The impact of project introduction heuristics on R&D performance

Abstract

We use a dynamic model to explore managerial behavior in the pharmaceutical industry, with a focus on the impact of project introduction heuristics on product development performance. In particular, we focus on the impact on performance, of three types of heuristics: 1)Gradual increase or decrease, 2)Random-normal choice, and 3)Target-based search. We find that a gradual decrease of project introduction rates results in convergence, but the size of the adjustments and the delays in the pipeline can limit the precision. A random choice is detrimental to performance even when the average value is the optimal. A targetbased search results in oscillation.