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A Note on the Accuracy of Industrial Forecasts of the Profitability of New Products and Processes

George Beardsley and Edwin Mansfield
The Journal of Business
Vol. 51, No. 1 (Jan., 1978), pp. 127-135
Stable URL: http://www.jstor.org/stable/2352623
Page Count: 9
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
A Note on the Accuracy of Industrial Forecasts of the Profitability of New Products and Processes
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Abstract

Very little information is available concerning the accuracy of estimates of the profitability of investments in new products and processes. In this paper we present detailed empirical results on this score concerning all of the major innovations developed by one of the nation's largest firms in 1960-64. Because these data have been systematically and carefully updated by the firm, they provide a relatively unique opportunity to study how quickly forecasts of this sort converge on their true value. Also, we analyze the accuracy of the initial forecasts, both for new processes and new products, and discuss their possible implications for private and public policy.

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