Title: Financial models insights of strategic R&D project investments

Authors: Wesley L. Harris; Jarunee Wonglimpiyarat

Addresses: Department of Aeronautics and Astronautics, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139, USA ' Department of Aeronautics and Astronautics, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139, USA

Abstract: This paper analyses strategic implications of using the financial models to evaluate research and development (R&D) project investments. It also discusses the challenges of intellectual property (IP) valuation. This paper reveals how conventional financial models fail to recognise the importance of strategic positioning since there are limits in terms of using the quantified approaches to measure R&D performance. From the technology management perspective, it is argued that financial models need to be reconciled with technology strategies since today's investments have linkages with firms' competitiveness in the long run.

Keywords: financial models; technology management; net present value; NPV; internal rate of return; IRR; Black-Scholes; capital asset pricing model; CAPM.

DOI: 10.1504/IJBIR.2020.110963

International Journal of Business Innovation and Research, 2020 Vol.23 No.3, pp.384 - 399

Received: 13 Jul 2018
Accepted: 06 Jun 2019
Published online: 03 Nov 2020 *

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