Selecting R&D Projects for Technology-Based Innovation

Abstract

A vital question incorporated under the fundamental corporate strategy of technology-based innovation is that of ensuring that R&D would most eectively exploit technological change in the development of new or enhanced products and services. The literature contains a profusion of models, methods and techniques which guide R&D project selection. Three approaches are particularly important: one based on mathematical programming, one where project selection is understood as a process rationally embedded in the corporate behavioural, organisational, and informational structure, and one which requires projects to be strategically consistent-andintegrated. To assist the bounded-rational manager faced with this embarras de choix, the authors propose a heuristic framework which respects both the constraint imposed by decision costs and the principle that to optimise the use of knowledge as many as possible of the results from the literature should enter into the ®rm's decision-information shortlist. Exploiting this framework, the manager can readily compare the dierent approaches under the normative methodology of testing the empirical relevance of their assumptions against a core model description of the ®rm's`real world' constructed according to the methodology of scienti®c realism. Once an approach which is methodologically best (most realistic) is found, the decision process can be re®ned upon further considerations of bounded rationality to determine a model, method, or technique under this approach which is simultaneously knowledge-optimal and operationally-satis®ced.

A new strategic approach for R&D project portfolio selection using efficiency-uncertainty maps

“…As explained before, the literature contains a profusion of models, methods and techniques which guide R&D project selection; however, few show the connection of R&D project selection to a corporate strategy under uncertainty. Cheung et al (2009) pioneered filling this gap for technology-based companies in the face of a confusing variety of choices. However, they just focused on knowledge-oriented vagueness.…”

A Real Options Model for Analysis of Industrial R&D Expenditures

“…In these terms, it is often easier to convince the Board of Directors of the proposal. The problem of R&D projects selection was treated academically in [Cheung, Greenfield, Liao, 2009] where the issue of real options was also under discussion.…”