Research On Projecet Decision Of Technology Innovation Investment Based On Real Options Analysis Approach

Under the environment of economic globalization and international competition become explosive increasingly, technological innovation plays a more important role in the promotion of enterprise's competitive power, speeding up the economic growth and improving enterprise's independent innovation ability. For this reason the State and enterprises take more care of technological innovation investement and the improvement of independent technological innovation ability . But the technological innovation project investment has the characteristics of no definity, irreversibility and so on. NPV in the name of the traditional assessment method which has the defect in assessing of the technological innovation project investment, cannot take consideration of management flexibility during the investment decision process. As a result NPV often underestimates the investment'value, and creates a fault decision in policy-making.Another decision method -- real options analysis approach could make up the traditional decision method's these defects. It obtains community approvals and the application. The real options theory can express and calculate the call option's value in the technological innovation project investment. It can provide the basis to making a more scientific reasonable decision-making.This article reviews the technological innovation theory and the real options theory, summarize the traditional investment assessment method's flaw, contrasts the real options analysis approach and the traditional assessment method to reveal its superiority, analyze the technological innovation projects'optional characteristics and states that utilizes of the real options approach in the project investment decision is feasible. Then I introduce the most used real options pricing model, establishes the application general frame of the technological innovation project with the real options approach and explain its approximate process with the example. Although the real options approach also has its deficiency and the utilization difficulty, it provides not only an appraisal tool to us but also a thinking method. It provids a new analyze thinking and the angle of view in the investment decision of technological innovation project.