Managing process innovation through incremental improvements: empirical evidence in the petroleum refining industry

A present value index model was developed to differentiate between the effects of radical innovation and incremental improvement on technological progress. The model was used to compare the return from an initial-radical-process innovation and the return from incremental changes in petroleum refining processes. The results showed that incremental improvements gave higher returns than initial innovations. The implications for conventional R&D strategies of manufacturing companies are discussed.