IDEAS home Printed from https://ideas.repec.org/p/ein/tuecis/0005.html
   My bibliography  Save this paper

The V-shaped value evolution of R&D projects

Author

Listed:
  • Lint, O.

    (ECIS, Technical University of Eindhoven)

  • Pennings, E.

    (Erasmus University Rotterdam)

Abstract

On average the expected value at the moment of commercialization of an R&D project should remain constant during the different stages of new product development. Contrary to this intuition however, a systematic, non-constant pattern is found in the average expected value of an R&D project. First, the value declines after the initial screening, then rises after the first market analysis, but on average does not reach the initial level at the final stage of development when resources for market introduction are approved. Moreover, uncertainty about the project value declines over time. The findings suggest a V-shaped value function of R&D projects. The study seems to be the first attempt to make direct measurements of valuing R&D projects through time in a real managerial setting.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lint, O. & Pennings, E., 2000. "The V-shaped value evolution of R&D projects," Working Papers 00.05, Eindhoven Center for Innovation Studies.
    • Handle: RePEc:ein:tuecis:0005
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Edwin Mansfield & Richard Brandenburg, 1966. "The Allocation, Characteristics, and Outcome of the Firm's Research and Development Portfolio: A Case Study," The Journal of Business, University of Chicago Press, vol. 39, pages 447-447.
    2. Pennings, Enrico & Lint, Onno, 1997. "The option value of advanced R & D," European Journal of Operational Research, Elsevier, vol. 103(1), pages 83-94, November.
    3. Mansfield, Edwin & Wagner, Samuel, 1975. "Organizational and Strategic Factors Associated with Probabilities of Success in Industrial R & D," The Journal of Business, University of Chicago Press, vol. 48(2), pages 179-198, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Álvarez Echeverría Francisco & López Sarabia Pablo & Venegas Martínez Francisco, 2012. "Valuación financiera de proyectos de inversión en nuevas tecnologías con opciones reales," Contaduría y Administración, Accounting and Management, vol. 57(3), pages 115-145, julio-sep.
    2. Thomas Bolli & Martin Woerter, 2013. "Technological Diversification and Innovation Performance," KOF Working papers 13-336, KOF Swiss Economic Institute, ETH Zurich.
    3. Lukas, Elmar & Mölls, Sascha & Welling, Andreas, 2016. "Venture capital, staged financing and optimal funding policies under uncertainty," European Journal of Operational Research, Elsevier, vol. 250(1), pages 305-313.
    4. Cassimon, Danny & Engelen, Peter-Jan & Yordanov, Vilimir, 2011. "Compound Real Option Valuation with Phase-Specific Volatility: a Multi-phase Mobile Payments Case Study," MPRA Paper 46053, University Library of Munich, Germany.
    5. Florian Kellner & Bernhard Lienland & Sebastian Utz, 2021. "A multi‐criteria decision‐making approach for assembling optimal powertrain technology portfolios in low GHG emission environments," Journal of Industrial Ecology, Yale University, vol. 25(6), pages 1412-1429, December.
    6. Becker, Annette & Hottenrott, Hanna & Mukherjee, Anwesha, 2022. "Division of labor in R&D? Firm size and specialization in corporate research," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 1-23.
    7. Zhao, Pingping & Wang, Tong & Song, Aimin & Chen, Peimin, 2023. "Valuing new drug R&D project under economic fluctuation, technical risks and subjective uncertainty," Chaos, Solitons & Fractals, Elsevier, vol. 172(C).
    8. James Boles & Albert N. Link, 2017. "On the R&D/marketing interface in knowledge intensive entrepreneurial firms," International Entrepreneurship and Management Journal, Springer, vol. 13(3), pages 943-952, September.
    9. Cui, Zhenyu & Kirkby, J. Lars & Nguyen, Duy, 2021. "A data-driven framework for consistent financial valuation and risk measurement," European Journal of Operational Research, Elsevier, vol. 289(1), pages 381-398.
    10. Verworn, Birgit, 2002. "The "fuzzy front end" of product development: An exploratory study," Working Papers 15, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
    11. Pennings, Enrico & Sereno, Luigi, 2011. "Evaluating pharmaceutical R&D under technical and economic uncertainty," European Journal of Operational Research, Elsevier, vol. 212(2), pages 374-385, July.
    12. Gicheva, Dora & Link, Albert N., 2016. "On the economic performance of nascent entrepreneurs," European Economic Review, Elsevier, vol. 86(C), pages 109-117.
    13. Charalambides, Marios & Koussis, Nicos, 2018. "A stochastic model with interacting managerial operating options and debt rescheduling," European Journal of Operational Research, Elsevier, vol. 267(1), pages 236-249.
    14. Lo Nigro, Giovanna & Morreale, Azzurra & Enea, Gianluca, 2014. "Open innovation: A real option to restore value to the biopharmaceutical R&D," International Journal of Production Economics, Elsevier, vol. 149(C), pages 183-193.
    15. Elizabeth Webster & Paul H. Jensen, 2009. "Macroeconomic Conditions and Successful Commercialization," Melbourne Institute Working Paper Series wp2009n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    16. Gharbi, Sami & Sahut, Jean-Michel & Teulon, Frédéric, 2014. "R&D investments and high-tech firms' stock return volatility," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 306-312.
    17. Pennings, H.P.G., 2010. "Does Contract Complexity Limit Opportunities? Vertical Organization and Flexibility," ERIM Inaugural Address Series Research in Management EIA-2010-044-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
    18. Thomas Bolli & Ursula Renold & Martin Wörter, 2018. "Vertical educational diversity and innovation performance," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 27(2), pages 107-131, February.
    19. Rajdeep Grewal & Gary L. Lilien & Girish Mallapragada, 2006. "Location, Location, Location: How Network Embeddedness Affects Project Success in Open Source Systems," Management Science, INFORMS, vol. 52(7), pages 1043-1056, July.
    20. Peter-Jan Engelen, 2004. "Criminal Behavior: A Real Option Approach With an Application to Restricting Illegal Insider Trading," European Journal of Law and Economics, Springer, vol. 17(3), pages 329-352, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ein:tuecis:0005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ectuenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.