Universität zu Köln

Fügener, Andreas ORCID: 0000-0002-4580-7444, Schiffels, Sebastian ORCID: 0000-0003-1017-6790 and Thonemann, Ulrich W. ORCID: 0000-0002-3507-9498 (2025). Project Portfolio Selection with Strategic Buckets—The Role of Naïve Diversification. Manufacturing & Service Operations Management, 27 (4). pp. 1242-1257. Informs. ISSN 1523-4614

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Abstract

Problem definition: A company’s project portfolio is an important success factor. Employing strategic buckets to segment the overall budget into budgets for different project types is a commonly used approach for managing project selection. Strategic buckets typically refer to sets of projects of a certain type, such as safe and risky projects. A strategic bucket specification defines the number of buckets and thresholds between them. This paper addresses the question of how different strategic buckets specifications affect decision makers’ project selection behavior. Methodology/results: We develop a behavioral model of the effect of strategic buckets on project selection and use laboratory experiments to analyze how bucket specifications affect project selection decisions. For various strategic bucket specifications where a rational decision maker would allocate the budget to projects of the project type matching their risk preference only, we find that actual decision makers have the tendency to allocate the budget evenly among buckets and among project types within buckets. This observation can be explained by the naïve diversification bias, and we observe this effect in experimental settings with different selection processes, project definitions, and subject pools. Managerial implications: Our findings allow companies to better understand the effect of buckets guidelines on actual project selection behavior and to manage their project portfolio selection by choosing the right bucket specification. Funding: This work was supported by the Deutsche Forschungsgemeinschaft [Grant EXC 2126/1–390838866]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2020.0373.

Item Type:	Article
Creators:	Creators Email ORCID ORCID Put Code Fügener, Andreas UNSPECIFIED https://orcid.org/0000-0002-4580-7444 UNSPECIFIED Schiffels, Sebastian UNSPECIFIED https://orcid.org/0000-0003-1017-6790 UNSPECIFIED Thonemann, Ulrich W. UNSPECIFIED https://orcid.org/0000-0002-3507-9498 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-799466
Identification Number:	10.1287/msom.2020.0373
Journal or Publication Title:	Manufacturing & Service Operations Management
Volume:	27
Number:	4
Page Range:	pp. 1242-1257
Number of Pages:	16
Date:	July 2025
Publisher:	Informs
ISSN:	1523-4614
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Faculty of Management, Economics and Social Sciences > Business Administration > Supply Chain Management > Professur für Digital Supply Chain Managment
Subjects:	Management and auxiliary services
Uncontrolled Keywords:	Keywords Language project selection English strategic buckets English naïve diversification English information asymmetry English
['eprint_fieldname_oa_funders' not defined]:	Publikationsfonds UzK
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/79946