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Capability building and learning: An emergent behavior approach

  • Andreu, Rafael

    (IESE Business School)

  • Riverola, Josep

    (IESE Business School)

  • Rosanas, Josep M.

    ()

    (IESE Business School)

  • de Santiago, Rafael

    (IESE Business School)

Registered author(s):

    Economics-based models typically overlook management decisions and firms' capabilities. We develop a model that puts firms at center stage by simulating the aggregate behavior of a population of firms resulting from specific management decisions. The model features a learning process that produces changes in companies' capabilities. Decisions are made under imperfect information and bounded rationality, and managers may sacrifice short-term performance in exchange for qualitative variables that affect their firm's future potential. The model provides a structured setting in which these issues-often discussed only in an informal way-can be more rigorously analyzed. The simulations produce a variety of hard-to-anticipate emergent behaviors. Economic performance appears to be quite sensitive to managers' estimates of the true capabilities of their own firms. Also, companies that are willing to accept sacrifices in the short run in order to increase future potential appear to be more stable than the rest.

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    File URL: http://www.iese.edu/research/pdfs/DI-0952-E.pdf
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    Paper provided by IESE Business School in its series IESE Research Papers with number D/952.

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    Length: 31 pages
    Date of creation: 05 Mar 2012
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0952
    Contact details of provider: Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
    2. Josep Rosanas, 2008. "Beyond Economic Criteria: A Humanistic Approach to Organizational Survival," Journal of Business Ethics, Springer, vol. 78(3), pages 447-462, March.
    3. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and the Sustainability of Competitive Advantage: Reply," Management Science, INFORMS, vol. 35(12), pages 1514-1514, December.
    4. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    5. Lindenberg, Siegwart, 2001. "Intrinsic Motivation in a New Light," Kyklos, Wiley Blackwell, vol. 54(2-3), pages 317-42.
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