THE SEQUENCE EFFECT ON THE SELECTION OF R&D PROJECTS

This paper explores the micro-dynamics of organizational decision-making, examining the sequence effect in decision-making on R&D project selection. We propose that the sequence of selection matters in R&D – even when it should be completely irrelevant – as projects that appear in a sequence following a funded project are themselves less likely to receive funding. We also theorize that the context of decision-making moderates sequence effects, focusing on the timing of decisions, panel expertise and panel composition. We test these conjectures using a randomization in sequence order from several rounds of R&D project selection at a leading professional service firm, and find robust support for the existence of sequencing effects in R&D as well as their attenuation by decision timing and panel expertise. These findings have broader implications for the selection of innovation ideas and R&D management as it suggests that a previously overlooked dimension affect selection outcomes.