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Organizational tension between static and dynamic efficiency, The

  • Ghemawat, Pankaj

    (IESE Business School)

  • Ricart, Joan E.


    (IESE Business School)

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    Efficiency has been defined in at least two different ways: in terms of the refinement of existing products, processes or capabilities (static efficiency) or the development of new ones (dynamic efficiency). This paper analyzes the organizational trade-off between these two forms of efficiency. It shows that there is a tendency towards extremes, and that the irreversibility of efficiency orientations tends to tip the balance to be struck between static and dynamic efficiency toward the latter. The paper also advances hypotheses about the industry, business and corporate factors that mediate between the choice of a particular efficiency orientation and organizational performance.

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    Paper provided by IESE Business School in its series IESE Research Papers with number D/255.

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    Length: 25 pages
    Date of creation: 19 Oct 1993
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0255
    Contact details of provider: Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
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    1. Jones, Robert A & Ostroy, Joseph M, 1984. "Flexibility and Uncertainty," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 13-32, January.
    2. Michael C. Jensen & William H. Heckling, 1995. "Specific And General Knowledge, And Organizational Structure," Journal of Applied Corporate Finance, Morgan Stanley, vol. 8(2), pages 4-18.
    3. Williams, J.R., 1992. "How Sustainable is your Competitive Advantage?," GSIA Working Papers 1992-03, Carnegie Mellon University, Tepper School of Business.
    4. George Stigler, 1939. "Production and Distribution in the Short Run," Journal of Political Economy, University of Chicago Press, vol. 47, pages 305.
    5. Carlsson, Bo, 1989. "Flexibility and the theory of the firm," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 179-203, June.
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