Management of Intellectual Asset Production in Industrial Laboratories

30 Pages Posted: 31 Oct 2019

See all articles by Debasis Mitra

Debasis Mitra

Columbia University

Qiong Wang

University of Illinois at Urbana-Champaign

Date Written: September 10, 2019

Abstract

Industrial laboratories generate profit for their parent companies and in so doing benefit society through spillovers of novel technologies and solutions. Yet research's share of corporate investment in R&D has been declining. To understand this trend from the operations perspective, we develop a model-based analysis of the management of intellectual asset production in industrial laboratories. The model consists of a linear network with multiple stages in which the first stage is the research division engaged in generating novel concepts and prototypes. It is followed by multiple development stages that transform research outputs into intellectual assets and marketable products. Management is responsible for strategic budget allocation to the stages, and tactical management of individual projects. Decisions are based on intrinsic return on investment in the laboratory, and option values of projects, both of which are endogenously determined. Our model and analyses have revealed several possible pathways that can lead to the management of the laboratories to reduce the share of research spending in their budgets, namely, a) lower variability of project values; b) improved investment efficiency at development stages; and c) higher revenue realization from assets produced at early development stages.

Keywords: Research and Development, Operations, Intellectual Assets, Innovation, Industrial Laboratories

JEL Classification: C61, L53, M21, O31

Suggested Citation

Mitra, Debasis and Wang, Qiong, Management of Intellectual Asset Production in Industrial Laboratories (September 10, 2019). Available at SSRN: https://ssrn.com/abstract=3473061 or http://dx.doi.org/10.2139/ssrn.3473061

Debasis Mitra

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Qiong Wang (Contact Author)

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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