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Optimal Time Allocation for Process Improvement for Growth-Focused Entrepreneurs

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  • Onesun Steve Yoo

    (UCL School of Management, University College London, London E14 5AB, United Kingdom)

  • Charles J. Corbett

    (UCLA Anderson School of Management, Los Angeles, California 90095)

  • Guillaume Roels

    (UCLA Anderson School of Management, Los Angeles, California 90095)

Abstract

For many entrepreneurs, time is a key constraint. They need to invest time to achieve growth, but also lose time because of recurring crises. We develop a simple stochastic dynamic program to model how an entrepreneur should prioritize between improving processes to reduce crises versus harvesting revenue or ensuring future growth. We show that it is initially optimal to prioritize process improvement: an entrepreneur should strive for high process quality early in the venture’s growth process. We numerically analyze a simple heuristic derived from this optimal policy and identify the conditions under which it is (or is not) effective. It performs near optimally except when process quality or revenue rate may deteriorate too fast or when the cost of process improvement or revenue enhancement is too high. Our work provides a theoretical foundation for the advice found in the popular entrepreneurship and time management literature to invest time now to save time later.

Suggested Citation

  • Onesun Steve Yoo & Charles J. Corbett & Guillaume Roels, 2016. "Optimal Time Allocation for Process Improvement for Growth-Focused Entrepreneurs," Manufacturing & Service Operations Management, INFORMS, vol. 18(3), pages 361-375, July.
    • Handle: RePEc:inm:ormsom:v:18:y:2016:i:3:p:361-375
    DOI: 10.1287/msom.2015.0568
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    References listed on IDEAS

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    Cited by:

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    4. Moren Lévesque & Ute Stephan, 2020. "It’s Time We Talk About Time in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 44(2), pages 163-184, March.
    5. Niu, Wenju & Shen, Houcai, 2022. "Investment in process innovation in supply chains with knowledge spillovers under innovation uncertainty," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1128-1141.
    6. Onesun Steve Yoo & Guillaume Roels & Charles J. Corbett, 2016. "The Time–Money Trade-Off for Entrepreneurs: When to Hire the First Employee?," Manufacturing & Service Operations Management, INFORMS, vol. 18(4), pages 559-569, October.
    7. KC, Diwas, 2020. "Worker Productivity in Operations Management," Foundations and Trends(R) in Technology, Information and Operations Management, now publishers, vol. 13(3), pages 151-249, April.
    8. Charles H. Fine & Loredana Padurean & Sergey Naumov, 2022. "Operations for entrepreneurs: Can Operations Management make a difference in entrepreneurial theory and practice?," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4599-4615, December.
    9. Sandrine Frémeaux & François Henry, 2023. "Temporality and Meaningful Entrepreneurship," Journal of Business Ethics, Springer, vol. 188(4), pages 725-739, December.

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