nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2012‒01‒25
seven papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. The strategy of parallel approaches in projects with unforeseeable uncertainty: the Manhattan case in retrospect By Sylvain Lenfle
  2. Upgrading of Symbolic and Synthetic Knowledge Bases: Analysis of the Architecture, Engineering and Construction industry and the Automotive Industry in China By Jan van der Borg; Erwin van Tuijl
  3. The Value of Failures in Pharmaceutical R&D By Jing-Yuan Chio; Laura Magazzini; Fabio Pammolli
  4. How to Design Public-Private Partnerships in a Warming World? - When Infrastructure Becomes a Really “Hot” Topic By David Martimort; Stéphane Straub
  5. The European Research Framework Programme and innovation performance of companies. An empirical impact assessment using a CDM model By Abraham Garcia
  6. Those Outsiders: How Downstream Externalities Affect Public Good Provision By Sarah Jacobson; Jason Delaney
  7. Strategic Sourcing of R&D: The Determinants of Success By Jacques Brook; Albert Plugge

  1. By: Sylvain Lenfle (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X, Université de Cergy Pontoise - Université de Cergy Pontoise)
    Abstract: This paper discusses the literature on the management of projects with unforeseeable uncertainty. Recent work demonstrates that, when confronted with unforeseeable uncertainties, managers can adopt either a learning, trial-and-error-based strategy, or a parallel approach. In the latter, different solutions are developed in parallel and the best one is chosen when enough information becomes available. Studying the case of the Manhattan Project, which historically exemplifies the power of the parallel approach, has lead us to show that the either/or logic underlying the existing literature on the parallel approach oversimplifies the question. The Manhattan case demonstrates that managers must not necessarily choose between solutions, but can also combine them or add new ones during the project.
    Keywords: Project Management; Parallel Approach; Combination, Unforeseeable uncertainty; Innovation; Manhattan Project.
    Date: 2011–05
  2. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari); Erwin van Tuijl (HIS and RHV, Erasmus University Rotterdam)
    Abstract: The degree and the way of upgrading differ widely per industry. This article tries to give some new insights in these differences by linking the concept of upgrading to that of the knowledge base. Moreover, we try to identify barriers to upgrading as well as the appropriate spatial scale on which upgrading takes place, again for different knowledge bases. We support our argument by analysing the process of upgrading in two industries in China: the AEC industry (in Beijing and Shanghai) and the automotive industry (in Shanghai). Within these industries we focus on upgrading on two levels: within firms and within projects. Our findings for both industries suggest that the principal ways of upgrading of the symbolic knowledge base are joint brainstorming in internal and external project teams and labour mobility. Major factors that hinder the upgrading of symbolic knowledge include the development stage of China, the Chinese educational system and tensions about duplication of western designs. Upgrading of the synthetic knowledge base takes mainly place via inter-company training programmes of foreign firms, technology transfer and labour mobility on the long run. A possible barrier for upgrading of synthetic knowledge, especially in the automotive industry, is that foreign firms tend to keep certain engineering activities in their home base because of the risk of knowledge leakage. However, this is changing quickly as many foreign carmakers and their suppliers invest in engineering centres in China due to an increasing demand for cars, to governmental regulations and to intensifying competition.
    Keywords: Urban development, upgrading, automotive industry, AEC industry, knowledge economy, China.
    JEL: L2 R00 R3 O3
    Date: 2011
  3. By: Jing-Yuan Chio (IMT Lucca Institute for Advanced Studies); Laura Magazzini (Department of Economics, University of Verona); Fabio Pammolli (IMT Lucca Institute for Advanced Studies and CERM Foundation; IMT Lucca Institute for Advanced Studies and Department of Managerial Economics, Strategy and Innovation, K.U. Leuven)
    Abstract: We build a cumulative innovation model in which both success and failure provide valuable information for future research. To test this learning mechanism, we use a dataset covering outcomes of world-wide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. Empirical results confirm theoretical predictions that patents associated with successfully completed projects (i.e., leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. We therefore offer evidence of the value of failures as research inputs in (pharmaceutical) innovation
    Keywords: R&D competition, patent policy, pharmaceutical industry
    JEL: D23 D83 O3
    Date: 2011–12
  4. By: David Martimort (Paris School of Economics-EHESS. Email:; Stéphane Straub (Toulouse School of Economics, ARQADE and IDEI. Email:
    Abstract: We analyze how the deep current scientific uncertainty regarding future climate conditions affects the design of Public Private Partnerships (PPPs) contracts between a government (principal) and a firm (agent), especially in infrastructure sectors that are highly sensitive to such changing weather conditions. Consistently with the literature on uncertainty and irreversibility, the prospect of future, uncertain productivity shocks that affect the returns on the firm’s effort in the future creates an option value of delaying efforts. By designing dynamic intertemporal incentive schemes for his agent, the principal can play on this option value. Whether this option value is exacerbated or not in an agency context depends on the properties of the agent’s cost of efforts.
    Keywords: Public-private partnerships, global warming, option value, principal-agent.
    JEL: D82 Q54 O13 H44
    Date: 2011–11
  5. By: Abraham Garcia (JRC-IPTS)
    Abstract: The effect of the EU Research Framework Programme (FP) on European company innovation performance is analysed for the period 1998-2000. The possibility of applying for the grant might make companies engage in new projects which they would not have considered if the fund was not there. In addition, the FP programme increases collaboration with other innovation agents (e.g., universities, research labs, governments and other firms). Both the existence of FP and collaboration are simultaneously modelled when innovation performance is studied. To measure innovation performance, an input indicator (level of R&D expenditure) is used in combination with an output indicator (increase in the innovation sales). Following Crepon et al. (1998) a simultaneous equations system is used with four equations (FP, collaboration, R&D and Innovation sales). The paper finds a positive impact for the FP on collaboration, and both factors positively affect the innovation performance (R&D and Innovation sales) of European firms. No crowding-out effect is found in the analysis.
    Keywords: Funding, Framework Programme, R&D investment, CIS, CDM model
    Date: 2011–12
  6. By: Sarah Jacobson (Williams College); Jason Delaney (University of Arkansas at Little Rock)
    Abstract: Some policy problems pit the interests of one group against those of another group. One group may, for example, determine the provision of a project (such as a power plant or a dam) that benefits group members but has downstream externalities that hurt people outside the group. We introduce a model of projects with such asymmetries. In-group members may contribute to a common fund that benefits them as a public good. In the model, benefits from the project may or may not vary within the group. Project provision has negative downstream externalities: common fund contributions hurt agents outside the in-group (“Outsiders”) rendering common fund contributions anti-social overall. Many models of social preferences predict that such externalities should reduce or eliminate project provision, although conditional cooperation or a preference for in-group members may counteract this effect. We test this model with a lab experiment. With homogeneous in-group benefits, the presence of negative downstream externalities reduces contribution levels by nearly half. We introduce a rotating high-return position that allows subjects to trade favors. Contributions diminish only slightly with the introduction of the negative externality and reciprocal giving occurs whether or not Outsiders are present.
    Keywords: public bad, public good, social preferences, reciprocity, externalities, in-group-out-group, parochial altruism
    JEL: C91 D01 D62 D71 H41 Q50
    Date: 2012–01
  7. By: Jacques Brook (Faculty of Strategy, Marketing and International Business, Maastricht School of Management, The Netherlands.); Albert Plugge (Faculty of Technology, Policy and Management, Delft University of Technology, The Netherlands.)
    Abstract: The outsourcing of the R&D function is an emerging practice of corporate firms. In their attempt to reduce the increasing cost of research and technology development, firms are strategically outsourcing the R&D function or repositioning their internal R&D organisation. By doing so, they are able to benefit from other technology sources around the world. So far, there is only limited research on how firms develop their R&D sourcing strategies and how these strategies are implemented. This study aims to identify which determinants contribute to the success of R&D sourcing strategies. The results of our empirical research indicate that a clear vision of how to manage innovation strategically on a corporate level is a determinant of an effective R&D strategy. Moreover, our findings revealed that the R&D sourcing strategy influences a firm’s sourcing capabilities. These sourcing capabilities need to be developed to manage the demand as well as the supply of R&D services. The alignment between the demand capabilities and the supply capabilities contributes to the success of R&D sourcing.
    Keywords: Sourcing strategies, R&D, outsourcing, capabilities.
    JEL: O31 O32
    Date: 2011–05

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