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The optimal management of research portfolios

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  • Bardsley, Peter

Abstract

Risky research projects are, other things being equal, intrinsically harder to monitor than projects that are less risky. It is shown using agency theory that a standard cost benefit analysis, which ignores the agency problem, will introduce a bias towards excessively risky projects, and it will under‐estimate the benefits from complementary investments in libraries, scientific equipment and other expenditures that increase the productivity of scientists. Research managers should be risk‐averse in their choice of projects, and they should aim to hold a balanced portfolio of projects. The nature of this portfolio problem is, however, quite different from the portfolio management problem in financial markets.

Suggested Citation

  • Bardsley, Peter, 1999. "The optimal management of research portfolios," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(3), pages 1-13, September.
    • Handle: RePEc:ags:aareaj:117158
    DOI: 10.22004/ag.econ.117158
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    References listed on IDEAS

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    7. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
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    Cited by:

    1. Bert Lenaerts & Yann de Mey & Matty Demont, 2022. "Revisiting multi‐stage models for upstream technology adoption: Evidence from rapid generation advance in rice breeding," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 277-300, February.
    2. Stoneham, Gary & Strappazzon, Loris & Soligo, James & Fisher, Bill & Eigenraam, Mark & Wimalasuriya, Rukman, 2000. "Evaluation Of Research Activities," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123645, Australian Agricultural and Resource Economics Society.
    3. Omuru, Eric & Kingwell, Ross S., 2005. "Funding and Managing Agricultural Research in a Developing Country: a Papua New Guinea case study," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137938, Australian Agricultural and Resource Economics Society.
    4. Kingwell, Ross S., 1999. "Institutional and social influences on R&D evaluation in agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(1), pages 1-14, March.
    5. X. Zhao & J.D. Mullen & G.R. Griffith & R.R. Piggott & W.E. Griffiths, 2002. "The Economic Incidence of R&D and Promotion Investments in the Australian Beef Industry," Monash Econometrics and Business Statistics Working Papers 16/02, Monash University, Department of Econometrics and Business Statistics.

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    More about this item

    Keywords

    Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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