Firms have to balance the costs and risks associated with investments in new products and the opportunities from pursuing a large number of innovation options at the same time. Real options logic suggests that sequential investments offer access to potential revenue opportunities while containing initial capital outlays. The project will investigate the relationship between a firm’s flexibility in allocating resources for new product development and innovation success. We will analyse the effects of sequencing investment in the development of new products as a way to gradually reduce uncertainty over the likely success of innovation projects while controlling for several mediating variables. In addition, we analyse the organisational and managerial features of firms that are relatively more successful in allocating resources dynamically across innovation projects. We will draw conclusions for innovation policy on how to consider sequencing of resource allocation over the life-time of funded R&D projects in public funding schemes.

The research programme "Strengthening Efficiency and Competitiveness in the European Knowledge Economies (SEEK)" is funded by the State of Baden-Württemberg.