Impact of economic and technical uncertainties on dynamic new product development

Tao Yao, Bin Jiang, Hongcheng Liu

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

A new product development process is usually under economic and technical uncertainties, and adjustable to the arrival of new information. As a result, new product development is not a one-time decision but a dynamic process under uncertainties. This paper applies repeated real options to derive optimal decision-making rules for a firm that faces two repeated options: 1) an incremental innovation project that is relatively easy to be developed and 2) a radical innovation project that offers superior performance but its development is much more difficult. Our findings can help firms make dynamic investment decisions on coexisting new product development projects.

Original languageEnglish (US)
Article number6193169
Pages (from-to)157-168
Number of pages12
JournalIEEE Transactions on Engineering Management
Volume60
Issue number1
DOIs
StatePublished - Jan 1 2013

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Electrical and Electronic Engineering

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