Comparative Analysis of R&D Investment Models

Abstract

Many prescriptive models have been developed to aid R&D managers in comparing, evaluating and selecting alternative projects, but few of these models have been carefully evaluated for their usefulness. Consequently, little is known about their comparative suitability for routine use. A recently established methodology now makes it feasible to assess and catalog the relative suitability of these models with respect to selected performance dimensions. This study utilizes this methodology to develop performance profiles and assess the relative degrees of usefulness of 41 R&D investment models, which were selected from the literature so as to represent a cross section of model characteristics. Six generic model types were examined: linear, nonlinear, zero-one, scoring, profitability index, and utility models. Profitability index and scoring types of models were found to have the easiest usability and the lowest cost performance characteristics, while the linear, nonlinear and zero-one models had the highest realism, flexibility and capability. The utility models were generally inferior in nearly all the performance dimensions studied here.