Technology Trajectories and the Selection of Optimal R&D Project Sequences

Author

van Bommel, Ties ; Mahieu, Ronald J. ; Nijssen, Edwin J.

Author_Institution

Dept. of Ind. Eng. & Innovation Sci., Eindhoven Univ. of Technol., Eindhoven, Netherlands

Volume

61

Issue

4

fYear

2014

fDate

Nov. 2014

Firstpage

669

Lastpage

680

Abstract

Given a set of R&D projects drawing on the same underlying technology, a technology trajectory refers to the order in which projects are executed. Due to their technological interdependence, the successful execution of one project can increase a firm´s technological capability, and help to efficiently and effectively develop other projects from this set. In this paper, we present a model for determining the optimal sequence for performing such projects. Based on Huchzermeier and Loch´s real-option value model, we demonstrate that accounting for interproject learning and discount rates has: 1) a positive effect on the maximum option value that different project sequences can achieve; and 2) the maximum value of the technology trajectory is particularly sensitive to the selection of the first project.

Keywords

cost-benefit analysis; innovation management; project management; technology management; Huchzermeier-Loch´s real-option value model; R and D project sequences; discount rates; firm technological capability; interproject learning; maximum option value; optimal sequence; project execution; project selection; technological interdependence; technology trajectory; Knowledge transfer; Research and development management; Sensitivity analysis; Technology management; Affordable loss; capability development; interproject learning; managing R&D projects; managing R&D projects; real options; sensitivity analyses; technology trajectory;

fLanguage

English

Journal_Title

Engineering Management, IEEE Transactions on

Publisher

ieee

ISSN

0018-9391

Type

jour

DOI

10.1109/TEM.2014.2349554

Filename

6891189