A Lack of Insight: An Experimental Analysis of R&D Managers’ Decision Making in Innovation Portfolio Management

Abstract

This study analyses the decision to exploit an innovation project and investigates differences in individuals’ evaluations of project attributes in the context of innovation project portfolio management. A conjoint field experiment was used to collect data on exploitation decisions made by 126 research and development (R&D) managers to test how managers evaluate specific project attributes in the context of innovation project portfolio management. I analyse the relative power and popularity of profitability, strategy, uncertainty and social dimensions of the portfolio while R&D managers exploit an innovation project. Moreover, using social judgement theory, I analyse actual exploitation processes (i.e., the innovation attributes an R&D manager considers while he or she is making an exploitation decision) and self‐reported decision‐making attributes (i.e., managers’ self‐reported data). The data underline that R&D managers value specific project attributes more and others less, and therefore find disparities in innovation project portfolio decision making. Based on this study's results, decision makers are better able to reflect and understand the influence of specific project attributes. Therefore, they should investigate established decision‐making processes which can help them to improve portfolio performance.

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