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Real Options Decision Framework for Research and Development: A Case Study on a Small Canadian High-Technology Start-Up

  • Author / Creator
    Mattar, Sally J
  • Research and Development (R&D) projects can be both innovative and highly uncertain. Allowing for managerial flexibility and adopting real options methods and incorporating technology readiness level scales to assess the maturity of technologies progressing through development stages, can help managers hedge the unforeseen risks that arise during these stages. Managers can make decisions that avoid the downside and capture the upside of these risks. This methodology is a decision-making framework for research organizations, where potential values of decisions and projects across a portfolio can be evaluated. The proposed framework analyzes the risks as they progress through the technology readiness level scale, and enables R&D management to play active roles in project evaluations and justify continued spending on risky, long term projects that are expected to be of high future value, an area where traditional valuation methods fall short. A case study on a small Canadian technology start-up is used to discuss the importance of adopting the proposed methodology.

  • Subjects / Keywords
  • Graduation date
    2017-11:Fall 2017
  • Type of Item
    Thesis
  • Degree
    Master of Science
  • DOI
    https://doi.org/10.7939/R39Z90R9X
  • License
    This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.
  • Language
    English
  • Institution
    University of Alberta
  • Degree level
    Master's
  • Department
    • Department of Mechanical Engineering
  • Specialization
    • Engineering Management
  • Supervisor / co-supervisor and their department(s)
    • Michael Lipsett (Mechanical Engineering)
  • Examining committee members and their departments
    • Lianne Lefsrud (Chemical & Materials Engineering)
    • Pedram Mousavi (Mechanical Engineering)