Parallel R&D Paths Revisited
This paper revisits the logic of pursuing parallel R&D paths when there is uncertainty as to which approaches will succeed technically and/or economically. Previous findings by Richard Nelson and the present author are reviewed. A further analysis then seeks to determine how sensitive optimal strategies are to parameter variations and the extent to which parallel and series strategies are integrated. It pays to support more approaches, the deeper the stream of benefits is and the lower is the probability of success with a single approach. Higher profits are obtained with combinations of parallel and series strategies, but the differences are small when the number of series trial periods is extended from two to larger numbers. A "dartboard experiment" shows that when uncertainty pertains mainly to outcome values and the distribution of values is skew-distributed, the optimal number of trials is inversely related to the cost per trial.
|Date of creation:||2011|
|Date of revision:|
|Publication status:||Published in HKS Faculty Research Working Paper Series|
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- F. M. Scherer, 1967. "Research and Development Resource Allocation Under Rivalry," The Quarterly Journal of Economics, Oxford University Press, vol. 81(3), pages 359-394.
- Horst Hanusch & Andreas Pyka (ed.), 2007. "Elgar Companion to Neo-Schumpeterian Economics," Books, Edward Elgar, number 2973.
- Scherer, F. M. & Harhoff, Dietmar, 2000. "Technology policy for a world of skew-distributed outcomes," Research Policy, Elsevier, vol. 29(4-5), pages 559-566, April.
- William J. Abernathy & Richard S. Rosenbloom, 1969. "Parallel Strategies in Development Projects," Management Science, INFORMS, vol. 15(10), pages B486-B505, June.
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