This thesis has its origin in empirical evidence. Some Swedish companies claimed that despite having plenty of proposals for developing new products, they experienced problems when choosing from all those alternatives. Their problem was how to select among new ideas the ones for being developed and the ones to be rejected, how many projects to run according to their capacity, when to start a development project and when to stop one, and how to decide among ongoing projects which the most important ones were. The companies’ problem was decision making in the context of innovation.

 According to literature, a deeper understanding is needed of the decision making process in innovation, taking into account its organizational and procedural complexities. The purpose of this thesis is to achieve an understanding of the decision making process in innovation.  The thesis is based on an explorative study, with interviews carried out in three companies that have new product development as a core competitive factor. The empirical study focuses on the decisions made for selection and prioritization of different innovative alternatives. 

As a result of the analysis of the empirical data a conceptualization of the decision making process was developed. Furthermore, it was described the relevant problems that decision makers experience, the main characteristics of the decision making process and the role that decision making plays in innovation. The implications of these findings for designing work procedures to support decision making in innovation were discussed; and general descriptions of two practical methods suggested. 

The main findings indicate that for making decisions in the context of innovation, organizations must be able to face uncertain and ambiguous situations, and achieve a collective understanding about what is to be done. To do this, different approaches for making decisions and understanding innovation are needed. However, regardless of the appropriateness of these approaches, they receive different levels of acceptance within organizations; and decision makers must deal with the different grades of organizational acceptance of the different approaches. As a consequence, an organization displays certain dynamic using different approaches for making decisions and for understanding innovation. Such dynamic influences the companies’ innovative potential and the output of the innovation process.

Product development has become an important competitive factor for most companies. A central task is to select which projects, often from a large number of project proposals, are to be developed in order to achieve strategic objectives without exceeding available resources. Project Portfolio Management (PPM) is the research discipline which focuses on the decision-making processes used to evaluate, select and prioritise projects. Previous research has stated that companies must be able to select and commit resources to different types of ideas and projects. However, it is widely believed that PPM literature has not sufficiently investigated the challenges that companies might face when putting into practice different decision-making approaches to select different types of ideas and projects.

This thesis aims to explore how different types of ideas and projects are evaluated and selected in the context of the development of complex technological products. It is based on a qualitative research approach and interviews and observations have been carried out with the cooperation of six companies.

The findings of this thesis reveal that because different decision-making approaches encounter different levels of acceptance within an organisation, the dynamics by which an idea evolves are affected by the way in which decision makers deal with the legitimacy of the decision-making approaches that they put into practice. Decision makers use some mechanisms that allow them to avoid drawing exclusively on the highly accepted approaches when they are not considered to be suitable, and to give legitimacy to the decisions that have been made by the less accepted approaches. In addition, the way in which decision makers experience a decision situation influences how it is approached. If they experience ambiguity, they might display a decision-making logic in which actions are allowed to be taken within self-organised social interactions, in order to make sense of the idea, project or criteria. However, the occurrence of self-organised interactions is conditioned by how decision makers negotiate resources with stakeholders that display different interests and decision-making logics.

These findings question the objective view that assumes that ideas and projects are already defined at the moment the decision is made and are able to be classified in pre-defined categories. It also led to the question of whether problems in fulfilling resource allocation plans and the risk of biases in decision making are problems that arise due to poor decision-making practices, and whether they should, instead, be understood as probable consequences of a flexible process.

Finally, this thesis explores a way of enhancing decision makers’ abilities through scenarios in which decision makers experience decision situations and reflect on their own ways of making decisions.