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on Project, Program and Portfolio Management |
| By: | Lucas B\"ottcher; Ronald Klingebiel |
| Abstract: | Budgetary constraints force organizations to pursue only a subset of possible innovation projects. Identifying which subset is most promising is an error-prone exercise, and involving multiple decision makers may be prudent. This raises the question of how to most effectively aggregate their collective nous. Our model of organizational portfolio selection provides some first answers. We show that portfolio performance can vary widely. Delegating evaluation makes sense when organizations employ the relevant experts and can assign projects to them. In most other settings, aggregating the impressions of multiple agents leads to better performance than delegation. In particular, letting agents rank projects often outperforms alternative aggregation rules -- including averaging agents' project scores as well as counting their approval votes -- especially when organizations have tight budgets and can select only a few project alternatives out of many. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.09843&r= |
| By: | Alessandro Lizzeri; Eran Shmaya; Leeat Yariv |
| Abstract: | Starting from Robbins (1952), the literature on experimentation via multi-armed bandits has wed exploration and exploitation. Nonetheless, in many applications, agents' exploration and exploitation need not be intertwined: a policymaker may assess new policies different than the status quo; an investor may evaluate projects outside her portfolio. We characterize the optimal experimentation policy when exploration and exploitation are disentangled in the case of Poisson bandits, allowing for general news structures. The optimal policy features complete learning asymptotically, exhibits lots of persistence, but cannot be identified by an index à la Gittins. Disentanglement is particularly valuable for intermediate parameter values. |
| JEL: | C73 D81 D83 O35 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32424&r= |
| By: | Amendolagine, Vito; Crescenzi, Riccardo; Rabellotti, Roberta |
| Abstract: | This paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all Foreign Direct Investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm-level characteristics in investment decisions. The empirical results show that - other things being equal - regions with stronger investment eco-systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI. |
| Keywords: | foreign direct investment; greenfield investment; cross-border acquisitions; multinational enterprises; firm heterogeneity; regions; European Union; institutions; European Union Horizon 2020 Programme H2020/2014-2020 (Grant Agreement n 639633-MASSIVE-ERC-2014-STG).; Wiley deal |
| JEL: | R12 R58 F23 |
| Date: | 2024–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122662&r= |
| By: | Paul Waidelich; Joscha Krug; Bjarne Steffen |
| Abstract: | Policymakers regularly rely on public financial institutions and government offices to provide loans for clean energy projects. However, both the market failures that public loan provision addresses and its role in a policy strategy that also features instruments directly addressing environmental and innovation externalities remain unclear. Here, we develop a model of banks providing loans for clean energy projects that use a novel technology. This early-stage lending builds up banks’ financing experience, which spills over to peers and hence is undersupplied by the market. In addition to this cooperation problem, bankability requirements can result in a coordination failure whereby the banking sector remains stuck in an equilibrium with no loans for the novel technology even when a preferable equilibrium with loans exists. Public provision of early-stage loans is inferior to de-risking instruments in solving this cooperation problem because it crowds out private banks’ loan provision. However, public loan provision—ideally in combination with additional de-risking measures to support banks in internalizing learning spillovers—can more effectively resolve the coordination failure by pushing the banking sector to a better equilibrium. |
| Keywords: | climate policy, credit guarantees, government loans, multiple equilibria, renewable energy, state investment bank |
| JEL: | G21 H81 Q48 Q55 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11118&r= |