Modeling the Evolutionary Sequence of International Joint Ventures

This paper contributes to the literature on foreign direct investment under uncertainty and underscores the importance of modeling the evolutionary sequence pattern of foreign market entry. The model presented helps to refine the application of real options in the international joint venture context by providing a closed-form solution in continuous time to value their overall strategic flexibility. Moreover, the analysis provides a novel perspective on existing empirical results and generates a number of new testable predictions.