The paper addresses the question whether a modular organizational structure breeds mechanisms that promote proactive strategic flexibility. We examine this question from the perspective of the cognitive school of strategic management and with the aid of system dynamics modeling and simulation to explore long-term dynamic effects. Both our analysis and our experiments with the model suggest that modular organizations do not necessarily encourage the construction of managers mental models with a capability to generate more strategic options and, thus, do not promote strategic flexibility at a higher degree compared to more traditional organizational structures.
The purpose of this research was to assess the Egyptian software industry using a Systems Dynamics approach based on the Software Export Success Factors Model developed by Heeks and Nicholson, 2002. A CLD was prepared as a step towards building a model to simulate the expected effect of key software-related infrastructure variables on the Egyptian software export revenue. Simulations of software export industry over a period of 10 years point to the following: (1) Injecting an additional 30% financial resources resulted in an increase of 8.4% in software export revenue and 2.1% in job opportunities with respect to the reference mode, (2) Improving IT staff productivity by 42%, and delivered software quality by 10%, with a decrease in resistance to change of 20% led to an increase of 68.7% in software export revenue and of 12.9% in job opportunities with respect to the reference mode, (3) Enhancing R&D by 50% and IT staff innovation contribution by 10% resulted in an increase of 14.4% in software export revenue and 3% in job opportunities with respect to the reference mode, and (4) Improving the software export promotion efficiency by 14% and quality of delivered software by 10% led to an increase of 38.7% in software export revenue and 8% in job opportunities with respect to the reference mode.
The method presented in this paper allows for an investigation of how the eigenvalues characterizing the model behavior is created from the underlying model structure and how this behavior feeds back to change instantaneously the relative significance of the model structure. The method also allows us to identify the relative significance of the various parameters that governs the gains of the links and loops of the model. The method has been implemented using Matlab software for the purpose of facilitating an eigenvalue analysis of system dynamic models. This work is based on control theory as well as the previous work on eigenvalue analysis in system dynamics. It summarizes the thesis work by Ahmed AbdelTawab AbdelGawad (2004) and Bahaa E. Aly Abdel-Aleem (2004), under the supervision of Mohamed Saleh and Pål I. Davidsen. The method outlined and Matlab code developed in preparation for this paper may be implemented as part of any simulation package.