The measurement and management of risk in R&D and innovation
by Derek Bosworth, Gregory Jobome
International Journal of Technology Management (IJTM), Vol. 18, No. 5/6/7/8, 1999

Abstract: This paper focuses on the issue of risk in the R&D and innovation processes. It examines the degree of risk suggested by the four main streams of the literature. While risk has not been a major focus of the empirical literature, the results suggest that the vast majority of inventions are worth relatively little, while a small proportion are extremely valuable. The second part of the paper argues that the net present value rule may not be appropriate in the presence of high risk, and the R&D decision may require an optimal stopping rule, which gives very different results. Adopting an optimal stopping rule in the face of a normal distribution of annual gross returns, the lifetime distribution of returns are similar to those observed in the real world. In addition, it is possible to use the results to replicate the observed behaviour of patent renewals.

Online publication date: Sun, 06-Jul-2003

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Technology Management (IJTM):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com