Do manager's heuristics affect R&D performance volatility?
Subtitle: a simulation informed by the pharmaceutical industry
By: Francesca Gino, Gary Pisano
Edition: Rev. 2
Series: Working paper / Division of Research, Harvard Business School -- 05-015; Working paper (Harvard Business School. Division of Research) -- 05-015
Publisher: Division of Research, Harvard Business School
Published: 2006
Place of publication: Boston
Language: eng
Number of pages: 32
Description: R&D performance volatility plays a critical role in various industries. Prior work in the innovation and product development literature has examined the factors influencing various dimensions of R&D performance. However, still little is known about the volatility of R&D output over time at the firm level. In this paper, we use a simulation model to explore such phenomenon, with a specific focus on the pharmaceutical industry. We argue that the fluctuations in R&D performance over time, while rooted in the uncertainty characterizing the development process, can be exacerbated by the heuristics decision makers use in managing the firm's R&D project portfolio. In particular, we focus on the impact on volatility of two types of heuristics: resource allocation and project termination strategies. Implications for both research and management practice are discussed.
Notes: "Draft: February 12, 2006"--Added t.p.

Previously published as: R & D performance volatility: a behavioral model. c2004.

Includes bibliographical references.