Technology trajectories and the selection of optimal R and D project sequences

Ties van Bommel, R.J. Mahieu, E.J. Nijssen

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8 Citations (Scopus)
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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.

Original languageEnglish
Article number6891189
Pages (from-to)669-680
Number of pages12
JournalIEEE Transactions on Engineering Management
Volume61
Issue number4
DOIs
Publication statusPublished - 1 Nov 2014

Keywords

  • Affordable loss
  • capability development
  • interproject learning
  • managing R&D projects
  • real options
  • sensitivity analyses
  • technology trajectory

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