nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒03‒28
nine papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Hybrid Car Creates Hybrid Organization: Development of Toyota's First Prius Model and Limits that Traditional Development Organization at Toyota confronted By Niihara, Hiroaki
  2. From Iconic Design to Lost Luggage: Innovation at Heathrow Terminal 5 By Andrew Davies
  3. Starting an R&D project under uncertainty By Dobbelaere, Sabien; Luttens, Roland Iwan; Peters, Bettina
  4. The Two Faces of Collaboration: Impacts of University-Industry Relations on Public Research By Markus Perkmann; Kathryn Walsh
  5. R&D Productivity and the Organization of Cluster Policy: An Empirical Evaluation of the Industrial Cluster Project in Japan By Junichi Nishimura; Hiroyuki Okamuro
  6. Labour as a utility measure in contingent valuation studies: how good is it really? By Ahlheim, Michael; Frör, Oliver; Heinke, Antonia; Duc, Nguyen Minh; Dinh, Pham Van
  7. A Survey of Impact Evaluations of Infrastructure Projects, Programs and Policies By Antonio Estache
  8. The costs of favoritism: Is politically-driven aid less effective? By Axel Dreher; Stephan Klasen; James Raymond Vreeland; Eric Werker
  9. Will the clean development mechanism mobilize anticipated levels of mitigation ? By Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.

  1. By: Niihara, Hiroaki
    Abstract: The manager of each function-based department holds private information about his or her respective department's fields of expertise and technological advances. Given this understanding, it may be advisable for the company's headquarters to delegate decision-making authority to the managers of these individual departments. However, if decision-making authority is delegated to individual departments or to the managers representing the interests of each of those departments, those departments may pursue their own interests even at the expense of the company's interests as a whole. By contract, the product manager does not have private information but is thinking about the new product under development as a whole and thus does not have a biased preference. The question then, is, what kind of governance structure will serve as the optimal solution? When each manager possesses a biased preference for his or her own department, it is important to consider the impact that the allocation of formal authority and the information flow within the organizational hierarchy has on the organizational capacity for innovation. This theme is developed and illustrated, using the case of development of Toyota's "Prius". In the case of Toyota Motor, too, this point has been an important issue for a long time when planning its development organization structure. The development of the world's first mass-produced hybrid vehicle, the Prius by Toyota is one of the most successful examples of innovative product development in recent years. However, it has been hardly studied as to how such architectural innovation was possible within the largest organization in Japan. This paper argues at length the development process of the Prius and transfiguration of Toyota's development organization structure from the viewpoint of organizational economics framework. Development of the first Prius model by Toyota set the stage for adoption of a new development organization structure : the term-limited implementation of the new "Big Room" approach, which did bring about lasting changes to Toyota's organizational framework for vehicle development. It will be noted that concept design, or in other words interdepartmental coordination, was more important in the initial phase of development (the first six months), and thus, the "Big Room" structure was the development organization structure of choice for implementation. By contrast, after the initial six months, work on the concept design of the product development had been almost completed and interdepartmental coordination had become less important to the company compared with advances in the technologies for the engine and other component systems. For that reason, the development organization was transitioned to a more decentralized structure of governance, the conventional “chief engineer” structure. The new development organization is a kind of hybrid organization, which lies between "centralization" and "decentralization". Furthermore, we touched upon the point that delay is costly in decision problems because it increases the lag upon which decisions are based, and evaluated the new development organization structure from that viewpoint, too. The arguments made in this paper will presumably be of value as generalized recommendations for the shape of the development organization within large established corporations.
    Date: 2010–02
  2. By: Andrew Davies
    Abstract: This paper aims to contribute to understanding of how organizations respond to risk and uncertainty by combining and balancing routines and innovation. It shows how approaches to risk and uncertainty are shaped by the contractual framework in large multi-party projects. The paper addresses a gap in the literature on how risk and uncertainty is managed to deliver innovation in large-scale ‘megaprojects’. These megaprojects are notorious for high rates of failure that conventionally evoke organizational strategies avoiding risks and uncertainties. Yet strategies for managing risk and uncertainty are essential to the routines and innovation that overcome the challenges of successfully delivering large-scale, complex projects.
    Date: 2010
  3. By: Dobbelaere, Sabien; Luttens, Roland Iwan; Peters, Bettina
    Keywords: investment under uncertainty, R&D, demand uncertainty, technical uncertainty, entry threat
    JEL: D21 D81 L12 O31
    Date: 2009–05–01
  4. By: Markus Perkmann; Kathryn Walsh
    Abstract: We analyze the impact of university-industry relationships on public research. Our inductive study of university-industry collaboration in engineering suggests that basic projects are more likely to yield academically valuable knowledge than applied projects. However, applied projects show higher degrees of partner interdependence and therefore enable exploratory learning by academics, leading to new ideas and projects. This result holds especially for research-oriented academics working in the ‘sciences of the artificial’ and engaging in multiple relationships with industry. Our learning-centred interpretation qualifies the notion of entrepreneurial science as a driver of applied university-industry collaboration. We conclude with implications for science and technology policy.
    Keywords: University industry relations; Collaborative research; Contract research; Academic consulting; Science technology links; Engineering
    Date: 2010
  5. By: Junichi Nishimura; Hiroyuki Okamuro
    Abstract: Industrial clusters have attracted increasing attention as important locations of innovation. Therefore, several countries have started promotion policies for industrial clusters. However, there are few empirical studies on cluster policies. This paper examines the effects of the “Industrial Cluster Project” (ICP) in Japan on the R&D productivity of participants, using a unique dataset of 229 small firms, and discusses the conditions necessary for the effective organization of cluster policies. Different from former policy approaches, the ICP aims at building collaborative networks between universities and industries and supports the autonomous development of existing regional industries without direct intervention in the clustering process. Thus far, the ICP is similar to indirect support systems adopted by successful European clusters. Our estimation results suggest that participation in the cluster project alone does not affect R&D productivity. Moreover, research collaboration with a partner in the same cluster region decreases R&D productivity both in terms of the quantity and quality of patents. Therefore, in order to improve the R&D efficiency of local firms, it is also important to construct wide-range collaborative networks within and beyond the clusters, although most clusters focus on the network at a narrowly defined local level. However, cluster participants apply for more patents than others without reducing patent quality when they collaborate with national universities in the same cluster region.
    Keywords: Industrial cluster; University-industry partnership; Small and medium enterprise; R&D; Patent
    JEL: O23 O32 O38 R38
    Date: 2010
  6. By: Ahlheim, Michael; Frör, Oliver; Heinke, Antonia; Duc, Nguyen Minh; Dinh, Pham Van
    Abstract: The Contingent Valuation Method (CVM) aims at the assessment of people's willingness to pay (WTP) for a public project. The sum of the individual WTPs is interpreted as the social benefits of the project under consideration and compared to the project costs. If the benefits exceed the costs the project is recommended for realization. In very poor societies budgets are so tight that households cannot give up any part of their income, i.e. of their market consumption, in favour of a public project, so that their WTP for that project stated in a CVM interview has to be zero or close to zero. This leads to a severe discrimination against poor regions in the decision process on the allocation of public funds. Therefore, several authors suggest to use labour contributions to the realization of a public project instead of monetary contributions as a measure of people's WTP for that project. In this paper we show theoretically and empirically, based on a CVM study conducted in Vietnam, that labour is severely flawed as a measuring rod for individual utility so that CVM based on labour contributions does not provide a reliable and meaningful decision rule for the allocation of public projects. --
    Keywords: Cost-benefit analysis,Contingent Valuation,developing countries,public expenditures
    JEL: D6 H4 L3 Q25 Q51
    Date: 2010
  7. By: Antonio Estache
    Abstract: This paper surveys the main lessons from impact evaluations of infrastructure projects, programs and policies relevant to policymakers. In the process, however, it also reveals some major research gaps of relevance to academics. After a brief discussion of the motivation for the explosion of the demand for impact evaluations, it starts with some sometimes underestimated lessons for infrastructure specialists from theoretical experiment. The main focus of the paper is, however, the impact evaluations derived from experimental and quasi-experimental techniques. It covers energy, water and sanitation as well as the various transport subsectors (ports, railways, rural roads and highways). The main value added of the survey may be to show that despite the relatively modest number of published evaluations concluded in infrastructure as compared to health or education for instance, there is a growing coverage of the sector in evaluation efforts. The survey also offers an opportunity to get a sense of the creativity of researchers conducting these evaluations. It summarizes the main questions asked, the main techniques used and when available the results available. It concludes with a discussion of some of the limitations of evaluations in the context of infrastructure interventions.
    Date: 2010
  8. By: Axel Dreher (Georg-August University Göttingen); Stephan Klasen (Georg-August University Göttingen); James Raymond Vreeland (Georgetown University); Eric Werker (Harvard Business School)
    Abstract: As is now well documented, aid is given for both political as well as economic reasons. The conventional wisdom is that politically-motivated aid is less effective in promoting developmental objectives. We examine the ex-post performance ratings of World Bank projects and generally find that projects that are potentially politically motivated – such as those granted to governments holding a non-permanent seat on the United Nations Security Council or an Executive Directorship at the World Bank – are no more likely, on average, to get a negative quality rating than other projects. When aid is given to Security Council members with higher short-term debt, however, a negative quality rating is more likely. So we find evidence that World Bank project quality suffers as a consequence of political influence only when the recipient country is economically vulnerable in the first place.
    Keywords: World Bank; Aid Effectiveness; Political Influence; United Nations Security Council
    JEL: O19 O11 F35
    Date: 2010–03–11
  9. By: Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
    Abstract: Under the Kyoto Protocol, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism. Yet Clean Development Mechanism investments have so far failed to reach many of the high-potential sectors identified by the Intergovernmental Panel on Climate Change. This raises doubts about whether the Clean Development Mechanism can generate an adequate supply of credits from the limited areas where it has proved successful. This paper examines the current trajectory of mitigation projects entering the Clean Development Mechanism pipeline and projects it forward under the assumption that the diffusion of the Clean Development Mechanism will follow a path similar to other innovations. Projections are then compared with pre-Clean Development Mechanism predictions of the mechanism’s potential market size to discern whether limits on the types of projects entering the pipeline have limited the expected supply of certified emission reductions. Parameter tests suggest that this is not the case and that currently identified Clean Development Mechanism investments will generate offsets in excess of early model predictions. In particular, under favorable circumstances, the mechanism is on track to deliver an average annual flow of roughly 700 million certified emission reductions by the close of 2012 and nearly to 1,100 million certified emission reductions by 2020.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,ICT Policy and Strategies,Energy Production and Transportation,Carbon Policy and Trading
    Date: 2010–03–01

This nep-ppm issue is ©2010 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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