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CONTEXT OF RESEARCH Resource-Based View of the Firm Wenerfelt (1984) Strategic Mgt. Jl.

INVESTMENTS IN WORKFORCE KNOWLEDGE and TECHNOLOGICAL CAPABILITIES Cheryl Gaimon, Karen Napoleon, Gulru Ozkan POMS Conference, May 2007. CONTEXT OF RESEARCH Resource-Based View of the Firm Wenerfelt (1984) Strategic Mgt. Jl. Barney (1991) Jl. of Mgt. Teece (1997) Strategic Mgt. Jl.

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CONTEXT OF RESEARCH Resource-Based View of the Firm Wenerfelt (1984) Strategic Mgt. Jl.

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  1. INVESTMENTS IN WORKFORCE KNOWLEDGE and TECHNOLOGICAL CAPABILITIESCheryl Gaimon, Karen Napoleon, Gulru OzkanPOMS Conference, May 2007

  2. CONTEXT OF RESEARCH Resource-Based View of the Firm Wenerfelt (1984) Strategic Mgt. Jl. Barney (1991) Jl. of Mgt. Teece (1997) Strategic Mgt. Jl. Knowledge Based View of Resources Workforce KnowledgeTechnological capability Leonard Barton (1992) Strategic Mgt. Jl.Conner Prahalad (1996) Organization Sci. 1

  3. Motivation of the MODEL Knowledge Based Resources  Profit Drivers of Change: Reduce costs (time, accuracy) Increase product-mix capability Enhance product features Changes in demand Technological opportunities 2

  4. Changing Technological Capability Benefits sought elusive... costs and time exceed expectations AMT (50-75% failure Majchrzak) CAD (time 30%,  quality 18% Joglekar & Whitney) CRM (55% below expectations Rigby et al.) Implementation failure AMT (Tyre, Hayes Clark, Chew et al...) IT (Brynjolfsson, Dong & Zhu, ...) 3

  5. Our Model Holistic view of knowledge management Technological Capability depreciation, upgrade (decision). Workforce Knowledge learning-by-doing vs. depreciation, general training (decision). Obsolescence, learning-before-doing (decision). Strategies prior, during, following upgrade 4

  6. Insights Sought When to pursue learning-before-doing vs. general training? (substitute, complement) When does technology upgrade substitute for worker knowledge? How does workforce learning... impact upgrade decision? How does technological advancement impact decisions? (vendor) What drives manager’s implementation strategy? 5

  7. LITERATURE: Learning Killingsworth (1982) Rev. Econ. Studies learning-by-doing and training  output Bailey (1989) Mgt. Sci. - as time betw. learning & use  forgetting . Argote et al. (1990) Mgt. Sci. knowledge depreciation Adler & Clark (1991) Mgt. Sci. preparatory training  disruption Pisano (1996) Research Policy learning-before-doing  disruption &  benefits. 6

  8. LITERATURE: Implementation Hayes & Clark (1985) disruption costs often outweigh purchase costs Brynjolfsson (1993) Commun. of ACM implementation major cost of IT investment Chand et al. (1996) Opns. Res. Gaimon (1997) Mgt. Sci. Carrillo & Gaimon (2000) Mgt. Sci. intro. link worker knowl. & proc. change Carrillo & Gaimon (2004) Sloan Mgt. Rev. outcome uncertainty and role of knowl. 7

  9. V(t) V(ti+) V(0) V(ti) time(t) ti V(t) level technological capability time t  technology depreciation (μV(t)) _____ a(ti) = 1 upgrade decision -------- a(ti) = 0 no upgrade 8

  10. K(t) level workforce knowledge time t general training (g(t), decision)learning-by-doing vs. knowledge depreciation (dK(t)) knowledge obsolescence BUT learning-before-doing (P(t)) K(t) K(ti) K(ti+) time(t) 0 ti 9

  11. P(t) Learning-Before-Doing  preparatory training(p(t), decision)  forgetting (bP(t)) P(t) P(ti) time(t) 0 P(ti+) 10

  12. Obj. Max Net Revenue - Costs Revenue driven by K & V. Cost of General Training includes tuition, disruption costs to sustain output during training (e.g., overtime)... Cost of Preparatory Training... 11

  13. Cost Purchase & Implement ith Technology Upgrade Fixed and variable costs Purchase cost can  or  over time. Implementation cost  as lead-time. Also, variable cost  as extent of upgrade . disruption costs, compatibility... 12

  14. Case(1) Case(2) Case(3) time (t) T Optimal Rate of General Training 13

  15. t i t i+1 t i+2 T time (t) Optimal Rate of Preparatory Training 14

  16. Analytic Results If high workforce knowledge depreciation  preparatory training and delayed;  general training over planning horizon; however, upgrade less likely. 15

  17. Analytic Results If high rate forgetting:  preparatory training & delayed;  general training substitute general for preparatory training however, an upgrade less likely. 16

  18. Analytic Results If learning-before-doing highly effective...  preparatory training and earlier;  general training over planning horizon; substitute preparatory for general training and an upgrade more likely. 17

  19. Analytic Results If technological depreciation small upgrade more likely  general training but  preparatory training. 18

  20. Contributions Holistic model of knowledge management before, during, following techn. upgrade Workforce: learning-by-doing obsolescence knowledge depreciation learning-before-doing general training preparatory training forgetting Technology: technology depreciation technology upgrade 19

  21. Contributions Insights on drivers of solutions where preparatory & general training complements - substitutes techn. capability substitutes for workforce knowledge Effect on knowledge management due to: rate of technological advancement dynamic cost of technology rate that knowledge or technology depreciation occurs Drivers of rapid or slowimplementation strategy 20

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