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Constructing new product development portfolios with internal and external projects
Nikpayam, Hossein
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Schlapp, Jochen
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Fleischmann, Moritz
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DOI:
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https://doi.org/10.1287/mnsc.2023.03917
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URL:
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https://pubsonline.informs.org/doi/abs/10.1287/mns...
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Document Type:
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Article
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Year of publication Online:
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2025
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Date:
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20 November 2025
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The title of a journal, publication series:
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Management Science
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Volume:
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tba
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Issue number:
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tba
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Place of publication:
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Cantonsville, MD
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Publishing house:
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INFORMS
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ISSN:
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0025-1909 , 1526-5501
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Publication language:
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English
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Institution:
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Business School > ABWL u. Logistik (Fleischmann 2009-)
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Subject:
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330 Economics
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Abstract:
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In order to build a successful new product development (NPD) portfolio, a firm must ensure not only its access to a wide variety of candidate NPD projects but also its capacity to collect and verify vital information about these projects prior to project selection. In practice, a popular strategy to enrich the set of candidate projects is to contemplate investing in both internal and external NPD projects; however, this approach often interferes with the firm’s ability to evaluate its own projects reliably, which in turn results in subpar project selections. To meet this managerial challenge, the firm must carefully craft its project selection process and incentivize its project managers to evaluate projects thoroughly and share their honest evaluation of outcomes. We address these issues by developing a principal–multiagent model, and our findings yield direct managerial implications. First, we show that the relative importance of a firm’s NPD portfolio scope versus its project evaluation costs is what dictates how flexibly the firm should select between internal and external projects; of course, greater flexibility leads to broader portfolios but also to higher evaluation costs. Second, controlling the tension between internal and external NPD projects while ensuring effective project evaluation requires that the firm offers—in addition to individual performance incentives—shared incentives, which signal its project selection preferences and also limit project managers’ opportunities to extract rent.
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 | Dieser Eintrag ist Teil der Universitätsbibliographie. |
 | Diese Publikation ist bisher nur Online erschienen. Diese Publikation nun als "Jetzt in Print erschienen" melden. |
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