Experience of Using Real Options in the Practice of the Enterprise’s Innovation Activity: A case study

Abstract

The relevance of the study is connected with the need to expand the tools for managing portfolios of innovative projects in organizations. The traditional set of management technologies of a modern company does not provide adequate flexibility and adaptability in making management decisions in a rapidly changing open external environment. The aim of the study was to study the practice of applying real options in managing a portfolio of innovative projects of a high-tech company for the period 2013-2018. The basic research methods were “case-study” and interviews, also used the methods of analytical data processing and forecasting. Positive actual and predicted effects from the exercise of real options are noted. In particular, other parameters remaining unchanged, the portfolio of projects with embedded and realized options goes beyond the zone of negative values of the aggregate net cash flow after the planned period. However, the current indicator of the total cash flow is significantly higher than planned. At the same time, the situational nature of the implementation of functions of real options and the impossibility of modeling positive effects in the long term, which complicates the use of this tool in the framework of strategic project portfolio management, is noted.