IDEAS home Printed from https://ideas.repec.org/p/aal/abbswp/06-05.html
   My bibliography  Save this paper

Organizational Design and Resource Evaluation

Author

Listed:
  • Michael Christensen
  • Thorbjørn Knudsen

Abstract

A crucial problem of evaluating, discovering, and creating the value of resources remains at the center of the subject of business strategy. The present article draws on reliability theory to advance an analytical platform that can address part of this problem, the evaluation of resource value. Reliability theory offers a way to model managerial ability and to derive the evaluation properties of organizations, boards, teams and committees. It is shown how the problem of resource evaluation can be remedied by proper evaluation structures. An evaluation structure that is build out of a very few agents can achieve significant improvements. A simulation of the classical n-armed bandit problem shows how evaluation structures can help managers select innovations of better economic value.

Suggested Citation

  • Michael Christensen & Thorbjørn Knudsen, 2006. "Organizational Design and Resource Evaluation," DRUID Working Papers 06-05, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:06-05
    as

    Download full text from publisher

    File URL: https://wp.druid.dk/wp/20060005.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    2. Jan W. Rivkin & Nicolaj Siggelkow, 2003. "Balancing Search and Stability: Interdependencies Among Elements of Organizational Design," Management Science, INFORMS, vol. 49(3), pages 290-311, March.
    3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    4. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    5. Ben-Yashar, Ruth C & Nitzan, Shmuel I, 1997. "The Optimal Decision Rule for Fixed-Size Committees in Dichotomous Choice Situations: The General Result," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 175-186, February.
    6. Mikael Holmqvist, 2004. "Experiential Learning Processes of Exploitation and Exploration Within and Between Organizations: An Empirical Study of Product Development," Organization Science, INFORMS, vol. 15(1), pages 70-81, February.
    7. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    8. George J. Stigler, 1962. "Information in the Labor Market," NBER Chapters, in: Investment in Human Beings, pages 94-105, National Bureau of Economic Research, Inc.
    9. Nicolai J. Foss & Thorbjørn Knudsen, 2003. "The resource-based tangle: towards a sustainable explanation of competitive advantage," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 291-307.
    10. Daniel A. Levinthal, 1997. "Adaptation on Rugged Landscapes," Management Science, INFORMS, vol. 43(7), pages 934-950, July.
    11. Levinthal, Daniel & March, James G., 1981. "A model of adaptive organizational search," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 307-333, December.
    12. Bruce R. Barringer & Allen C. Bluedorn, 1999. "The relationship between corporate entrepreneurship and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 421-444, May.
    13. Joseph E. Stiglitz, 2002. "Information and the Change in the Paradigm in Economics," American Economic Review, American Economic Association, vol. 92(3), pages 460-501, June.
    14. Steven A. Lippman & Richard P. Rumelt, 2003. "A bargaining perspective on resource advantage," Strategic Management Journal, Wiley Blackwell, vol. 24(11), pages 1069-1086, November.
    15. Sah, Raaj Kumar & Stiglitz, Joseph E, 1988. "Committees, Hierarchies and Polyarchies," Economic Journal, Royal Economic Society, vol. 98(391), pages 451-470, June.
    16. Richard Makadok, 2003. "Doing the right thing and knowing the right thing to do: why the whole is greater than the sum of the parts," Strategic Management Journal, Wiley Blackwell, vol. 24(10), pages 1043-1055, October.
    17. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    18. Elaine Mosakowski, 1998. "Entrepreneurial Resources, Organizational Choices, and Competitive Outcomes," Organization Science, INFORMS, vol. 9(6), pages 625-643, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Phebo D. Wibbens, 2023. "A formal framework for the RBV: Resource dynamics as a Markov process," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1562-1586, June.
    2. Roland Bel, 2018. "A property rights theory of competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1678-1703, June.
    3. Heli Wang & Shan Zhao & Jinyu He, 2016. "Increase in takeover protection and firm knowledge accumulation strategy," Strategic Management Journal, Wiley Blackwell, vol. 37(12), pages 2393-2412, December.
    4. Friederike Wall, 2016. "Agent-based modeling in managerial science: an illustrative survey and study," Review of Managerial Science, Springer, vol. 10(1), pages 135-193, January.
    5. Oliver Baumann & Nils Stieglitz, 2011. "Motivating Organizational Search," DRUID Working Papers 11-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Hazhir Rahmandad, 2008. "Effect of Delays on Complexity of Organizational Learning," Management Science, INFORMS, vol. 54(7), pages 1297-1312, July.
    7. Thorbjørn Knudsen & Daniel A. Levinthal, 2007. "Two Faces of Search: Alternative Generation and Alternative Evaluation," Organization Science, INFORMS, vol. 18(1), pages 39-54, February.
    8. Inseong Song & Jonghoon Bae, 2016. "Politics, strong institution and competitive advantage: an examination of organizational aspiration for competition," Computational and Mathematical Organization Theory, Springer, vol. 22(4), pages 412-443, December.
    9. Karén Hovhannisian & Marco Valente, 2005. "Modeling Directed Local Search Strategies on Technology," Computational Economics 0507001, University Library of Munich, Germany.
    10. Elizabeth J. Altman & Frank Nagle & Michael L. Tushman, 2013. "Innovating Without Information Constraints: Organizations, Communities, and Innovation When Information Costs Approach Zero," Harvard Business School Working Papers 14-043, Harvard Business School, revised Sep 2014.
    11. Hazhir Rahmandad & Nelson Repenning, 2016. "Capability erosion dynamics," Strategic Management Journal, Wiley Blackwell, vol. 37(4), pages 649-672, April.
    12. Felipe A. Csaszar & Daniel A. Levinthal, 2016. "Mental representation and the discovery of new strategies," Strategic Management Journal, Wiley Blackwell, vol. 37(10), pages 2031-2049, October.
    13. Karén Hovhannissian & Marco Valente, 2004. "Modeling Directed Local Search Strategies on Technology Landscapes: Depth and Breadth," ROCK Working Papers 028, Department of Computer and Management Sciences, University of Trento, Italy, revised 17 Jun 2008.
    14. Chang, Myong-Hun & Harrington, Joseph Jr., 2006. "Agent-Based Models of Organizations," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 26, pages 1273-1337, Elsevier.
    15. Giannoccaro, Ilaria, 2015. "Adaptive supply chains in industrial districts: A complexity science approach focused on learning," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 576-589.
    16. Christina Fang & Daniel Levinthal, 2009. "Near-Term Liability of Exploitation: Exploration and Exploitation in Multistage Problems," Organization Science, INFORMS, vol. 20(3), pages 538-551, June.
    17. Oliver Baumann, 2015. "Models of complex adaptive systems in strategy and organization research," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 14(2), pages 169-183, November.
    18. Dirk Martignoni & Thomas Keil & Markus Lang, 2020. "Focus in Searching Core–Periphery Structures," Organization Science, INFORMS, vol. 31(2), pages 266-286, March.
    19. Ming Piao & Edward J. Zajac, 2016. "How exploitation impedes and impels exploration: Theory and evidence," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1431-1447, July.
    20. Giovanni. Gavetti & Daniel A. Levinthal, 2004. "50th Anniversay Article: The Strategy Field from the Perspective of Management Science: Divergent Strands and Possible Integration," Management Science, INFORMS, vol. 50(10), pages 1309-1318, October.

    More about this item

    Keywords

    Reliability theory; resource value;

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aal:abbswp:06-05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Keld Laursen (email available below). General contact details of provider: https://www.druid.dk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.