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Strategic NPV: Real Options and Strategic Games under Different Information Structures

Smit, Han T.J.; Trigeorgis, Lenos


Han T.J. Smit


Among the most difficult firm strategic choices is the trade-off between making a long-term commitment or holding off on investment in the face of uncertainty. To operationalize strategic management theory under demand, technological and competitive uncertainty, we develop a Strategic Net Present Value (NPV) framework that integrates real options and game theory to quantify value components and interactions at the interface between NPV, real options, and strategic games. Our approach results in new propositions clarifying the way learning-experience conditions, technological uncertainty, and proprietary information interact to tilt the balance in the interplay between wait-and-see flexibility and strategic commitment. As such, Strategic NPV adds to our understanding of the conditions where NPV, real options, or strategic thinking are more relevant.


Smit, H. T., & Trigeorgis, L. (2017). Strategic NPV: Real Options and Strategic Games under Different Information Structures. Strategic Management Journal, 38(13), 2555-2578.

Journal Article Type Article
Acceptance Date Mar 25, 2017
Online Publication Date Apr 17, 2017
Publication Date 2017-12
Deposit Date Feb 14, 2023
Journal Strategic Management Journal
Print ISSN 0143-2095
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 38
Issue 13
Pages 2555-2578
Public URL