Abstract
This study aims to form the basis for constructing a framework for evaluating alternative portfolios of R & D projects. This study provides an extensive literature review on portfolio selection. Most of the existing studies deal with the portfolio selection problem by evaluating individual projects and then seeking ways to combine them for an R & D portfolio. However, the combination of individually good projects unnecessarily constitutes the optimal portfolio. In particular, this study discusses three portfolio effects: (1) the difference between the preference for the portfolio as a whole and the preference for the projects, (2) the interrelation among projects, (3) the size of portfolio selection problems. This study develops a three-phase framework for evaluating R & D portfolios and proposes a new taxonomy of the portfolio attributes (i.e. independent, interrelated, and synergistic). This study concludes with a discussion of future research, directed toward increasing the applicability of portfolio-selection approaches for managing R & D portfolios.