nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2009‒04‒25
three papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Modelling major projects: What are the factors that determine net social benefits? By James A Giesecke; John R Madden
  2. A Real Options Perspective On R&D Portfolio Diversification By Bekkum, S. van; Pennings, H.P.G.; Smit, J.T.J.
  3. Industrial Research Institutes’ Collaboration: a three-way solution to integrating new research skills By Bienkowska, Dzamila; Larsen, Katarina

  1. By: James A Giesecke; John R Madden
    Abstract: Economic impact statements are part and parcel of project proponents seeking government assistance, infrastructure, or environmental clearance. Such impact assessments are increasingly being conducted with computable general equilibrium (CGE) models. Frequently, however, CGE modellers do not report results in economic welfare terms nor give sufficient attention to the proper simulation requirements for determining net social benefits correctly. In this paper we take the example of a major mining project in the Western Australian region and model it under a variety of stylized scenarios in order to demonstrate the key determinants of an economic welfare measure, gross national disposable income (GNDI). We show that GNDI is sensitive to such factors as: terms of trade effects; profitability; public concessions and infrastructure; cost of foreign financing; and taxation of foreign-owned returns.
    Keywords: major projects, economic impact, regional CGE
    JEL: D61 D58 Q33 Q38
    Date: 2009–04
  2. By: Bekkum, S. van; Pennings, H.P.G.; Smit, J.T.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper shows that the conditionality of investment decisions in R&D has a critical impact on portfolio risk, and implies that traditional diversification strategies should be reevaluated when a portfolio is constructed. Real option theory argues that research projects have conditional or option-like risk and return properties, and are different from unconditional projects. 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 a fundamentally different risk than a portfolio of unconditional projects. When conditional R&D projects are negatively correlated, diversification only slightly reduces portfolio risk. When projects are positively correlated, however, diversification proves more effective than conventional tools predict.
    Keywords: real options;portfolio analysis;research & development
    Date: 2009–04–03
  3. By: Bienkowska, Dzamila (KTH and HELIX); Larsen, Katarina (KTH)
    Abstract: Innovation processes in emerging fields of technology frequently utilize scientific knowledge and technical skills from several research areas. Likewise, technological development frequently involves a diverse set of organizations including for example private firms, universities, corporate research labs and public or semi-public research and technology organizations (RTOs). These processes spur the need for both organizational and institutional change and adjustment, e.g. in order to facilitate research and development (R&D) and formation of innovation networks. The main question analyzed in the paper is how RTOs cope with integrating new skills in their competence base in the quest for exploring new emerging science fields and technology applications. The empirical setting consists of Swedish semi-public industrial research institutes active in the fields of pulp & paper technology and electronics, optics & communication technology respectively. The results of the study bring attention to three ways of integrating diverse skills and types of actors in R&D networks. These are: organization of collaborative research in formalized industry-specific R&D programs, purposeful organizational change also including redefinition of categories of core research competence and finally by targeting ‘open’ innovation processes characterized by incorporation of both end-users and skills of neighboring technology areas.
    Keywords: Industrial research institutes; Innovation networks; Emerging technology; RTOs; Collaborative R&D; Interdisciplinary; Innovation policy; management and organization; Sweden
    JEL: L20 L33 L52 L80 L84 O25 O31 O32 O38
    Date: 2009–04–22

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