Is real options reasoning a cause or consequence of dynamic capability?

Asghar Afshar Jahanshahi, Khaled Nawaser

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


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.

Original languageEnglish
Pages (from-to)395-402
Number of pages8
JournalStrategic Change
Issue number4
StatePublished - Jul 2018


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