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Organizational Selection of Innovation

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  • Lucas Bottcher
  • Ronald Klingebiel

Abstract

Budgetary constraints force organizations to pursue only a subset of possible innovation projects. Identifying which subset is most promising is an error-prone exercise, and involving multiple decision makers may be prudent. This raises the question of how to most effectively aggregate their collective nous. Our model of organizational portfolio selection provides some first answers. We show that portfolio performance can vary widely. Delegating evaluation makes sense when organizations employ the relevant experts and can assign projects to them. In most other settings, aggregating the impressions of multiple agents leads to better performance than delegation. In particular, letting agents rank projects often outperforms alternative aggregation rules -- including averaging agents' project scores as well as counting their approval votes -- especially when organizations have tight budgets and can select only a few project alternatives out of many.

Suggested Citation

  • Lucas Bottcher & Ronald Klingebiel, 2024. "Organizational Selection of Innovation," Papers 2405.09843, arXiv.org.
    • Handle: RePEc:arx:papers:2405.09843
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    File URL: http://arxiv.org/pdf/2405.09843
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    References listed on IDEAS

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    1. Nathan R. Furr & J. P. Eggers, 2021. "Behavioral Innovation and Corporate Renewal," Strategic Management Review, now publishers, vol. 2(2), pages 285-322, September.
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    Cited by:

    1. Yurun Ge & Lucas Bottcher & Tom Chou & Maria R. D'Orsogna, 2025. "Efficient Portfolio Selection through Preference Aggregation with Quicksort and the Bradley--Terry Model," Papers 2504.16093, arXiv.org.

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