Selection and Evaluation of Innovation Projects

Haustein, H.-D. & Weber, M. (1980). Selection and Evaluation of Innovation Projects. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-80-151

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Abstract

This working paper presents the first step of an ongoing research project which will be continued during the next few years at the University of Economic Sciences in Berlin.

The subject of this paper is the decision-making process for decisions on innovations. During the past three decades considerable efforts have been devoted to investigating the role and importance of innovations for the growth and prosperity of firms both in market and planned economies. Effective management of innovations is a decisive factor in their development. A certain increase of funds devoted to R&D does not result in an appropriate increase of output in terms of productivity. Problems of an "optimal" management of innovations are investigated in many countries.

The study was initiated by decision-makers of a particular industrial branch in the GDR. An analysis of the advantages and disadvantages of the decision-making process revealed the necessity of a decision support system. The approach developed is tailored to the case study but is general in several aspects. This paper describes a model for resource allocation in R&D which is well suited for our case study. The choice of the model type was based on an analysis both of the decision-making process in the particular firm and of existing models for this purpose.

A combination of innovation theory and economic-mathematical methods for aiding decisions is from our viewpoint a necessary condition for a successful development and implementation of a system we are aiming at.

A system of this kind will improve the decision-maker's understanding of the relationship between the long-term development of the firm and the resource allocation in R&D.

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