Abstract
Since many companies have introduced cashflow-based performance valuation methods such as economic profit, R&D managers are required to have methodology to evaluate the cashflow-based performance of their R&D investment. The economic profit rate has a higher correlation coefficient with operation incomes over R&D expenditures than with R&D expenditures over sales. In high-technology intensive business, there is a linear relation between the economic profit rate and the operation income over R&D expenditure. In order to articulate multiyear effects of R&D investment, the Performance-Scale Chart Method is convenient to evaluate the possible time lag between the points of R&D investment and the points of outcome performance from it. Finally, spinout ventures from corporations are effective vehicles to increase the R&D performance by transforming non-core technology seeds into real options for future deals. Corporations can delay the rational decisions of deal structures after seeing success of them.
