nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2022‒08‒29
six papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Research Joint Ventures: The Role of Financial Constraints By Philipp Brunner; Igor Letina; Armin Schmutzler
  2. Project Cash-flow Risk Resolution and Project Value By Ralphb W. Sanders, Jr.
  3. Assessing the First Shocks of Covid-19 Pandemic on the Idiosyncratic Risk in the Brazilian and the Emerging Markets By Assis de Salles, Andre
  4. SMEs embedded in collaborative innovation networks: how to measure their absorptive capacity? By Lamiae Benhayoun-Sadafiyine; Marie-Anne Le Dain; Carine Dominguez-Péry; Andrew C. Lyons
  5. From Education to Exploitation – New Insights to promote successful Entrepreneurial Activities By Dilmetz, Daniel
  6. The state of science and innovations in Russia in 2021 By Dezhina Irina

  1. By: Philipp Brunner; Igor Letina; Armin Schmutzler
    Abstract: This paper provides a novel theory of research joint ventures for financially constrained firms. When firms choose R&D portfolios, an RJV can help to coordinate research efforts, reducing investments in duplicate projects. This can free up resources, increase the variety of pursued projects and thereby increase the probability of discovering the innovation. RJVs improve innovation outcomes when market competition is weak and external financing conditions are bad. An RJV may increase the innovation probability and nevertheless lower total R&D costs. RJVs that increase innovation tend to be profitable, but innovation-reducing RJVs also exist. Finally, we compare RJVs to innovation-enhancing mergers.
    Date: 2022–07
  2. By: Ralphb W. Sanders, Jr. (Department of Economics and Management, DePauw University)
    Abstract: I examine the effects of cash-flow risk resolutions on project valuation by deriving risk-resolution-scenario-specific "families" of capital structure relations (i.e., equations for the value of the levered firm, return on levered equity, and marginal cost of capital). Although I obtain Modigliani and Miller’s family of relations only as highly constrained special cases reflecting "risk-free" cash flows, I find that their qualitative insights into firm value and leverage in the presence of corporate taxes are robust across the cash-flow risk resolution scenarios examined. More practically, I find that analysts will correctly value a scale enhancing project (i.e., a project of the same risk class as the firm funded at the firm’s observable leverage ratio) by discounting its net cash flows at the firm’s observable weighted average cost of capital regardless of the actual way the project’s cash-flow risk actually resolves. However, analysts will misvalue projects involving changes in leverage ratio if they use a weighted average cost of capital implied by a family of capital structure relations inconsistent with the way the project’s cash-flow risk resolves (e.g., valuation errors result when analysts use Modigliani and Miller’s marginal cost of capital in the real world). Employing standard alternatives to traditional weighted average cost of capital valuation (e.g., Myers’ APV and Ruback’s Capital Cash Flow approach) does not solve this problem). More generally, I show that practitioners best not approach project (or firm) valuation with a one-size-fits-all or favorite set of valuation equations. Rather, they must be guided by their best understanding of the way the project’s cash-flow risk resolves, hope that understanding is correct, and employ the family of relations consistent with that understanding.
    Date: 2022–07–15
  3. By: Assis de Salles, Andre
    Abstract: The Covid-19 Pandemic affects social and economic relations in all national economies and the world economy, and their financial markets. Investment and production financing in economies takes place through these markets, in particular in the capital market. The idiosyncratic risk represents the risk associated only with a specific productive project, with an economic sector, or with a specific national economy. This work aims to estimate the idiosyncratic risk of the Brazilian economy, through heteroscedastic conditional models, to verify the initial impact of the Covid-19 Pandemic on the risk associated with productive projects developed in the Brazilian and emerging economies, and to their financing and investments. Daily data in US$, covers the period from June 30, 2017 to July 1, 2020, were used.
    Keywords: Covid-19 Pandemic; Idiosyncratic Risk; Brazilian Economy; Emerging Economies.
    JEL: C22 F65 G01 G1 G12 N2
    Date: 2021–03
  4. By: Lamiae Benhayoun-Sadafiyine (LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], TIM - Département Technologies, Information & Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris]); Marie-Anne Le Dain (G-SCOP_CC - Conception collaborative - G-SCOP - Laboratoire des sciences pour la conception, l'optimisation et la production - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Carine Dominguez-Péry (CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes); Andrew C. Lyons (University of Liverpool)
    Abstract: SMEs increasingly participate in collaborative innovation networks (CINs), enabling them to access valuable external knowledge from other actors while maintaining high levels of internal competencies. The SME absorbs this knowledge to achieve reciprocal learning through its contribution to the common CIN goals, and one-way learning to improve its own organization's performance. This knowledge absorption varies according to the SME's context, described with factors such as the turbulence of its external environment, the motivations to contribute to the CIN, or the cognitive distance separating it from the network actors. To better guide this knowledge absorption, this research uses a two-stage mixed method to propose a contextualized operational measure of absorptive capacity (ACAP) for an SME embedded in a CIN. A qualitative phase consisting of semi-structured interviews was implemented first and enabled characterizing the SME's ACAP through a set of practices and dimensions that it could implement. Then a quantitative phase using the partial least squares (PLS) method established a model predicting the absorption dimensions and practices that the SME should master primarily according to its context in the CIN. Hence, this study provides SMEs with an instrument to assess their strengths and weaknesses with regard to ACAP in CINs.
    Keywords: SME,Collaborative network,Open innovation,Absorptive capacity,Inter-organizational learning,Partial least squares
    Date: 2020–10
  5. By: Dilmetz, Daniel
    Abstract: This dissertation aims to answer current research questions related to entrepreneurship. Since the works of Joseph Schumpeter (1883 - 1950), who attributed the development of capitalism to entrepreneurship, it has been one of the most important factors influencing technological progress and the growth of economic structures. The motives of a person to become an entrepreneur are complex. While some founders actively pursue the goal of realizing themselves and being able to act autonomously, others discover an opportunity and develop an entrepreneurial initiative from this discovery, which ultimately results in their entrepreneurial action. Also, the change of circumstances, the environment, or other regularities can an individual to recognize an entrepreneurial opportunity. Ourselves have been experiencing such a change since the year 2020 when the Covid-19 pandemic changed our lives to an extent unimagined at that time. As a result, new problems of everyday life also arose, which were not infrequently addressed by innovations from start-up companies to ensure the safety of society in these times and still allow normal life to continue. Two years later, taking advantage of the technologies that have emerged, we have adapted. We now carry our vaccination records digitally at all times, use apps on our smartphones to track our whereabouts, and traditional meetings in our workday are replaced by digital meetings using apps like Zoom or Teams. Society is evolving and using the products and services of innovative young companies to counter the ”new now” and move on with life. In line with the high relevance of entrepreneurship for economic and social development and the advance of technological progress, research in this field has also expanded rapidly in recent decades, encompassing a considerable number of sub-fields. However, two questions, in particular, preoccupy this field of research: The origin of entrepreneurs and how they differ from other individuals, and the question of how entrepreneurs can exercise sustainable successful entrepreneurship. Concerning the origin of the entrepreneur, the question of whether founders are born or if the skills needed for successful entrepreneurship can be learned has prevailed almost since the beginning of research in the field of entrepreneurship. In the context of this question, educational institutions such as universities are the focus of research endeavors. Concerning the sustainable success of an enterprise, the acquisition of the necessary resources is crucial. In particular, securing financial resources is the most important challenge for the entrepreneur. From these two points of view, two of the largest scopes of research in the field of entrepreneurship have developed over the past decades: entrepreneurial education and entrepreneurial finance. This dissertation consists of a total of three studies that provide new insights in both areas and thus make a significant contribution to current entrepreneurial research. The first study focuses on the field of entrepreneurial education and investigates how the university ecosystem can influence students' innovation skills. Based on a survey of over 300 students before and after their first year within the university, we demonstrate in this study that individual elements of the university ecosystem can indeed have a positive impact on students' entrepreneurial development. Thus, this study also indicates through empirical findings that individuals can indeed learn the skills for successful entrepreneurial actions, thereby underscoring universities' role and relevance in this endeavor. The second and third studies deal respectively with the field of entrepreneurial financing, referring to a still rather young phenomenon in this field: crowdfunding as an alternative to traditional financing options such as venture capital financing. The second study examines how the use of words associated with creativity in the presentation of a crowdfunding campaign can affect its likelihood of success. This study is based on a dataset of more than 39,000 crowdfunding projects conducted between 2009 and 2019. The results of the study indicate that the use of words associated with creativity, when used to describe the campaign, has significant potential to in-crease the campaign's likelihood of success. This study thus makes a further contribution in terms of identifying signals for reducing information asymmetries between founders and investors. The third study then examines how project initiators can and should inform their supporters about the current status of the campaign. Using a dataset of 909 crowdfunding projects, this study investigates which topics have a particularly high potential to convince potential supporters of the quality of the project and, as a result, to make a financial contribution to the project through this information tool ("updates"). Each study discussed in this dissertation will be conducted with the help of empirical methods. The empirical methodology is explained in detail in each underlying chapter. Likewise, each underlying chapter of a study first deals with an overview of the current state of research and the derivation of the hypotheses related to the respective study. Subsequently, the empirical results of each study are presented and dis-cussed in detail. The final section of this dissertation summarizes the theoretical and practical contribution of the results obtained.
    Date: 2022
  6. By: Dezhina Irina (Gaidar Institute for Economic Policy)
    Abstract: In 2021, the sphere of science underwent institutional changes connected with completion of the system of state management of science. Collegiate bodies were created, which contribute to the strengthening of centralization and unification of accountability for budget financing. The state program of scientific and technological development was formed, which now combines all budget expenditures for civil research and development. Priority support for university science continued with a stronger focus on practical applications. The influence of the pandemic was clearly noticeable in the field of technological innovations. There was a reduction of internal expenses of companies on research and development with a simultaneous decrease in the intensity of partnerships with academic institutions and universities.
    Keywords: Russian economy, R&D, science, technology
    JEL: O31 O32 O3 I28 I2
    Date: 2022

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