Similarities in the value generated when real options are utilized to evaluate innovations.

Sammanfattning: Innovation is an important activity for organizations to be able to compete and handle changing environments. Since innovations are uncertain it is difficult to evaluate them. Traditional evaluation models are based on historical data, but since innovations do not have any history traditional models are not applicable. The real option is an evaluation model that can incorporate all the properties of innovations and thus give a fair value to innovation. But a barrier to using real options is that the value it creates can be ambiguous to decision-makers. In our opinion, this hurdle could be diminished if similarities were identified since it would create clarity in the value that is created. Therefore, the purpose of this thesis was to identify similarities in the value created, when real options are used to evaluate innovations. This study used literature study to collect data, and thematic analysis was used to determine if there exist common themes in the value created. Ten articles were analyzed. Flexibility and learning were identified as the common themes in the value created by real options. Real options create the possibility to execute activities in shorter phases, which creates flexibility for the decision-maker and builds knowledge. Future research should focus on investigating the situations under which real options are effective, to determine whether real option is a general tool that can be used in all-organizational settings.