Staging Innovation Projects: (When) Does it Pay Off?

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Staging innovation projects: (When) does it pay off ?Petra Andries * † Paul Hünermund † ‡ November 2014Building on real options literature, this study shows that the use of a staged approach for the management of innovation projects affects the innovation output of firms differently depending on firm characteristics and ambitions. In particular, while staged project management increases the effect of innovation expenditures on new product sales for firms envisaging incremental or continuous innovations, this moderating effect is absent for firms aspiring radical innovations. In addition, while staged project management has a positive moderating effect in firms with resource slack, this is not the case when firms are resource-constrained. We further investigate the underlying mechanisms to this latter finding by demonstrating that in resource-abundant firms staged project organization is associated with delaying projects until more information becomes available. Thereby these firms reap the waiting value inherent to real options reasoning. By contrast, resource-constrained firms using staged project management are shown to abandon a larger share of their innovation projects and to concentrate resources on fewer projects. It appears, however, that, due to budgetary pressure, they make the decision to abandon at a too early stage where uncertainty is insufficiently resolved. This can explain why there is no effect of staged project management on the sales of resource-constrained firms from new products. The paper contributes to theory development on when and why the staging of innovation projects affects the innovation output of firms and to the literature on real options reasoning in general.

Innovation in Project Management: Lessons Learned From Successful Business Development Initiatives in Various Industries

“…This literature review aims to analyze and synthesize insights from relevant studies to shed light on the dynamics of innovation in project management. Andries and Hünermund (2014) explore the concept of staging innovation projects and investigate when it pays off. The study discusses the temporal aspects of innovation, highlighting the importance of timing and sequence in project implementation.…”