Research On The Investment Strategy Of Technological Innovation Of Firms Based On The Real Option-game Approach

Firms'core competition capacity mainly derives from their technological innovation, which is motivity of growth of national economy. Whether technological innovation succeeds or not determines the advantageous status of a firm in furious market competition. Technological innovations are composed of adopting and providing(R&D) technologies,which are two interactive aspects. There always exist a lot of uncertain factors in the investment decisions of two aspects. These uncertainties entitle firms a lot of dynamic managerial flexibility. Because a series of value of managerial flexibility of technological innovation investment are not considered by the classical investment evaluating approaches(NPV method),these traditional approaches can't make scientific appraisal of the investments of technological innovations. On the other hand,the real option method considers the value of the decision flexibility,but ignores reactions of competitors. When confronting rivals, firms are inclined to losing their investment value in order to change their strategies. Therefore real option method also can't evaluate investment decision of technological innovation fully. By comparison, real option game approach can make good combination of real option pricing theory and game theory. It can not only take the managerial flexibility of investment into consideration, but also pay attention to reactions of rivals. Thus,it can offer more scientific analytical approach and evaluation model for technological innovation investment of firms.On the base of survey of research on the investment strategy of technological innovation of firms option, this article makes a compare analysis of investment decision method, then models real option-game model of firms'technological innovation investment based time-to-build, obtains preemption, collusion and simultaneous investment strategy equilibriums, and analyses the factors which have an effect on the investment strategy. As the time-to-build and cost increasing, the value of firm's decrease and investment thresholds increase, because of the effect of market demand volatility, firms have flexibility value of investment to wait and increase threshold to invest. But in duopoly competition, firms invest to preempt or invest to follow.Unlike economic intuition, time-to-build and investment cost of technology innovation have no effect on investment cascades, market demand volatility quicken to invest ahead, and heighten the likelihood of investment cascades. The research implies...