This paper integrates the resource-based view (RBV) with concepts from the literature on managerial cognition and organizational slack to show how shifts in resource constraints can lead to shifts in firm performance and even industry structure over time. Using a process-based method, we show that a shift in constraints of resources, under the moderating impact of heterogeneous mental models and resource structure, shift resource allocations. In turn, this creates and sustains resource heterogeneity, leading to differential performance. Previously developed propositions are tested using simulation in two strategic business units from a leading player in the UK insurance industry. The conclusion highlights implications for research methods, strategy theory and managerial practice.
In its Preface, The 9/11 Commission Report states: We learned that the institutions charted with protecting national security did not understand how grave this threat can be, and did not adjust their policies, plans, and practices to deter or defeat it (2004: xvi). Given current realities and uncertainties better preparedness can be achieved by identifying, controlling and managing the elusive linkages and situational factors that impact state stability and fuel state decay and destruction and hence create new threats to the nations security. We propose to focus on the use of system dynamics modeling techniques to help understand, measure and model the complex dynamics shaping state stability, initially for two regions. We will specifically consider the impacts of unanticipated disruptions, such as a tsunami and its aftermath, on the dynamics of the two regions. For each region, we will develop a country model, along with an analysis of conditions and casual links between predicted futures plus corresponding mitigated options. The presentation will include an update on the status of this project.
Decision-makers and managers have often an irresistible tendency to over intervene in the systems (companies, organizations, communities, etc) for which they are responsible hence generating unnecessary fluctuations and instability in their organizations. Sterman, et al (1989; 2000) and Maani & Li (2004) have studied these phenomena in simulated and experimental settings. This paper examines the impact of change and managerial intervention on firms performance. Frequency and magnitude of change actions are used as proxy for managerial intervention. Based on prevailing assumptions and common practice two hypotheses are postulated as follows:
H01 : The more frequent the change (interventions), the better the results.
H02 : Dramatic change leads to dramatic (positive) results.
The above hypotheses and our own observations collectively inform the key research question posed in this paper: How do the style (extent) and frequency of change and the interpretation of feedback affect the outcomes of interventions in organizations? In this research, Microworlds are employed as proxy for complex systems. Research subjects comprise MBA and graduate business students and practicing managers. With some exceptions, the results refute the above hypotheses and suggest that over intervention could often lead to counter productive outcomes.
The system dynamics group at the Rockefeller College of the University at Albany has been developing techniques to create system dynamic models with groups of managers during the last 25 years. Building upon their tradition in decision conferencing, the group has developed a particular style that involves a facilitation team in which people plays different roles. Throughout these years of experience, the group has also developed several scripts to elicit knowledge from experts based on small-groups research, and well-established practices in the development of system dynamics models. This paper constitutes a detailed documentation of a relatively small-scale modeling effort that took place in early 2001, offering a soup to nuts description of Group Model Building at Albany. The paper describes in detail 8 of the scripts that the group has developed, offering some reflections about their advantages and limitations.
System dynamics requires the intense use of qualitative data and human judgment in all stages of model development. Most approaches to the formal inclusion of qualitative data have been developed with the purposes of knowledge elicitation during the conceptualization or formulation stages of model development. Although the importance of using expert judgment to assess the validity of system dynamics models is well recognized, the development of approaches to use this kind of judgment is not well developed. In recent years, efforts to develop tools to assess the validity of system dynamics models by interviewing experts have been explored in some doctoral work. This paper reviews the basic concepts of model validation, and explores the use of interviews as a research and knowledge-acquisition technique. Finally, it documents and compares four applications of interviewing as a tool to assess system dynamics models, ending with recommendations for both the practitioner and researcher.
The author has created a system dynamics model to investigate how health care providers can and should respond to increases in patient demand for treatment above usual levels. This response by the health care system is called surge capacity and is an important issue in emergency and disaster planning and response. The model describes how hospital and home care treatment providers can alter their internal staffing and patient treatment policies as well as movements of staff and patients between each other. These providers can fail to respond adequately to surge events by exhausting their staff or by moving too much burden from the hospital sector to the home care sector.
Based on an in-depth field study in an electronics plant in Singapore, this paper examines the dynamic interaction between two of the key functions, Production (P) and Manufacturing Engineering (ME). P and ME are responsible for process execution and process development respectively, and for process smoothness jointly; their relationship is asymmetrical if judged from organizational and structural aspects. The paper reveals the causes and effects of three types of short-sighted functional behavior burden-shifting, resource-fighting, and corner-cutting. The resulting P-ME conflict due to short-sighted behaviors is analyzed in a qualitative system dynamics model. Although this research is based on a single firm, the findings have implications for many contemporary plants where the proliferation of new processes puts stress on the P-ME interface. Future researchers can use more samples to test and theorize the findings of this research.
Agent-based modelling seems to be an alternative way of modelling to System Dynamics. Criteria for discriminating the methodologies, and criteria for the choice of which one to use, still remain vague. This study compares both approaches on an empirical basis, utilizing an exploratory experiment aimed at investigating the respective comprehensibility of each methodology. The gained results, considering all the observations, show no significant differences between the two treatments. Nevertheless if the subjects are grouped into SD students and non-SD students, differences are observed. Interestingly it shows an advantage of the AB approach for the SD student group, whereas the non-SD students seem to have an advantage with the SD methodology.
We explore organizational forgetting, the notion that firms knowledge can be lost through human capital decay. An in-depth case study research, which is guided by the conceptualization of a system dynamics model, is conducted. The evidence appears to support the presence of forgetting. This gives rise to the possibility of productivity falling in spite of continued output accumulation, due to changes in the characteristics of the resource where experience resides. Most prior research on learning curves, however, assumes that productivity will always increase with cumulative firm output.