nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2007‒12‒08
six papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Government R&D funding: new approaches in the allocation policies for public and private beneficiaries By Poti' Bianca; Reale Emanuela
  2. Contracting with a quiet life manager By Eduard Alonso-Paulí
  3. Accelerated Development of Organizational Talent By Konstantin Korotov
  4. Constructing Stability in Software Product Development during Organizational Restructurings By Segercrantz, Beata
  5. Network of Tinkerers: A Model of Open-Source Technology Innovation By Meyer, Peter B.
  6. Residual income and value creation: An investigation into the lost-capital paradigm By Magni, Carlo Alberto

  1. By: Poti' Bianca (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy); Reale Emanuela (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy)
    Abstract: The objective of this paper is to perform a first experiment of quantitative assessment on changes in allocation mechanisms and in their underlying delegation models, using the quantitative information and the descriptions of national funding systems produced in the PRIME project funding activity. Delegation has been explored through changes in instrument portfolios and in evaluation modes, as proofs of an evolution in research governance. Some common trends can be identified: the reinforcing of both priority setting and peer review processes. The general result of our analysis is that some change in delegation modes took place, but there is not a simple transition from one delegation regime to another, while a "contract" delegation model (the NPM reform) is not detectable through project funding analysis.
    Keywords: R/D funding, allocation policy, project funding, research governance, evaluation modes, delegation models
    JEL: H0 H5 O30
    Date: 2007–09
  2. By: Eduard Alonso-Paulí (Department of Economics, Universidad Pablo de Olavide)
    Abstract: The aim of this paper is to analyze how employees may affect firm's corporate governance. In particular, we analyze a shareholder-manager relationship through a principal-agent framework. The manager is the agent in charge of taking decisions for firm's success. Yet, when deciding, the manager takes into account employees' preferences, i.e. the manager wants to enjoy a "quiet life". Our result highlight that having a quiet-life manager is not necessarily linked to destroy value, as suggested in recent research. It might even recover part of the efficient decisions (at a cost borne by the shareholder).
    Keywords: Quiet-life bias, Corporate Governance, Moral Hazard
    JEL: L26 M14 D86
    Date: 2007–12
  3. By: Konstantin Korotov (ESMT European School of Management and Technology)
    Abstract: This working paper explores the challenges of accelerated development of organizational talent. The meaning of the word "accelerated" is that such development takes place at a pace that is significantly higher than that of "traditional" development that allows an individual to learn the intricacies of the current job, observe incumbents in a higher level position (usually, one level up), practice elements of the boss' job when being delegated tasks, undergoing formal training, or benefiting from the knowledge accumulated by others and codified in the knowledge management systems. Accelerated development means, contrary to the usual, more traditional developmental path, bypassing traditionally expected career steps, stretched over a longer period of time learning opportunities, and/or age-related developmental progression. Accelerated development is a necessity for organizati of qualified individuals in the internal or external labor markets, and significant pressures from other organizations that are ready to "poach" talented executives and employees and offer them even higher levels of responsibility and remuneration. Organizations also respond with accelerated development initiatives to the individuals engaged in career entrepreneurship, i.e., those who make alternative career investments in order to enjoy quicker returns in terms of career growth and progression. This paper discusses the challenges of accelerated development programs, such as not only learning the competencies required in the new position, but also developing a new identity. The paper discusses the process of going through an accelerated development program and identifies its important elements: preentry experience, initial surprise of getting into the accelerated program's environment and learning to use it, engaging in identity exploration through examining past and present identities, staging identity experiments, and, finally, stepping out of the program into the real world.
    Keywords: organizational behavior, human resource management, executive education, identity, accelerated development
    Date: 2007–09–27
  4. By: Segercrantz, Beata (Swedish School of Economics and Business Administration)
    Abstract: We all have fresh in our memory what happened to the IT sector only a few years ago when the IT-bubble burst. The upswing of productivity in this sector slowed down, investors lost large investments, many found themselves looking for a new job, and countless dreams fell apart. Product developers in the IT sector have experienced a large number of organizational restructurings since the IT boom, including rapid growth, downsizing processes, and structural reforms. Organizational restructurings seem to be a complex and continuous phenomenon people in this sector have to deal with. How do software product developers retrospectively construct their work in relation to organizational restructurings? How do organizational restructurings bring about specific social processes in product development? This working paper focuses on these questions. The overall aim is to develop an understanding of how software product developers construct their work during organizational restructurings. The theoretical frame of reference is based on a social constructionist approach and discourse analysis. This approach offers more or less radical and critical alternatives to mainstream organizational theory. Writings from this perspective attempt to investigate and understand sociocultural processes by which various realities are created. Therefore these studies aim at showing how people participate in constituting the social world (Gergen & Thatchenkery, 1996); knowledge of the world is seen to be constructed between people in daily interaction, in which language plays a central role. This means that interaction, especially the ways of talking and writing about product development during organizational restructurings, become the target of concern. This study consists of 25 in-depth interviews following a pilot study based on 57 semi-structured interviews. In this working paper I analyze 9 in-depth interviews. The interviews were conducted in eight IT firms. The analysis explores how discourses are constructed and function, as well as the consequences that follow from different discourses. The analysis shows that even though the product developers have experienced many organizational restructurings, some of which have been far-reaching, their accounts build strongly on a stability discourse. According to this discourse product development is, perhaps surprisingly, not influenced to a great extent by organizational restructurings. This does not mean that product development is static. According to the social constructionist approach, product development is constantly being reproduced and maintained in ongoing processes. In other words stable effects are also ongoing achievements and these are of particular interest in this study. The product developers maintain rather than change the product development through ongoing processes of construction, even when they experience continuous extensive organizational restructurings. The discourse of stability exists alongside other discourses, some which contradict each other. Together they direct product development and generate meanings. The product developers consequently take an active role in the construction of their work during organizational restructurings. When doing this they also negotiate credible positions for themselves.
    Keywords: development; organizational restructurings; stability; discourse
    Date: 2007–06–12
  5. By: Meyer, Peter B. (U.S. Bureau of Labor Statistics)
    Abstract: Airplanes were invented by hobbyists and experimenters, and some personal computers were as well. Similarly, many open-source software developers are interested in the software they make, and not focused on profit. Based on these cases, this paper has a model of agents called tinkerers who want to improve a technology for their own reasons, by their own criteria, and who see no way to profit from it. Under these conditions, they would rather share their technology than work alone. The members of the agreement form an information network. The network's members optimally specialize based on their opportunities in particular aspects of the technology or in expanding or managing the network. Endogenously there are incentives to standardize on designs and descriptions of the technology. A tinkerer in the network who sees an opportunity to produce a profitable product may exit the network to create a startup firm and conduct focused research and development. Thus a new industry can arise.
    Keywords: Technological Change, Open Source Software, Uncertainty, Innovation, Invention, Collective Invention, Hackers, Hobbyists, Experimenters, Airplane
    JEL: O3 O31 O34 N10 D83 D85
    Date: 2007–11
  6. By: Magni, Carlo Alberto
    Abstract: This paper presents a new way of measuring residual income, originally introduced by Magni (2000a, 2000b, 2003). Contrary to the standard residual income, the capital charge is equal to the capital lost by investors. The lost capital may be viewed as (a) the foregone capital, (b) the capital implicitly infused into the business, (c) the outstanding capital of a shadow project, (d) the claimholders' credit. Relations of the lost capital with book values and market values are studied, as well as relations of the lost-capital residual income with the classical standard paradigm; many appealing properties are derived, among which a property of earnings aggregation. Different concepts and results, provided by different authors in such different fields as microeconomics, management accounting and corporate finance, are considered: O'Hanlon and Peasnell's (2002) unrecovered capital and Excess Value Created; Ohlson's (2005) Abnormal Earnings Growth, O'Byrne's (1997) EVA improvement, Keynes's (1967) user cost, Drukarczyk and Schueler's (2000) Net Economic Income, Fern\'{a}ndez's (2002) Created Shareholder Value, Anthony's (1975) profit. They are all conveniently reinterpreted within the theoretical domain of the lost-capital paradigm and conjoined in a unified view. The results found make this new theoretical approach a good candidate for firm valuation, incentive compensation, capital budgeting decision-making.
    Keywords: Management accounting; corporate finance; residual income; abnormal earnings; paradigm; value creation; incentive compensation; outstanding capital; lost capital; net present value; book value; market value.
    JEL: G11 M41 M40 M20 G10 G0 G30 M21
    Date: 2007–11

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