN - 1086-1718
DOI - 10.1002/jsc.2211
Subject(s) - dynamic capabilities , computer science , business environment , conceptual framework , knowledge management , risk analysis (engineering) , process management , business , business administration , philosophy , epistemology
Real options reasoning provide an appropriate platform for firms to change incrementally. Dynamic capabilities are the renewing and regenerative capabilities that enable firms to change their operating processes incrementally and radically. The two distinct concepts of dynamic capability and real options reasoning have received notable attention from strategic management scholars in recent years. These two streams of research in strategic management literature are certainly not mutually exclusive. Our conceptual article discussed the similarity and difference between these two concepts. Real options reasoning are the firm's possibility and dynamic capabilities are the firm's ability to respond to environmental challenges. A changing and dynamic environment is a prerequisite to the emergence of real options reasoning. Nevertheless, dynamic capabilities may also be used in stable environment, because firms obviously do integrate, recombine, and reconfigure their internal and external competencies even in environments subject to lower rates of change. The effectiveness of real options reasoning highly depends on the firms’ ability to gather the necessary information from the market and business environment in a timely manner.