SPECIFIC FEATURES OF THE FORMATION AND IMPLEMENTATION OF RADICAL AND INCREMENTAL INNOVATION PROJECTS
Abstract
The article provides a theoretical substantiation of the specific features of innovation projects in comparison with investment projects and clarifies the differences in their formation, implementation, and evaluation depending on the type of innovation involved. The study is based on the analysis of the financial logic of project appraisal derived from the theory of the time value of money, according to which project efficiency is assessed through discounted indicators such as NPV, IRR, and DPP. It is argued that although innovation projects contain an investment component, their economic nature cannot be reduced to capital allocation. An innovation project involves the creation or implementation of novelty that transforms technological, organizational, or market parameters of enterprise activity and affects the strategic trajectory of the firm. Therefore, a distinction between investment and innovation management logic is substantiated. The paper further develops the internal differentiation of innovation projects by distinguishing between incremental and radical types. Incremental innovation projects are implemented within existing technological and market structures, rely on established competencies, and are partially integrated into traditional financial planning systems. Their objectives are usually clearly defined and quantitatively measurable. Radical innovation projects, in contrast, are characterized by a high level of uncertainty, the absence of clearly defined market standards at early stages, evolutionary goal setting, and iterative implementation. Their formation is often based on strategic hypotheses rather than on fully formalized business plans and requires flexible organizational arrangements. The study demonstrates that differences embedded at the stage of project formation determine the specific features of their implementation and evaluation. Incremental innovation projects combine financial and operational logic, while radical projects require the dominance of exploration processes and the combination of financial and strategic evaluation criteria. The universal application of traditional investment appraisal tools without considering the type of novelty is methodologically limited and may constrain innovation development in dynamic environments.
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