Preview

Stocks of Knowledge and Organizational Performance a Dynamic Relationship.Pdf

Better Essays
Open Document
Open Document
7029 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Stocks of Knowledge and Organizational Performance a Dynamic Relationship.Pdf
STOCKS OF KNOWLEDGE AND ORGANIZATIONAL PERFORMANCE: A DYNAMIC RELATIONSHIP
Fernando Arenas Universidad ICESI Calle 18 122-135, Cali, Colombia tel: +57 2 5552334 x8858 faarenas@icesi.edu.co Abstract The relationship between the level of knowledge and organizational performance has been studied by the academic community and is receiving growing attention from decision makers in organizations. However it is not the case of the feedback relationship between performance and the level of knowledge, although this relationship has a dynamic pattern of behavior on both variables. This research poses a conceptual approach that involves a causal model of this feedback relationship, theoretically founded on the resource based view and the behavioral theory of the firm. The methodology involves the design and use of a system dynamics simulation model based on a pharmaceutical company which relates stocks of knowledge, innovation capability, financial performance and investments on knowledge stocks. The concept of “managerial dynamic hypothesis” is defined and used to explain, via the prospect theory, how much managers decide to invest over time on knowledge stocks. Simulations, based on managerial dynamic hypotheses with two different levels of complexity, were carried out. The results show that the more complex the hypothesis is the more stable the investment flow is and a better performance is achieved. Keywords: knowledge stocks, organizational performance, organizational knowledge, prospect theory, simulation. system dynamics,

1. INTRODUCTION The influence of variables related to knowledge (knowledge management, stocks of knowledge, organizational learning) on organizational performance, has been the subject of numerous studies. It has not occurred in the same way with the study of the influence of the performance itself on these variables. It should then be asked, is organizational performance just a result of these variables, or does it, in turn, influence them? If



References: Barney, J. (1991). Firm resources and sustained competitive advantage, Journal of Management, 17 (1): 99-120. Bettis, R. A., & Prahalad, C. K. (2000): The dominant logic: retrospective and extension, Strategic Management Journal, 16 (1), 5-14. Boekestein, B. (2006). The relation of intellectual capital and intangible assets of pharmaceutical companies, Journal of Intellectual Capital, 7 (2): 241-253. Bontis, N. (1999). Managing organizational knowledge by diagnosing intellectual capital: framing and advancing the state of the field. International Journal of Technology Management, 18: 433-462. Bontis N. (2001). Assessing knowledge assets: a review of the models used to measure intellectual capital. International Journal of Management Reviews, 3:41-60. Bontis, N., Crossan, M. M. & Hulland, J. (2002): Managing an organizational learning system by aligning stocks and flows, Journal of Management Studies, 39 (4), 437-469. Bromiley, P. (2009). A prospect theory model of resource allocation. Decision Analysis, 6 (3): 124-138. Chen, M., Cheng, S. & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital, and firm’s market value and financial performance. Journal of Intellectual Capital, 6 (2): 159-176. Davis, J.P., Eisenhardt, K.M. & Bingham, C.B. (2007). Developing theory through simulation methods, Academy of Management Review, 32: 480-499. Dierickx, I. & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage, Management Science, 35 (12), 1504-1511. Donaldson, G. & Lorsch, J. (1983): Decision Making at the Top, Basic Books, New York. Firer, S. & Williams, S. M. (2003). Intellectual capital and traditional measures of corporate performance, Journal of Intellectual Capital, 4 (3): 348-360. Forrester, J. W. (1961): Industrial Dynamics, MIT Press, Cambridge, MA. Gary, M. S., Wood, R. E. (2011). Mental models, decision rules, and performance heterogeneity, Strategic Management Journal, 32: 569-594. Grant, R. M. (2010): Contemporary Strategy Analysis (7th ed.), Wiley. Greve, H. R. (2003): Organizational Learning from Performance Feedback: A Behavioral Perspective on Innovation and Change, Cambridge University Press, Cambridge, United Kingdom. Helfat, C.E. & Lieberman, M. (2002). The birth of capabilities: market entrance and the importance of prehistory, Industrial and Corporate Change, 12: 725-760. Kahneman, D. & Tversky, A. (eds) (2000a): Choices, Values, and Frames, Cambridge University Press, Cambridge, United Kingdom. Kahneman, D. & Tversky, A. (2000b). Prospect theory: an analysis of decision under risk. In Kahneman, D. & Tversky, A. (eds) (2000a): Choices, Values, and Frames: 17-43, Cambridge University Press, Cambridge, United Kingdom. Kaplan, R. S. & Norton, D. P. (1992). The balanced scorecard: measures that drive performance, Harvard Business Review, 70 (1): 71-79. Kaplan, R. S. & Norton, D. P. (2004): Strategy Maps, Harvard Business School Press, Cambridge, MA, USA. Maditinos, D., Chatzoudes, D., Tsairidis, D. & Theriou, G. (2011). The impact of intellectual capital on firm’s market value and financial performance. Journal of Intellectual Capital, 12 (1): 132-151. Mollona, E. (2007). A competence view of firms as resource accumulation systems: a synthesis of resource-based and evolutionary models of strategy making. En Morecroft, J., Sanchez, R. & Heene, A. (eds). Systems Perspectives on Resources, Capabilities, and Management Processes: 93-125, Emerald Group Publishing Limited, Bingley, Reino Unido. Morecroft, J., Sanchez, R. & Heene, A. (eds) (2007). Systems Perspectives on Resources, Capabilities, and Management Processes, Bingley: Emerald Group Publishing Limited. Nazari, J. A., Herremans, I. M. (2007). Extended VAIC model: measuring intellectual capital components. Journal of Intellectual Capital, 8 (4): 595-609. Oltra, V. (2002). Influencia de las políticas de recursos humanos en los procesos de desarrollo y gestión del conocimiento. Tesis Doctoral. Universidad de Valencia: Facultad de Economía. Prahalad, C. K. & Bettis, R. A. (1986). The dominant logic: a new linkage between diversity and performance, Strategic Management Journal, 7, 485-501. Prahalad, C. K. & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review, 30 (3): 79-91. Pulic, A. (2000). VAIC – an accounting tool for IC management. International Journal of Technology Management, 20 (5-8): 702-714. Pulic, A. (2004). Intellectual capital: does it create or destroy value? Measuring Business Excelence, 8 (1): 62-68. Rahmandad, H., Repenning, N., & Sterman, J. (2009). Effects of feedback delay on learning. System Dynamics Review, 25 (4): 309-338. Repenning, N. (2002). A simulation-based approach to understanding the dynamics of innovation implementation, Organization Science, 13: 109–127. Riahi-Belkaoui, A. (2003). Intellectual capital and financial performance on US multinational firms. Journal of Intellectual Capital, 4 (2): 215-226. Roos, J., Roos, G., Dragonetti, N. C. & Edvinsson, L. (1997). Intellectual Capital: Navigating in the New Business Landscape. London: MacMillan Press. Sanchez, R. & Heene, A. (1997). Managing for an uncertain future: a systems view of strategic organizational change, International Studies of Management & Organization, 27 (2), 21-42. Sawicka, A. & Gonzalez, J. J. (2003). Choice under risk in IT environments according to cumulative prospect theory. Proceedings of the 21st Conference of the System Dynamics Society, New York, USA. Shiu, H. J. (2006). The application of the value added intellectual coefficient to measure corporate performance: evidence from technological firms, International Journal of Management, 23 (2): 356-365. Sveiby, K. E. (1998-2001). Intellectual capital and knowledge management, [documento de WWW] URL http://www.sveiby.com/articles/IntellectualCapital.html, accedido en 11/02/2011. Tan, H. P., Plowman, D. & Hancock, P. (2007). Intellectual capital and financial return of companies. Journal of Intellectual Capital, 8 (1): 76-95 Tversky, A. & Kahneman, D. (2000). Advances in prospect theory: cumulative representation of uncertainty. In Kahneman, D. & Tversky, A. (eds) (2000a): Choices, Values, and Frames: 44-65, Cambridge University Press, Cambridge, United Kingdom. Von Neumann, J., Morgestern, O. (1947): Theory of Games and Economic Behavior (2nd ed.), Princeton University Press, Princeton, N.J. Von Krogh, G., Erat, P. & Macus, M. (2000). Exploring the link between dominant logic and company performance, Creativity and Innovation Management, 9 (2), 82-93. Zégal, D. & Maaloul, A. (2010). Analysing value added as an indicator of intellectual capital and its consequences on company performance, Journal of Intellectual Capital, 11 (1): 39-60. Zott, C. (2003). Dynamic capabilities and the emergence of intra-industry differential firm performance: Insights from a simulation study. Strategic Management Journal, 24: 97–125.

You May Also Find These Documents Helpful

  • Better Essays

    Reinvest in R&D

    • 1243 Words
    • 5 Pages

    In the past 20 years, intellectual property has been highly respected in the world. In other words, there has been a majority of companies that paid more and more attention with regard to the performance of department of research and development (R&D), and especially for technologic corporations that own the fast product-life-cycle. Despite the fact that some people will argue whether reinvesting more source in research and development is successful strategy or not, an important issue for management studies would be normally discussed to be to what extent companies have to reinvest in research and development. This essay will seek to discuss some solutions of a number of large technologic companies form different views and also try to find the optimum one. Firstly, there are two solutions will be discussed. Secondly , They will be compared each other. In the end, the essay could summarize that which solution is the best.…

    • 1243 Words
    • 5 Pages
    Better Essays
  • Satisfactory Essays

    Lululemon Case Study

    • 1891 Words
    • 8 Pages

    1. As discussed in the course introduction and chapter one, the two main determinants in achieving and sustaining superior performance are (1) industry attractiveness (i.e. external environment) and (2) competitive position (i.e. internal organization). The first input involves the Industrial Organization model of above-average returns, which suggests that the external environment imposes constraints on superior performance. Hence, firms must study the external situation, especially industry and competitor dynamics, to locate an attractive industry and set an appropriate strategy. The second input involves the Resource-Based model, which suggests that a firm’s unique resources and capabilities are the basis of superior returns. Here, firms select a strategy that allows the firm to utilize its capabilities relative to market opportunities in order to build competitive advantage.…

    • 1891 Words
    • 8 Pages
    Satisfactory Essays
  • Best Essays

    Strategy

    • 4072 Words
    • 17 Pages

    Edvinsson, L. and Malone, M. S. (1997).Intellectual Capital: Realizing Your Company’s True Value by Finding its Hidden Brainpower. New York: Harper Business.…

    • 4072 Words
    • 17 Pages
    Best Essays
  • Powerful Essays

    Environmental audit of IHG

    • 1789 Words
    • 8 Pages

    References: 1. Barney, J. (2011) 'Firm Resources and Sustained Competitive Advantage ' Journal of Management 17 (1), 99 -120.…

    • 1789 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    Knowledge based organizations are usually considered to be those whose products or services are knowledge -intensive. Knowledge based organizations (also referred as knowledge-enabled or knowledge- intensive organization) are usually described in terms of the knowledge intensity of their product or service. The greater the degree to which knowledge forms the core of the product or service, the more knowledge- based the organization. However, using products or services as a mean for categorizing the knowledge – based organization is inadequate. Products or services reflect only the tangible part of the organization. The primary resource that enables an organization to produce is hidden within the “invisible asset - intellectual capital”. (Itami, 1987).…

    • 2405 Words
    • 10 Pages
    Powerful Essays
  • Powerful Essays

    References: 1) Barney, J., (1991). Firm Resources and Sustained Competitive Advantage, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120.…

    • 4299 Words
    • 123 Pages
    Powerful Essays
  • Powerful Essays

    Southwest Airlines

    • 2655 Words
    • 11 Pages

    Mosconi, E., & Roy, M. (2013). Linking knowledge management and organizational performance. International Business Research, 6(9), 68-76. Retrieved from http://search.proquest.com.ezproxylocal.library.nova.edu/docview/1465350639?accountid=6579…

    • 2655 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    Purpose – Through investigating the relationship among human resource management (HRM), organizational learning (OL), organizational innovation (OI), knowledge management capability (KMC), and organizational performance (OP), the aim of this paper was to find a way of improving organizational performance through learning and knowledge. Design/methodology/approach – A survey questionnaire was utilized to collect data. The population of this study included 659 employees from electronic industrial listed and over-the-counter listed technological companies in Taiwan (N ¼ 208, valid return rate 37.21 percent). Descriptive statistics, exploratory and confirmatory factor analysis, as well as structural equation modeling were used for data analysis. Findings – The results indicate that: HRM strategies result in better organizational learning, organizational innovation, and knowledge management capability, which ultimately contributes to achieving organizational performance; organizational learning improves organizational innovation and accumulates knowledge management capability; organizational innovation results in knowledge management capability development, which contributes to the establishment of organizational development; and technological companies should utilize organizational knowledge in order to enhance organizational performance. Research limitations/implications – The generalization of the present study is constrained by the existence of possible biases of the participants, and the regional-constrained data which were collected in and thus focused on Taiwan. Thus, the characteristics of the surveyed firms may be different from those in other areas or countries. Managerial implications…

    • 8700 Words
    • 35 Pages
    Good Essays
  • Better Essays

    Bp Strategy

    • 3144 Words
    • 13 Pages

    Winter, S. (2003), “Understanding dynamic capabilities”, Strategic Management Journal, Vol. 24, pp. S991-5 (Accessed: 13 April 2013).…

    • 3144 Words
    • 13 Pages
    Better Essays
  • Good Essays

    The idea of intellectual capital has emerged as an alternative or complementary to that of financial and material resources. The individual and organisational knowledge is recognised as one of the most critical assets. The way all stakeholders within the organisations recognise and use information, share and exploit knowledge, and create new knowledge is fundamental to support a company’s competitiveness and growth. Therefore, it has been argued that “the most successful companies and the most successful countries will be those that manage…

    • 456 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    The remaining of this paper unfolds as follows: Section 2 briefly reviews the resourcebased view and comments on RBV as a developmental process. The subsequent section…

    • 4962 Words
    • 20 Pages
    Powerful Essays
  • Powerful Essays

    References: Amin, A. & Cohendet, P. (2004). Architectures of knowledge: Firms, capabilities, and communities. Oxford: Oxford University Press. Amit, R. & Schoemaker, P. J. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14, 33-46. Andreu, R. & Ciborra, C. (1996). Organizational learning and core capabilities development: The role of IT. Journal of Strategic Information Systems, 5, 111-127. Ashby, W.R. (1960). Design for a brain. New York: John Wiley and Sons, Inc. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. Bateson, G. (1972). Steps to an ecology of mind: A revolutionary approach to man’s understanding of himself. San Francisco: Chandler Press. Boerner, C.S., J.T. Macher, & D. Teece (2001). A review and assessment of organizational learning in economic theory. In M. Dierkes, A. Berthion Antal, J. Child & I. Nonaka (Eds) Handbook of organizational learning & knowledge (pp.89-117), Oxford: Oxford University Press. Boisot, M.H. (1998). Knowledge assets: Securing competitive advantage in the information economy. Oxford: Oxford University Press. Brenner, T. (2006). Agent learning representation. Advice in modelling economic learning. In L. Tesfatsion & K. Judd (eds), Handbook of computational economics, chapter 18: 895947. Elsevier. Brown, J.S. & Duguid, P. (1991). Knowledge and organization: A social-practice perspective. Organization Science, 12(2), 198-213. Brown, F. (2003), Three revolutions: From training to learning and team building, Military Review, July-August, 54-61.…

    • 7987 Words
    • 32 Pages
    Powerful Essays
  • Good Essays

    Intellectual Capital

    • 14400 Words
    • 58 Pages

    Understanding corporate value: managing and reporting intellectual capital Intellectual capital Contents 1 Introduction 4 2 Definitions of intellectual capital 6 2.1 2.2 Classifications of intellectual capital Why is intellectual capital so difficult to measure? 3 IC measurement 8 Generic models 3.1 Balanced scorecard 3.2 Performance prism 3.3 Knowledge assets map approach Individual company models 3.4 The Skandia navigator 3.5 Ericsson’s cockpit communicator 3.6 Celemi’s intangible assets monitor 3.7 Ramboll’s holistic company model 3.8 Bates Gruppen CompanyIQ measurement system…

    • 14400 Words
    • 58 Pages
    Good Essays
  • Powerful Essays

    This article has the following objectives: developing the need for assessing knowledge capital at the national economic level; review of a national case study of how intellectual capital assessment was done in case of one nation state; suggesting implications of use of such assessment methods and needed areas of advancement; and highlighting caveats in existing assessment methods that underscore the directions for future research. With increasing emphasis on aligning national information resource planning, design and implementation with growth and performance needs of business or nation, better understanding of new valuation and assessment techniques is necessary for information resource management policymakers, practitioners and researchers.…

    • 7707 Words
    • 31 Pages
    Powerful Essays
  • Good Essays

    Intellectual capital- is the amount by which the market value of a firm exceeds its tangible (physical and financial) assets less liabilities. [1][2] This contrasts with physical and financial forms of capital; all three make up the value of an enterprise. Measuring the real value and the total performance of intellectual capital's components is often a critical part of running a company in the knowledge economy and Information Age, to optimize the stock price using the leverage of intellectual assets.[3]…

    • 815 Words
    • 4 Pages
    Good Essays