A Real Options Reasoning Perspective on Entrepreneurs’ Decision-Making Over Time

This study advances real options reasoning (ROR) logics by examining how entrepreneurs make sequential decisions under varying uncertainty. Although ROR has been conceptualized as a useful decision-making framework, its boundary conditions and theoretical applications remain underspecified. Through a multistage experimental design with 181 entrepreneurs and an archival study, we demonstrate that entrepreneurs employ different ROR logics based on both the initial level of uncertainty and its subsequent directional changes. This advances ROR by establishing its boundary conditions, demonstrating when entrepreneurs do and do not employ ROR logics, and revealing how the directionality and magnitude of uncertainty changes influence entrepreneurial decision-making.