26th International Association for Management of Technology Conference - IAMOT 2017

Changes in the external and internal business environment may induce a redirection of company strategy, which can result in the destruction of a company’s valuable intellectual assets (people and knowledge), generated through formal R&D investment. These intellectual assets may be of value to both the company and society, and their termination of projects as a consequence of the re-shaping of company R&D portfolios may result in the destruction of knowledge useful to society. This study investigates four main aspects: 1) What is the likelihood of a change in business strategy that will impact negatively on an R&D project portfolio value? 2) What is the extent of the impact of changing business strategy on R&D portfolio value?, 3) What steps are being taken by companies to avoid destruction of shareholder value and maximize social return on investment in the event of R&D portfolio changes, and; 4) What portfolio management methodology can be used to mitigate the risk of portfolio value destruction as identified in questions above? This paper deals with steps being taken by companies to avoid destruction of shareholder value and maximize social return on investment in the event of R&D portfolio changes Most company’s patents are by no means used in any of the holders’ businesses, or are used to deter potential competitors and most innovations and intellectual property sit on the shelf unexploited; from a public goods perspective, unexploited patents represent a large unexploited source of knowledge that could be used to construct new companies and economic growth if there were an efficient approach to ‘activate’ these unexploited patents in other companies. This waste of scarce resources is significant; from society’s perspective, the loss is even worse; if organizations certainly do not use various technologies they are creating, or license-out these technologies to other organizations for the purpose of commercialization, then the knowledge covered by the temporary monopoly are not ever brought to market. Importantly, considerable effort has to be put into commercializing the unexploited technology/knowledge through spin-offs or through licensing to other companies in other markets (Wang et al., 2012). The population was drawn from South African R&D intensive manufacturing companies, this population includes medium-sized enterprises as well as large organisations listed on the Johannesburg stock exchange. Data was collected using an online instrument and telephone interviews during the previous study phase (Phase 1) while the questionnaire was further developed for this phase (Phase 2) of the study and to then be further developed and refined of item wording and structure for use in Phase three (Final Phase). The analysis of the findings of the Phase 1 of this study showed that manufacturing companies are affected by changes in business strategy. Private R&D outputs can be divided into those that lead to new company innovation (new products, processes and services), those that have value but are discontinued due to change in company strategy or lack of funds, and those that have no immediate value. Many companies are sitting on huge reservoirs of new knowledge which is never revealed. The conclusion is that the overall return on private R&D could be improved if these outcomes are freely available, especially if there is a change in strategy and the projects are discontinued for non-technical reasons. Uncertain business environment and consequent changes in company strategy have a negative influence on R&D portfolio value.