A study on the option value of entrepreneurial decision-making

Abstract

Since 1990s, the research of entrepreneurship has been focused on the entrepreneurial process and behavior instead of the personality traits of the entrepreneur. Distinguished from ordinary business operations, entrepreneurial activities are actions taken by entrepreneurs who identify, evaluate and exploit opportunities in the conditions of uncertainty. Within the framework of nonequilibrium analysis, and from the viewpoint of real option, this paper examines the value of real option chain in entrepreneurial process. The characteristic and formation mechanism of option value are demonstrated and appreciated through a theorized model, and a corresponding example is given at the last.