Net present value techniques and their effects on new product research

Abstract

This article presents an exploratory analysis of the effects of emphasizing net present value techniques and short-term returns in the analysis and selection of new product research projects. A large body of literature exists in economics indicating that such emphases hinder successful innovation, yet the authors usually argue from anecdotal and case-generated data. We present empirical results that lend support to the aforementioned criticisms of net present value techniques and the short-term biases that they reflect. © 1995.