Developing a process for the relative valuation of R&D programmes

This paper addresses the issue of R&D programme prioritisation within a manufacturing company in the aerospace industry, in the context of an overall framework for technology management. A review of approaches to R&D project selection leads into a recent case, which describes how the company developed a practical methodology. The benefits of the process and the relevance of the academic contribution are discussed, leading to a practical checklist for in-company development of a prioritisation process.     

The R&D performance in Taiwan's electronics industry: a longitudinal examination

R&D investment has been widely regarded as an important input for firms, particularly for high‐tech firms, to achieve competitive advantage within their industry. Hence, a number of high‐tech firms are now investing substantial amounts into R&D. Since R&D efforts enable firms to raise the competitive advantage, one noticeable and interesting issue expected to know is the degree to which R&D investment influences firm output performance. In Taiwan, much greater emphasis is also being placed into R&D investment in the high‐tech industries; however, R&D output performance has never been seriously examined within this sector. Since the island's electronics industry is widely regarded as the most promising industry in the ‘high‐tech sector’, and is expected to place greatest emphasis on its R&D efforts, we take the electronics firms as our analytical sample. This paper therefore sets out to estimate the impact of R&D on firm performance, in terms of productivity growth and the rate of return on investment, within the electronics industry in Taiwan, whilst also examining the Schumpeterian hypothesis, that R&D performance is an increasing function of firm size. Our examination of R&D performance is based on a panel sample of 83 large electronics firms, completely balanced over the period from 1994 to 2000, with series data of R&D capital also being constructed. Based upon the extended Cobb‐Douglas production function, a random effects model is developed with the estimations revealing that the output elasticity of R&D is around 0.19 and the average rate of return on R&D is around 22%. These findings clearly demonstrate that investment in R&D by these electronics firms has had an impact on their competitive advantage. Compared to the findings of previous studies, where the analytical unit of data was at firm level, here the rate of return on R&D is consistent with similar estimates for the US and UK, but lower than those for Japan. However, our estimations do not provide support for the hypothesis that the impact of R&D on productivity is an increasing function of firm size.     

Working effectively in strategic alliances through managerial fit between partners: some evidence from Sino–British joint ventures and the implications for R&D professionals

To succeed in R&D strategic alliances requires not only strategic fit and cultural fit at the organisational level, but also managerial fit at the micro, inter–personal interaction level. This paper provides the results from a cross–cultural study of managerial fit between British and Chinese managers in joint ventures (JVs) initiated in 1993–1998 with a focus on two important issues: the perceived competence and managerial roles of the partners. Managerial fit between partners is critical for the success of R&D strategic alliances including JVs. Misfit in partners' managerial behaviour often results from the fact that JVs are characterised by the lack of specificity of various managerial tasks shared by the partners at the operational stage. In addition, a manager's managerial competence as perceived by the counterpart is a contributory factor to trust and supportive reaction from the counterpart, both of which are important for cohesive interaction between partners. This study has revealed that (1) there are similarities and significant differences in some of the characteristics of managerial competence perceived by the counterpart between the British and Chinese managers; and (2) there is often a mismatch of perceptions between the British and Chinese managers with regard to who plays a particular managerial role in a JV. Managerial implications are discussed and issues for further research are highlighted.     

A model for R&D performance measurement

R&D activities are increasingly costly and risky and, as a consequence, measuring their performance and contribution to value becomes critical. This paper illustrates a formal model for measuring R&D performance, based upon a balanced and synthetic evaluation of quantitative indicators from five different perspectives of performance: financial, customer, innovation and learning, internal business, alliances, and networks. The model is built in coherence with the suggestions coming from the theory of measurement in soft systems, which gives relevant guidelines for ensuring validity, objectivity and inter-subjectivity of the model. Then, an application in a real R&D setting is described, which helps to understand the model and to enlighten its main advantages and limits.     

R&D 'programmes-competencies' matrix: analyzing R&D expertise within the firm

The author suggests that the systematic identification of a firm's technologies opens up the possibility of evaluating, protecting, optimizing, enriching and exploiting these technologies to the full. A firm's technologies fall into two parts: those embodied and exploited in current operations and those evolving from the collective competencies of its R&D staff. The author's aim is to evaluate and describe the firm's R&D competencies.
The identification of R&D competencies proceeds in three steps: tracing the background of the current and past programmes, constructing a programmes/competencies matrix, and deriving an expertise profile. The construction of the matrix is the key activity and requires much care in its execution, if competencies are to be properly defined and truly existing, and if it is to be exhaustive. The author sketches a procedure for constructing a matrix and discusses problems of implementation and draws attention to some of its limitations.
The author claims that such an inventory of expertise could improve the efficiency of the use of the R&D resource, identify a laboratory's strengths and weaknesses, direct R&D into hitherto neglected channels, assist individuals to identify and evaluate their own expertise, justify obtaining funding for building expertise in shortage areas. The method should be considered as a starting point to formulate appropriate strategies to gain access to technology.     

Internal corporate joint ventures: Development processes and performance outcomes

Joint venture activity and internal corporate venturing represent two administrative innovations receiving increased attention in strategic management research. This study investigates a new hybrid form of administrative innovation: internal corporate joint ventures, which combine the equity involvement typically found in joint ventures with the internal staffing of a semiautonomous unit typical of internal corporate ventures. Drawing on both a process model and a variance model, the structuring, development and performance of 53 such ventures in an industry-specific setting is examined.     

Utilizing the balanced scorecard for R&D performance measurement

R&D programs are critical for many firms to achieve and sustain competitive advantage. Yet, measuring R&D performance over time can be quite complex due to inherent uncertainty. The paper responds to calls in the R&D literature to explore integrated performance measurement systems that capture financial and nonfinancial performance. We integrate the Stage-Gate approach to R&D management with the Balanced Scorecard to present a framework to show how firms can link resource commitments to these activities and the firm's strategic objectives. In this paper, we provide specific examples of how firms can apply this integrated performance measurement system to the R&D function.     

Private and social incentives to form R & D joint ventures

R & D patent pools induce individual firms to reduce investment in R & D, but are socially beneficial because they ensure greater competition in the post-innovation market. It is not usually optimal for all firms to combine in a single cooperative R & D venture. If R & D combinations are formed voluntarily by firms that seek to maximize their expected value, they will not, in general, adopt the socially optimal structure of R & D joint ventures.     

Contract,cooperation, and performance in international joint ventures

This study examines how contract, cooperation, and performance are associated with one another within international joint ventures (IJVs). We argue that contract and cooperation are not substitutes but complements in relation to IJV performance. An IJV contract provides an institutional framework guiding the course of cooperation, while cooperation overcomes the adaptive limits of contracts. Our analysis of 293 IJVs in a dynamic market demonstrates that previous cooperation bolsters contractual adaptability, which in turn nurtures current cooperation between the same partners. We find that contract completeness and cooperation drive IJV performance both independently and interactively. When contracts are more complete, cooperation contributes more to performance. Contract and cooperation differ in their quadratic effects such that the contribution of contract completeness to performance declines as completeness increases but the contribution of cooperation remains linear. Copyright © 2002 John Wiley & Sons, Ltd.     

The impact of EC R&D programmes on corporate R&D practice in Europe: a knowledge-base approach

This paper examines the role of additionality in the impact of EC R&D pro-grammes on firms. It comes from a study of the Impact of the EC Framework Pro-gramme on European Industry, which was sponsored by the Support Programme for Evaluation Activities in Research (SPEAR) of the EC. The argument is that there is an interaction between ie use of additional R&D resources, the organization of the R&D process, and the exploitation of R&D results. The analysis of the R&D process takes place within a framework based on the concept of the knowledge-base of the firm. A number of case studies are discussed and conclusions are drawn as to the impact of the EC Framework Pro-gramme on European firms.     

Product diversification in international joint ventures: performance implications in an emerging market

This study extends product diversification research to a new organizational form (IJV) and a new environmental context (emerging market). It explores the extent to which product relatedness with both foreign and local parents affects IJV performance as perceived by venture managers. After controlling for relevant variables, analysis of the data containing 134 IJVs in China validates our major premise: the relatedness of an IJV's products with that of its foreign and local parents is positively associated with its performance. An IJV maintaining bilateral related diversification (i.e., with both parents) performs better than a venture maintaining a unilateral related linkage (i.e., with one parent), which in turn outperforms an IJV which is unrelated to either parent. When resource complementarity or goal congruity between parents is higher, there is a stronger positive relationship between product relatedness and IJV performance. When structural opportunities are fewer or institutional deterrence is higher, there is a weaker positive relationship between product relatedness and IJV performance. Copyright © 2002 John Wiley & Sons, Ltd.     

Corporate technology portfolios and R&D performance measures: a study of technology intensive firms

This paper examines the relations between technology portfolio strategies and five commonly used research and development (R&D) performance measures. Patent and financial data of 78 US-based technology companies from 1976 to 1995 were gathered and analysed to investigate how a well-managed technology portfolio can create synergy and affect R&D performance. A technology portfolio can be characterized by its composition and technology concentration. A valuable technology portfolio that consists of patents with higher average citation made and self-citation ratio can have a positive effect on firm value. Our findings suggest that large firms may enjoy advantages for technological innovation because they can exploit synergy effects of their technology portfolios. Technology concentration strategy does not work well because firms focusing on few technology fields can experience diseconomy to patents received since high-quality patents are increasingly difficult to obtain. This paper lays the groundwork for future empirical research on technology portfolio and R&D performance.     

Antecedents and performance consequences of learning success in international joint ventures

This study examined a sample of organizations involved in international joint ventures, (IJVs) in Malaysia. Drawing upon the resource based view of the firm this paper investigates the antecedents and performance consequences of learning success of foreign partners in IJVs. Data was analysed using two-stage least squares regression (2SLS). Results suggest that a learning orientation, IJV partner mutual dependency and management control, have a positive effect upon the learning success. Results also suggest that organizations with higher levels of learning orientation and learning success have higher levels of business performance. The findings imply that foreign partners in IJVs that are successful in achieving their learning goals, and improving their knowledge, will be winners in terms of improving their business performance.     

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.     

Improving R&D/Marketing relations: R&D's perspective

Abstract
Successful product innovation hinges on close R&D/marketing relationships, especially in technology-based organizations. However, there is evidence that linkage problems are common and when they are not overcome failure is the usual result.
R&D's perspective on what R&D, marketing and senior management can do to improve their relationship with marketing is presented. The recommendations are based on suggestions from R&D directors involved in new product development efforts in 83 technology-based companies. Also presented is how the need for integration has changed over time and where it is going in the future.     

In-house R&D management development — strategy and implementation in a major government R&D agency

Abstract
The paper describes the experiences of CSIR in developing an in-house capability and implementation process of R&D management development programmes. The conceptual approach of the laboratory-based R&D management development programmes is described. Different phases in the process of implementation are presented along with the case studies of recent training programmes in two different laboratories. Some of the key aspects of the training programmes —- successful implementation, relationship with policy-making, and improving R&D performance have been examined. The role of international co-operation in R&D management development is suggested. The paper also discusses the future prospects of R&D management development programmes in the country.     

Absorptive capacity,learning, and performance in international joint ventures

This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.