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 technologi...Show MoreMetadata
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.
Published in: IEEE Transactions on Engineering Management ( Volume: 61, Issue: 4, November 2014)