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Improving the Management of Innovation Risks - R&D Risk Assessment for Large Technology Projects

Author

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  • Ralf Dillerup
  • Daniela Kappler
  • Fiona Oster

Abstract

Global network structures of products and services are important value creators for many companies. Complex business models include a variety of relationships and interrelationships within and across different systems particularly in the case of innovation processes. This increases innovation risks. Risk management is becoming more and more important and is crucial for the German Machinery and Plant Engineering Industry (MPEI). Many companies are medium-sized and are using standard static risk management methods. Use of these methods often means that critical situations are detected late, they do not help in the understanding of problem characteristics and their interdependencies and, consequently, lead to erroneous decisions. Therefore, the modelling of cause-and-effect structures of innovation risks in the German MPEI facilitates the exploration and understanding of the behavioral dynamic of risk clusters. In a comparison of standard risk assessment with the Causal Loop Diagram and the System Dynamics Model of Innovation Risks, the potential of System Dynamics for systemic and multi-dimensional risk management is demonstrated. In this paper, particular emphasis is given to the risk of shortages of skilled workers from a common and System Dynamics perspective. This is relevant as these shortages are the main risk associated with innovation, impacting on project timings, output and performance amongst others. The research concludes that the development of specific System Dynamic models can help to overcome certain problems and incorporate multi-causal interconnections and multidimensional views on risk.

Suggested Citation

  • Ralf Dillerup & Daniela Kappler & Fiona Oster, 2018. "Improving the Management of Innovation Risks - R&D Risk Assessment for Large Technology Projects," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 9(1), pages 31-52, February.
  • Handle: RePEc:jfr:jms111:v:9:y:2018:i:1:p:31-52
    DOI: 10.5430/jms.v9n1p31
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    References listed on IDEAS

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    1. Nicholas C. Georgantzas & Evangelos G. Katsamakas, 2008. "Information systems research with system dynamics," System Dynamics Review, System Dynamics Society, vol. 24(3), pages 247-264, September.
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    Cited by:

    1. Kashan, Alireza Javanmardi & Lay, Janine & Wiewiora, Anna & Bradley, Lisa, 2022. "The innovation process in mining: Integrating insights from innovation and change management," Resources Policy, Elsevier, vol. 76(C).

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