Economic analyses for the evaluation of is projects

Information system projects usually have numerous uncertainties and several conditions of risk that make their economic evaluation a challenging task. Each year, several information system projects are cancelled before completion as a result of budget overruns at a cost of several billions of dollars to industry. Although engineering economic analysis offers tools and techniques for evaluating risky projects, the tools are not enough to place information system projects on a safe budget/selection track. There is a need for an integrative economic analysis model that will account for the uncertainties in estimating project costs benefits and useful lives of uncertain and risky projects. The fuzzy set theory has the capability of representing vague data and allows mathematical operators and programming to be applied to the fuzzy domain. The theory is primarily concerned with quantifying the vagueness in human thoughts and perceptions. In this article, the economic evaluation of information system projects using fuzzy present value and fuzzy B/C ratio is analyzed. A numerical illustration is included to demonstrate the effectiveness of the proposed methods

Fuzzy Systems in Business Valuation

This research aims to develop a model that is able to integrate and objectify information provided by the different business valuation methods, incorporating quality management in its formal approach, which to date has not been considered in the literature about business valuation or quality management. Firstly, the company is valued using the methods which best adapt to its specific characteristics. Because of the subjectivity inherent in any valuation process, the results will be expressed through Triangular Fuzzy Numbers (TFN). These Fuzzy Numbers will be aggregated and summarized by applying Basic Defuzzification Distribution Uncertain Probabilistic Ordered Weighted Averaging operator (BADD-UPOWA). The weighting factors will be: the degree of confidence in each of the business valuation methods applied, and the innovative use of the company’s position on Crosby’s Quality Administration Grid. The results from application of the model in a case study show a significant reduction in uncertainty in contrast to the initial valuations. Moreover, the proposed methodology is seen to increase the final value of the company as its advances in quality management

Exploring the design and development of the real value (RV) methodology : a value-based business development leadership metrics system.

Thesis (M.Sc.)-Unversity of KwaZulu-Natal, Durban, 2009.The dissertation explores and explains the design and development of the researcher's Real Value© methodology, through participative action research. The action research (participative exploratory research) was undertaken in the form of professional pilot projects as real world commercial research, for the formulation and emergence of the value-based business development leadership metrics system: The Real Value© Methodology. The outcomes of the action research are captured in select strategic knowledge reports (i.e. client pilot project research reports) which demonstrate the emergence of the Real Value© methodology, in the client and commercial context, through the entire action research process. The clients were contracted on a professional basis and the fees generated from the commercial projects were utilised to fund the resources required to do the knowledge investigations of the client organisations. The methodology was intended as a strategic management system, and subsequently developed, through the action research and pilot projects, into a value-based business development leadership metrics system. The Real Value© methodology aims to create, develop and measure the real value of intangible assets (vs. physical assets) in a continuous and discontinuous process of business development: value that is created and sustained through the highest and best application and utilisation of intangible assets in the knowledge (and industrial) economic context. (Intangible assets herein classified as brand, intellectual property, technology, and human and customer capital). The participative action research was originally inspired by the first Module of the MSc programme 'Managing Complexity' facilitated by Professor Steen Martiny (Copenhagen Business School) during the comparative exercise on 'Extraordinary and Ordinary Management', and specifically during the reading of the first precept of Stacey's (2000) 'Extraordinary Management Theory': "Detect and attract attention to important external and internal issues, ordinarily not noticed." The above precept captures the essence and intrinsic motivation of the researcher for undertaking and performing the participative action research of the dissertation. The dissertation explains the real world professional pilot projects and participative exploratory action research that was undertaken by the researcher in the design and development of the Real Value© methodology

Essays on ownership and innovation

Tesis por compendio de publicacionesWe investigate three distinct ‘bridges’ between companies’ ownership characteristics and innovation. In the first chapter, we take an exploratory empirical approach to investigate the effect of going public on the risk-reward characteristics of the innovation portfolio. We argue that an IPO is a life-changing event that encompasses many changes that concur to impact the risk-reward characteristics of the innovation portfolio. However, we expect that an IPO is a more severe event for companies that were originated as new and independent entities, and remain independent till the IPO event – emerging growth companies – than it is for other companies – non-emerging growth companies. We find that going public does not affect the risk-reward characteristics of nonemerging companies. For emerging growth companies we find that the risk-reward characteristics of the innovation portfolio are: positively impacted by going public; and, negatively impacted by the percentage of shares offered at the IPO. In the second chapter, we investigate pharmaceuticals’ decision between acquiring and allying with a biotechnological, after recombinant DNA. The discovery of RDNA represented an R&D competence-destroying event for incumbent pharmaceutical companies. As a response to that, organizational deals – namely, strategic alliances and mergers and acquisitions – have been extensively used as external sources of knowledge. We examine a potential determinant of pharmaceuticals’ decision between these two alternatives: the width of applicability of the internal knowledge of the biotechnological company. We find compelling evidence that it has a positive effect on the likelihood that the pharmaceutical company acquires (or merges with) that biotechnological company. In the third chapter, we examine the impact of SOX Section 404 on long-term investment of small innovative companies. We hypothesise that R&D intensity increases the impact of SOX 404 on long-term investment. Making use of a quasinatural experiment, our results suggest that the impact of SOX Section 404 on companies’ long-term investment is uneven, favouring R&D intensive companies. This may call for a re-centring of policy discussion around the distribution of the net benefit of coercive financial disclosure programs versus the overall economic impact of those programs.Initial Public Offer and the Risk-Reward Characteristics of the Innovation Portfolio (pp. 1-39). -- Pharmaceuticals’ R&D After Recombinant DNA: the decision between acquiring and allying with a biotechnological (pp. 40-72). -- The Effect of SOX Section 404 on Long-Term Investment of Small Innovative Companies (pp. 73-105).Programa Oficial de Doctorado en Empresa y Finanzas / Business and FinancePresidente: Marco Giarratana.- Secretario: Ester Martínez Ros.- Vocal: Andrés Barge Gi

An Enhanced Evaluation Framework for Defence R&D Investments under Uncertainty

Ph.DDOCTOR OF PHILOSOPH

Decision-making and the role of feedback in complex tasks

This thesis investigates the process of decision-making in relation to complex tasks and considers the important role which dynamic information and real-time feedback play in shaping response behaviour and adaptation within such environments. Through empirical studies, the thesis explores the extent to which decision-makers can be said to act rationally when challenged by complex decision-making environments. Evidence relating to demand for information and the impact of feedback on behaviour is provided with two studies: The first uses a simulated auction platform to examine behaviour within overlapping auctions of short duration with close-to-identical items and minimal participation costs. Mouse tracking is used to capture data on relevant interactions of participants with the simulated online platform, including switching behaviour independent of bidding. The resulting data suggests that participants did behave in a manner consistent with utility maximisation, seeking to acquire the item at the lowest possible price and showing no bias in terms of auction preference. The impact of fixed-price offers in the form of a “Buy it Now” option is also examined with some evidence that participants again seek, and respond to, current information when deciding on their bidding strategy. The second study is a test of the impact of real-time feedback and demand for information within the context of financial markets. The study again uses a novel simulated environment which provides access to considerable amounts of relevant data which participants can choose to access. In addition, participants are exposed to regular feedback with regard to their own performance. Overall, demand for information is found to be dependent upon the type of feedback received and its context. Decision-makers then appear to behave objectively, apparently seeking the latest available information to support current decisions, although investor style is found to be important in determining overall trading propensity. The thesis starts by considering a number of the foundations and pathways which run through the judgment and decision-making literature. It is not a complete description, review or analysis of all of the prevailing lines of enquiry. Nevertheless, it seeks to achieve coherence in terms of bringing together some of the key themes dealing with risky choice under conditions of uncertainty and ambiguity. The field of judgment and decision-making is inevitably vast; its scope owing much to the fact that it transcends individual disciplines. The emergent behavioural sciences thus draw together important strands from various sources, notably Economics and Finance. In many areas, psychological traits can be applied to explain inconsistencies which are found in classical theory of rational behaviour. The recognition of behavioural traits has thus contributed greatly to the evolution of decisionmaking theories under conditions of uncertainty and ambiguity which are, in many cases, substantially more adaptable and robust than early normative theories of rational behaviour. The classical approach to rational decision making within Economics, together with some theoretical and empirical challenges to it, are considered in Chapter 1. It is here that we are introduced to the Rational Man. Like the mythical creatures found in Classical Antiquity, the Rational Man does not actually exist in the real world; he is nevertheless central to the concept of utility maximising rational choice which provided much of the foundation of Economics. Developments of expected utility theory (EUT) are considered, including its replacement of expected value, and the formalisation of rational behaviour within the context of axioms. When those logical axioms apply, decision-makers can be said to behave 'as if' they are utility maximises. The chapter ends with some empirical evidence, showing the types of approaches often used to explore rational decision-making. Some violations of EUT are explored, both in relation to notional gambles and consistency with regard to revealed preferences. Chapter 2 extends the narrative by considering rational decision-making in cases where there is no objective information about possible outcomes. Subjective utility theory (SEU) is then introduced, describing objective functions based upon preferences derived from combined utility and probability functions. The implications of the Allais’ and Ellsberg paradoxes are discussed, along with some possible solutions. It is here that we explore the concepts of uncertainty and ambiguity in more details and consider some theoretical formulations for addressing them. Chapter 3 covers the significant contribution to decision-making under conditions of uncertainty provided by Prospect Theory and, later, Cumulative Prospect Theory (CPT). Their evolution from the pioneering work of Markowitz is discussed within the context of reference points relative to which outcomes can be evaluated. The significance of stochastic dominance and rank dependence are explored. By this stage, we have examined numerous theories which have fundamentally transformed standard EUT into much more flexible and adaptable frameworks of rational choice. The core concepts of utility maximisation remain yet the initial, strictly concave utility function describing diminishing marginal utility is now substantially replaced by more complex weighted preference functions. From this theoretical base, the process of choice reduction and the application of heuristics in decision-making are considered. We again describe axiomatic behaviour compatible with rational choice. Therefore, decision-makers faced with multiple choices about which there may be little or no objective information about likely outcomes can nevertheless develop rational beliefs and expectations which can then be applied to reduce complex tasks to more manageable proportions. As well as considering these aspects from the point of view of actual choices, we also consider the processes by which decisions are taken. Thus, process tracing methods are introduced into the discussion. The chapter also explicitly considers the role of feedback in decision making. This includes a consideration of Bayesian inference as a process for updating probabilistic expectations subject to new information. From considering theoretical formulations form which we can judge rational behaviour, Chapter 5 looks at evidence for sub-optimal decision-making and bias. Bias with regard to probability assessments are considered along with empirical evidence of bias in relation to intertemporal discounting. Sunk cost bias is also considered as a clear example of irrational behaviour, leading in to a specific discussion about a number of persistent behavioural biases identified within financial markets. As an introduction to later chapters, this also covers the basic theoretical principles of market efficiency and evidence that real markets fail to adhere to those principles in important ways. Chapters 6 and 8 describe the empirical studies with Chapter 7 providing a more detailed introduction to the financial markets experiment, considering aspects of market efficiency, models of behaviour and other empirical evidence

ERP implementation methodologies and frameworks: a literature review

Enterprise Resource Planning (ERP) implementation is a complex and vibrant process, one that involves a combination of technological and organizational interactions. Often an ERP implementation project is the single largest IT project that an organization has ever launched and requires a mutual fit of system and organization. Also the concept of an ERP implementation supporting business processes across many different departments is not a generic, rigid and uniform concept and depends on variety of factors. As a result, the issues addressing the ERP implementation process have been one of the major concerns in industry. Therefore ERP implementation receives attention from practitioners and scholars and both, business as well as academic literature is abundant and not always very conclusive or coherent. However, research on ERP systems so far has been mainly focused on diffusion, use and impact issues. Less attention has been given to the methods used during the configuration and the implementation of ERP systems, even though they are commonly used in practice, they still remain largely unexplored and undocumented in Information Systems research. So, the academic relevance of this research is the contribution to the existing body of scientific knowledge. An annotated brief literature review is done in order to evaluate the current state of the existing academic literature. The purpose is to present a systematic overview of relevant ERP implementation methodologies and frameworks as a desire for achieving a better taxonomy of ERP implementation methodologies. This paper is useful to researchers who are interested in ERP implementation methodologies and frameworks. Results will serve as an input for a classification of the existing ERP implementation methodologies and frameworks. Also, this paper aims also at the professional ERP community involved in the process of ERP implementation by promoting a better understanding of ERP implementation methodologies and frameworks, its variety and history