Decison-making for maritime innovation investments: The significance of cost benefit and cost effectiveness analysis

Genevieve Giuliano, Geraldine Knatz, Nathan Hudson, Christa Sys, Thierry Vanelslander and Valentin Carlan

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: Six universities from Europe, Asia and the United States participated in an evaluation of the use of innovation in the port logistics and maritime sector. Led by the BNP Paribas Fortis Chair in Transport, Logistics and Ports from the University of Antwerp, the purpose of the study was to evaluate the decision-making process and adoption of innovation using quantitative tools. This paper focuses on one of those quantitative tools, cost benefit analysis. Seventy-four separate and highly diverse innovation projects undertaken by private businesses were examined to determine if a traditional cost benefit analysis was used as part of their decision-making process. The data showed that no projects performed comprehensive cost benefit analysis, although for some projects limited cost effectiveness data were collected after the innovation was implemented. Cost benefit analysis is both complex and time consuming. It is designed for public sector decision-making, where societal costs and benefits are of concern, and where alternative policy actions are evaluated. If these innovations were implemented mainly as a result of internal decisions, use of cost benefit analysis would not be expected. The data show that 37 (50%) of the innovation projects were undertaken because of external influences, 21 (28.3%) were purely internal company decisions and 16 (21.6%) were influenced by public subsidy. Several types of innovation projects examined in this research project could be candidates for a cost benefit or cost effectiveness assessment. These are projects where environmental benefits and costs can be quantified, or where quantifiable external benefits support public investment in capital costs or in an operating subsidy. It is found that port innovation would benefit from more formalized methods of project assessment.

Pages: 22 pages
Date: 2016-01
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ppm, nep-sea and nep-tre
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Citations: View citations in EconPapers (1)

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