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 language | English |
|---|---|
| Article number | 6891189 |
| Pages (from-to) | 669-680 |
| Number of pages | 12 |
| Journal | IEEE Transactions on Engineering Management |
| Volume | 61 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 1 Nov 2014 |
Keywords
- Affordable loss
- capability development
- interproject learning
- managing R&D projects
- real options
- sensitivity analyses
- technology trajectory