Abstract
OVERVIEW:A new financial metric called Economic Value Added, or EVA®, is gaining momentum both on Wall Street and among company managers. For the scientist, it is tempting to view EVA as simply one more financial metric. However, this is not the case. EVA fundamentally changes the accounting landscape by treating R&D as a strategic capital cost rather than an expense. This induces a number of interesting changes that affect R&D. Some are strictly financial, such as changing the way that R&D is budgeted. However, others impact a wide variety of aspects central to R&D success. For example, EVA can provide a framework for technology valuation, affect R&D portfolio management, influence technical idea generation, and reinforce the role of R&D as an investment in the future of the corporation.
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