R&D project termination in high-tech industries

Based upon extensive data on 51 R&D projects in high-tech companies, a discriminant analysis produced 16 factors which discriminated very well the decision to continue or terminate a project in the development phase. The most important discriminating variables were virtually strategic parameters of the high-technology research environment. Specifically, high rates of product turnover, high market share, and small size were found to lead to continuations, whereas infancy stage product life cycle and innovative versus aligned research strategy led to terminations. A number of controllable behavioral properties were also critical to project continuation, among them project management effectiveness, management support, worker commitment, and project leader championship during the projects later stages. In contrast to high-tech firms, “non-high-tech” project's were found to have greater potential where product turnover was low and projects had limited focused end uses offering sizable profit margins.