Real Options and Its Suitability in Assessing International Digital Investment

Abstract

Firms have experienced extreme competition because of changes in technological and global issues. Globalization of manufacturing has arisen through a faster transfer of materials, complex payment systems, and compression of product life cycle. Eventually, firms need the integration of technologies to meet the increasingly sophisticated customers' needs. Among the technologies, artificial intelligence has attracted much of the attention as it has been foreseen to have a major impact on all industries. Real options approach may be applied to make informed decisions concerning digital technologies investments. Therefore, firms could decide to defer the option of investing in artificial intelligence for the sake of finding a more favorable future environment. This chapter provides an adequate tool to reduce uncertainty in deciding whether to implement artificial intelligence in their companies. This tool comprises the strategic perspective of the investment in digital technologies that makes it suitable to be incorporated as a part of the set of strategic tools.