nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2008‒02‒23
four papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. A Real Options Perspective on R&D Portfolio Diversification By Sjoerd van Bekkum; Enrico Pennings; Han Smit
  2. Assessing Budget Support with Statistical Impact Evaluation: a Methodological Proposal By Chris Elbers; Jan Willem Gunning; Kobus de Hoop
  3. Codes of Best Practice in Competitive Markets for Managers By Eduard Alonso-Paulí

  1. By: Sjoerd van Bekkum (Erasmus University Rotterdam); Enrico Pennings (Erasmus University Rotterdam); Han Smit (Erasmus University Rotterdam)
    Abstract: This paper shows that the presence of conditional staging in R&D (Research & Development) has a critical impact on portfolio risk, and changes diversification arguments when a portfolio is constructed. When R&D projects exhibit option-like characteristics, correlation between projects plays a more complicated role than traditional portfolio diversification would suggest. Real option theory argues that research projects with conditional phases have option-like risk and return properties, and are different from unconditional projects. We show that although the risk of a portfolio always depends on the correlation between projects, a portfolio of conditional R&D projects with real option characteristics has fundamentally different risk than a portfolio of unconditional projects. When conditional R&D projects are negatively correlated, portfolio risk is hardly reduced by diversification. When projects are positively correlated, however, diversification is more effective than these tools predict.
    Keywords: Real Options; Research & Development (R&D); Risk Management; Monte Carlo Simulation
    JEL: G31 G32 O30 O32
    Date: 2007–01–15
  2. By: Chris Elbers (VU University Amsterdam); Jan Willem Gunning (VU University Amsterdam); Kobus de Hoop (University of Amsterdam)
    Abstract: Donor agencies and recipient governments want to assess the effectiveness of aid-supported sector policies. Unfortunately, existing methods for impact evaluation are designed for the evaluation of homogeneous interventions (‘projects’) where those with and without ‘treatment’ can be compared. The lack of a methodology for evaluations of sector-wide programs is a serious constraint in the debate on aid effectiveness. We propose a method of statistical impact evaluation in situations with heterogeneous interventions, an extension of the double differencing method often used in project evaluations. We illustrate its feasibility with an example from the education sector in Zambia.
    Keywords: Impact Evaluation; Sector-Wide Programs; Aid Effectiveness; Education; Africa; Zambia
    JEL: F35 H43 N37 O10
    Date: 2007–09–24
  3. By: Eduard Alonso-Paulí
    Abstract: We study firms' corporate governance in environments where possibly heterogeneous shareholders compete for possibly heterogeneous managers. A firm, formed by a shareholder and a manager, can sign either an incentive contract or a contract including a Code of Best Practice. A Code allows for a better manager's control but makes manager's decisions hard to react when market conditions change. It tends to be adopted in markets with low volatility and in low-competitive environments. The firms with the best projects tend to adopt the Code when managers are not too heterogeneous while the best managers tend to be hired through incentive contracts when the projects are similar. Although the matching between shareholders and managers is often positively assortative, the shareholders with the best projects might be willing to renounce to hire the best managers, signing contracts including Codes with lower-ability managers.
    Keywords: Corporate Governance, Incentives, Moral Hazard, Matching model
    Date: 2008–02–16
  4. By: Argentino Pessoa (Faculdade de Economia da Universidade do Porto, Portugal)
    Abstract: The developing world needs far more financing for infrastructure than can be provided by domestic public finances alone and through ODA (Official Development Aid). Around middle 1980s a new strategy based on the use of public-private agreements, relying on ODA to enhance the quality of projects, reduce risks and raise profitability was gradually implemented for the provision of infrastructures and public utilities. This paper evaluates the more typical forms of private sector involvement and its actual importance (by type of public utility and by region), and shows that the new strategy has failed in improving the provision of infrastructures in the developing world.
    Keywords: infrastructures, ODA, outsourcing, public-private partnership, public utilities, regulation
    JEL: H4 H54 I18 I28 L33
    Date: 2008–02

This nep-ppm issue is ©2008 by Arvi Kuura. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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