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Multi-Attribute Investment Decisions: A Study of R&D Project Selection


  • S. L. Schwartz

    (University of British Columbia)

  • I. Vertinsky

    (The International Institute of Management, Berlin)


In evaluating R&D opportunities executives make tradeoffs among three classes of attributes: commitment of resources, expected payoff, and risk. The focus of this study of Canadian top executives and R&D managers is the investigation of these tradeoffs and how they differ among executives and industries. On the basis of judgments of sixty hypothetical projects, alternative individual and group models were estimated using regression and discriminant analysis procedures. The results indicate that linear models provide good fit with observations of R&D investment judgments and that differences in tradeoffs between risk and rates of return can be related to the characteristics of the executives and their work environments. This information is useful for predicting R&D investment portfolios in an environment of changing opportunities.

Suggested Citation

  • S. L. Schwartz & I. Vertinsky, 1977. "Multi-Attribute Investment Decisions: A Study of R&D Project Selection," Management Science, INFORMS, vol. 24(3), pages 285-301, November.
  • Handle: RePEc:inm:ormnsc:v:24:y:1977:i:3:p:285-301

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    References listed on IDEAS

    1. Jacob A. Mincer & Victor Zarnowitz, 1969. "The Evaluation of Economic Forecasts," NBER Chapters,in: Economic Forecasts and Expectations: Analysis of Forecasting Behavior and Performance, pages 3-46 National Bureau of Economic Research, Inc.
    2. N/A, 1962. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 19(1), pages 3-3, February.
    3. N/A, 1962. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 20(1), pages 3-3, May.
    4. N/A, 1962. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 21(1), pages 3-3, August.
    5. J. G. Cragg & Burton G. Malkiel, 1968. "The Consensus And Accuracy Of Some Predictions Of The Growth Of Corporate Earnings," Journal of Finance, American Finance Association, vol. 23(1), pages 67-84, March.
    6. N/A, 1962. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 22(1), pages 3-3, November.
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    Cited by:

    1. Riggle, Charlene & Madey, Gregory, 1997. "An analysis of the impact of chaotic dynamics on management information flow models," European Journal of Operational Research, Elsevier, vol. 103(1), pages 242-254, November.
    2. Supachart Iamratanakul, 2013. "The Selection of Project in Rapid Environment’s Industry Using Zero Based Budget," Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management, ToKnowPress.

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