Pulling the Plug? Investigating Firm-Level Drivers of Innovation Project Termination

Marek Vaculík, Annika Lorenz, A.H.W.M. Roijakkers, Wim Vanhaverbeke

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Firms need to innovate and develop dynamic capabilities to create a sustainable competitive advantage. Due to this pressure, firms in high-tech industries invest a high percentage of their revenues in innovation. Despite the vast number of innovation success stories, only one in five innovation projects reaches the market. It is important to understand the drivers of project termination as many firms make sizable investments in innovation and these drivers may have a significant impact on their innovation performance. Therefore, the earlier recognition of unfeasible projects would avoid continued investment and release resources that could be invested in more profitable projects. This paper investigates firm-level factors influencing the termination of innovation projects based on a sample of 4385 firms in the Czech Republic and Germany. We find that firm size, research and development activities, organizational agility, and the level of internationalization are positively associated with innovation project termination. Surprisingly, marketing innovation is also positively associated with project termination. Our results contribute to an improved understanding of why some firms are better at identifying unsuccessful projects (earlier) than others. Identifying generalizable factors provides complementary insights into project-level factors of project termination that can have a remarkable impact on the profitability and survival of firms.
Original languageEnglish
Pages (from-to)180-192
Number of pages13
JournalIeee Transactions on Engineering Management
Volume66
Issue number2
DOIs
Publication statusPublished - May 2019

Keywords

  • Technological innovation
  • Industries
  • Economics
  • Research and development
  • Investment
  • Commercialization
  • Plugs
  • organizational agility
  • PRODUCT DEVELOPMENT
  • RESEARCH-AND-DEVELOPMENT
  • CRITICAL SUCCESS FACTORS
  • PERFORMANCE
  • MARKET ORIENTATION
  • DYNAMIC CAPABILITIES
  • INTERNATIONAL DIVERSIFICATION
  • Dynamic capabilities
  • innovation project termination
  • innovation process
  • FINANCIAL CONSTRAINTS
  • TECHNOLOGICAL-INNOVATION
  • ABSORPTIVE-CAPACITY

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