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Simulating the evolution of industries using a dynamic behavioural model
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Kunc, Martin (2004) Simulating the evolution of industries using a dynamic behavioural model. In: 2004 International Conference of the System Dynamics Society, Oxford, UK, July 25 - 29. Published in: Proceedings of the 2004 International Conference of the System Dynamics Society
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WRAP_Kunc_0870951-wbs-041213-sd_conference_oxford_2004_final_version_for_wrap (2).pdf - Accepted Version Download (7Mb) | Preview |
Abstract
Investment decisions determine that not only the evolution of industries is hard to forecast with certainty but also industries may have different dynamic behaviour and evolutionary paths. In this paper we present a behavioural framework to simulate the evolution of industries. Two factors determine the dynamic behaviour of an industry: managerial decision-making and the interconnected set of resources. Managerial decision-making significantly affects the dynamic behaviour of firms. Bounded rational managers define rates of asset stock accumulation to achieve a competitive advantage using different mental models. However, the set of interconnected internal and external resources existing at industry level affects the expected performance of the firms. Consequently, the effect of the feedback structure existing in the industry, which consists of managers in competing firms making similar decisions over the interconnected set of resources, determines that the dynamically contingent behaviour of firms influence on the industry evolutionary paths.
In our simulations, we found that simple managerial choices, such as the definition of a market share or an expected market size, lead to diverse firm and industry performances even though management of competing firms emphasises different sets of resources required to carry out their strategy.
| Item Type: | Conference Item (Paper) | ||||
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| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Operational Research & Management Sciences Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Industrial management , Human behavior models , Leadership | ||||
| Journal or Publication Title: | Proceedings of the 2004 International Conference of the System Dynamics Society | ||||
| Official Date: | 2004 | ||||
| Dates: |
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| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Funder: | London Business School (LBS) | ||||
| Conference Paper Type: | Paper | ||||
| Title of Event: | 2004 International Conference of the System Dynamics Society | ||||
| Type of Event: | Conference | ||||
| Location of Event: | Oxford, UK | ||||
| Date(s) of Event: | July 25 - 29 | ||||
| Related URLs: |
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