Uncertainty and stress in an R&D project environment

Abstract
R&D project managers work in an environment in which the uncertainty and complexity of engineering development problems are an important source of episodic job stress. A study of the US. Navy's top major project R&D managers (N = 118) was conducted to test the use of various coping skills and social support as preventive stress management techniques for this population. It was found that perceived environmental uncertainty (PEU) had a direct, positive effect on psychological distress of these project managers while social support had a therapeutic effect on their experience of burnout. While problem focussed coping had a small, positive effect on burnout, neither coping skills nor social support were found to have a primary prevention effect upon perceived environmental uncertainty (PEU).
Engineering managers engaged in high technology R&D are confronted by a wide range of uncertainties, risks and changing demands that give rise to the stress response with its attendant physiological and psychological changes (Asterita, 1985). Adams (1980) has argued that an episodic versus chronic dichotomy of stressors is valuable because it distinguishes between intermittent stressors of finite duration (episodic) and ongoing stressors of indeterminant duration (chronic). This article reports the results of a study of uncertainty as an episodic work stressor for the U.S. Navy's high technology R&D project managers. The results suggest that R&D project managers should develop social support systems and structures to maintain well-being and avert distress and strain.     

Forecasting core competencies in an R&D environment

This study, carried out in 1998, aimed to develop a method of forecasting core competencies in an agricultural research organization, using the Delphi Technique. First, based on a survey of internal documents and interviews, nine organizational core competencies and their specific components (human competencies) were defined, and expert judges identified. These judges responded to a questionnaire, in which the importance of the future human competencies was assessed and the organization's existing human capacity was evaluated. Means were calculated for both judgements and changes were made in various definitions, based on the experts' comments. Another questionnaire was designed and sent out to an expanded panel of judges to confirm or to revise the priority mean scores obtained or to add scores in the case of competencies that entered later. Factor analysis and reliability scores have demonstrated internal and inter‐competency consistencies. Technological Innovation Management and Geo‐processing appeared as the top priorities and Plant Pathology as the least priority. Priorities for each human competency were also calculated and they have been helpful for decision‐making concerning the selection and graduate training of researchers on the organization studied.     

Linking R&D to market needs

A market research technique for identifying and evaluating the more important product features and service aspects of new industrial products is described. This method helps tailor product design and performance aspects to market needs and manufacturing costs.     

Social capital and creativity in R&D project teams

The existing research contributes to our understanding about the value of social capital in a wide range of social science disciplines; however, it does not well address the role of social capital in creativity for research and development (R&D) project teams in a given context. Using a sample of 54 R&D project teams in high-technology firms of Taiwan, we examined the impacts of social capital on creativity of R&D project teams from an intra-team perspective. Results of factor analysis revealed four factors extracted from the concept of social capital, namely social interaction, network ties, mutual trust, and shared goals. Findings suggested that social interaction and network ties had significant and positive impacts on creativity of R&D project teams, but mutual trust and shared goals did not. Managerial implications for managing social capital in R&D project teams are discussed.     

Economic compensation compositions preferred by R&D personnel of different R&D types and intrinsic values

In order to enhance R&D performance, R&D managers make sure that R&D personnel are satisfied with their compensation, both economic and non–economic . An R&D compensation scheme would consist of many complex factors. In this research, we focus on 'compensation composition' as such a factor for the economic compensation system, i.e., the mix of compensation components such as team (or organization) performance based, individual (R&D personnel) performance based, and fixed (seniority based) portion of economic compensation. As part of non–economic compensation, intrinsic values such as social status and self–actualization perceived by the R&D personnel are influencing their level of satisfaction with the entire compensation system. Another critical factor we consider here is the difference in R&D types: there are three R&D types, i.e., basic, applied , and commercial R&D . We put forth two sets of propositions. First, there is statistically significant correlation among R&D personnel's job satisfaction, performance measurement satisfaction, and compensation satisfaction. Second, depending on the types of their R&D activities, R&D personnel prefer a certain composition of economic compensation. In addition, the relationships are mediated by whether the R&D personnel feel intrinsic values of their jobs.     

Strategies for Linking Vertical Cooperative R&D to Commercialization in Korea

Since 1982, the government of Korea has actively promoted vertical cooperative R&D programs between government-sponsored research institutes (GRIs) and private firms. A number affirms participated in the programs because cooperative R&D could lower the risk and could contribute to rapid commercialization of many technologies. In this article, Chulwon Lee, Zong-Tae Bae, and Jinjoo Lee examine the effectiveness of participant firms' strategies for commercial utilization of cooperative R&D results, from the viewpoint of technology sourcing at the project level. The data have been obtained from 162 cases of vertical cooperative R&D projects from a diverse group of industries in Korea. Three different commercialization strategies are empirically derived through cluster analysis of the relative usage rates of cooperative R&D and of other supplementary technology acquisition methods. They find that the effectiveness of these strategy clusters varies significantly according to the types of innovation, that is, project-business relatedness. If the project belongs to an existing business area, in-house development augmented cooperative R&D strategy is the most effective. On the other hand, licensing-in supplemented cooperative R&D strategy is the most successful, if the project belongs to a new business area. Findings suggest that firms participating in cooperative R&D projects should try to utilize other supplementary technology acquisition methods in order to achieve commercial utilization of cooperative R&D results.     

The effects of creative problem solving training on creativity, cognitive type and R&D performance

The effects of Creative Problem Solving (CPS) training on creativity, cognitive type, and R&D performance were investigated with 106 R&D workers of a large government–owned manufacturing company in Taiwan. Seventy–one of them volunteered to participate in the CPS training and were divided into three groups. Each group received 12 hours of CPS training and two follow–up training sessions over a one–year long period in a time–series design. The 'Circle Test of the Torrance Test of Creative Thinking', and the 'Myers–Briggs Type Indicator' were administered before and after the CPS training. R&D performance averaged over the past three years before the CPS training and one year after the pretest were obtained from the company. Results showed that participant's scores on fluency and flexibility of ideas were higher after the CPS training. There was also an increase in the number of persons being classified as extrovert or feeling type of cognition. In terms of R&D performance, the participants' number of co–authored service projects increased significantly from pretest to posttest, whereas no such change was observed among those 35 R&D workers who did not participated in the CPS.     

An examination of the relationships between leadership style, quality, and employee satisfaction in R&D versus administrative environments

Academics and executives argue that effective leadership is a key predictor of R&D success as well as quality management. Recent research highlights transformational leadership as a highly effective style shown to predict performance in organizations. However, no study examined the role of transformational and transactional leadership in building quality climate in R&D versus non-R&D settings. We examined the relationship between leadership style and the establishment of a quality environment in an R&D setting based on an empirical study of 511 research engineers and scientists. It is found that both transformational leadership and transactional contingent-reward leadership are related to the establishment of a quality environment in the R&D part of a telecommunications firm. However, the impact of transactional contingent-reward leadership ceases to be significant once both leadership styles are considered simultaneously using structural equations. A transformational leadership style was also found to be related to employee satisfaction.     

Drivers of organizational creativity: a path model of creative climate in pharmaceutical R&D

A path model of organizational creativity was presented; it conceptualized the influences of information sharing, learning culture, motivation, and networking on creative climate. A structural equation model was fitted to data from the pharmaceutical industry to test the proposed model. The model accounted for 86% of the variance in the creative climate -dependent variable. Information sharing had a positive effect on learning culture, which in turn had a positive effect on creative climate, while there were negative direct effects of information sharing on creative climate and on intrinsic motivation. This study suggests that information sharing and intrinsic motivation are important drivers for organizational creativity in a complex R&D environment in the pharmaceutical industry. Implications of the model are discussed.     

Managing an in-house R&D service department

The paper reports a study carried out in a large UK industrial R&D establishment which had recognised that queuing for service from support groups was becoming a serious problem.
The main part of the study was carried out on the operations of an analytical department. Interviews were carried out with both 'servers' and 'customers' at all levels in the organisation. These were supplemented by observations of the actual process by which service was demanded and rendered, and by analysis of records.
The study revealed why the queuing problem arose and the reasons for its undesirable effects. The authors concluded that resolution of the problems is a matter for the organization as a whole, and not merely for servers and customers.
The situation is further analysed in terms of queuing theory. It is argued that improvement could be achieved if a systematic priority allocation system which took into account both urgency and importance were instituted. However, rational scheduling is possible only over a short time horizon, given current human and computing abilities. To achieve optimization over a longer time horizon the authors recommend the development of an expert system incorporating past experience into its knowledge base.     

Strategy in pharmaceutical R&D: a portfolio risk matrix

The management of any research-intensive company must weigh carefully the expenditure on any particular development product with the sales revenues that are likely to be obtained when the new product is introduced to the market. In particular, the technical risk (whether the development product results in a marketable product) and the market risk (whether the new product can be introduced to a suitable market niche where it will generate the required revenues) have to be scrutinised.
This paper sets out to develop an original model by Drews into a methodology for assessing the risk associated with a company's research portfolio. To test a model they had developed, the authors carried out in-depth interviews with three British pharmaceutical multinational companies, and compared the overall technical/market risk profiles of their respective development portfolios. Some interesting differences between the three were detected in terms of the overall risk profiles, in market risk, and in technical risk. The authors conclude that the matrix described here may be a useful tool in discriminating between the risk levels of the research portfolios of several companies; it may also be useful for plotting the movement of a particular firm's research risk over time.
While this paper concentrates on comparing the portfolios of three pharmaceutical firms at a particular point in time, R&D managers in other industries and other situations may find some evaluative utility in the model.     

Flexibility planning for managing R&D projects under risk

Incorporating managerial flexibility in an innovative R&D project is important, because managers face greater uncertainty in today's competitive and dynamic changing environment. It is essential to bring managerial flexibility into R&D project planning to decrease technical and market risks, while increasing potential market value. The objective of this paper is to develop a flexibility planning methodology based on real option analysis to improve managerial flexibility for R&D projects. The proposed methodology identifies potential risks that may occur during every R&D stage. It also recognizes a cascading option structure to resolve the identified risks, and evaluates and selects adequate options that maximize the potential value of the project. Instead of using a traditional option pricing method, a dynamic programming model that considers multidimensional product performance and market payoff is used to evaluate the R&D project value. Using the proposed methodology, managers can identify future scenarios as a function of their management actions. The proposed flexibility planning methodology can help managers improve managerial flexibility of R&D project and increase the success rate of product launch. A drug development project is used to illustrate the proposed methodology.     

Towards networked R&D management: the R&D approach of Sonera Corporation as an example

In this paper the authors delineate the challenges of a dynamic environment to R&D management. The authors build on most recent ideas, such as the dynamic capability view of the firm, as strategic foundation for modern R&D management. Collaboration is emphasized as a meta-capability for innovation. These ideas are merged into a 'Networked R&D Management' approach that emphasizes internal and external collaboration networks as critical for companies operating in a dynamic business environment. The approach is illustrated with ICT industry as an example. The implementation of Networked R&D Management is reflected in the illustrative case discussion of R&D management of Sonera Corporation.     

R&D as an option on market introduction

Discounted cash flow methods for making R&D investment decisions cannot properly capture the option value in R&D. Since market and technology uncertainties change expectations about the viability of many new products, the value of projects is frequently adjusted during the R&D stages. Capturing the adjustment in expectations has an option value that may significantly differ from the Net Present Value of R&D projects. However, there are no historic time series for estimating the uncertainty of the value of R&D projects. As a result, the standard Black and Scholes model for financial option valuation needs to be adjusted. The aim of this paper is to report the application of a particular option pricing model for setting the budget of R&D projects. The option value of the model captures jumps or business shifts in market or technology conditions. The approach originates from applying current insight into the valuation of R&D projects to the field of multimedia research at Philips Corporate Research. This way, the gap between real option theory and R&D practice is further diminished.     

Sensitivity of new industrial product risk to R&D incentives

Incentives for research and development have frequently been a feature of government policy to increase the level or alter the direction of new product development activity in industrial product companies. Conceptually, these incentives may be viewed as "risk-modifiers they may encourage managers to undertake innovation projects where the potential payoffs may be attractive, but where some dimensions of risk are perceived as too high to proceed. This research explores the sensitivity of different dimensions of risk faced by managers to incentives of different kinds, at different levels. Implications are cited for different types of R&D incentives aimed at these different dimensionsof risk.     

R&D competition versus R&D cooperation in oligopolistic markets with evolving structure

This paper considers investment behavior of duopolistic firms subject to technological progress. It is assumed that initially both firms offer a homogeneous product, but after a stochastic waiting time they are able to implement a product innovation. Production capacities of both firms are product specific. It is shown that firms anticipate a future product innovation by under-investing (if the new product is a substitute to the established product) and higher profits, and over-investing (in case of complements) and lower profits, compared to the corresponding standard capital accumulation game. This anticipation effect is stronger in the case of R&D cooperation. Furthermore, since due to R&D cooperation firms introduce the new product at the same time, this leads to intensified competition and lower firm profits right after the new product has been introduced. In addition, we show that under R&D competition the firm that innovates first, overshoots in new-product capacity buildup in order to exploit its temporary monopoly position. Taking into account all these effects, the result is that, if the new product is neither a close substitute nor a strong complement of the established product, positive synergy effects in R&D cooperation are necessary to make it more profitable for firms than R&D competition.