Another wave of economic restructuring -- Returns to R&D-investments: (e)valuation of technological projects in Hong Kong

Abstract
Project valuation has always been a hot topic in the fields of Engineering Management, Management Science and Business Analytics. Among all, Research and Development (R&D) and high-tech projects are of growing interest in the recent decades, as they become a buzzword among the academics and the industry practitioners. Nevertheless, the prevailing dynamics in the market have made valuation (the issue of “worthiness”) of R&D investment not as easy and realistic, especially when it comes to a heavy capital input but a long payback period.

While the existing literature focuses on private investment in R&D-driven economies such as the US, the aspirations of this research are as follows: i) proposes valuation metrics for public (governmental) investment and integrates them into a new simulation framework with real data and ii) puts forward managerial insights for the Hong Kong government where R&D system is yet to be mature/premature. Given also the high risk nature and uncertainties involved in R&D and technological projects, on top of Net Present Value, a real option approach (Net Options Value) will be considered by taking managerial flexibility for granted – to replicate the timely decisions made in response to the ever-changing conditions – both externally in the market and internally in the project.