Capability Accumulation (Normalize Stock from 0 to 1)

[cweitert]

Hey there,

I am a PhD Student currently working on a sd model analyzing the impact of dynamic capabilities on the performance of firms facing technological change.

In my literature research i came across Kim Warrens Competitive Strategy Dynamics. He uses the concept of capabilities a lot. I think his representation is very interesting, but I have some troubles transferring these into a formal model.

He argues that capabilities range between 0 and 1, where 0 represents absolute absence of the capability and 1 represents the highest competence possible. On the other hand he represents capabilities as stock variables in his stock and flow diagrams. (no equations are given)

Does anyone have an idea how to model this adequately and continuously(without too artificial and/or discrete formulations)?

Another Problem associated with this is the formulation of the inflow. This should be influenced by an actual learning process as well as by the effort (investment) made to build the capability. Therefore if and how much capability is accumulated depends on its utilization and the financial resources allocated to the accumulation process (inflow).

Thanks a lot in advance for your help!

Cheers Chris

[LAUJJL]

Can you give the exact pages in Warren's book where both references come from. I will have a look at the book and try to give an answer.
I think too that there is a Web site where you can dowload the models from the book and make them run using the freely downloadable mystrategy player.
Regards.
JJ

[cweitert]

Hey JJ,

its not specifically about the way Kim Warren does it. (I referred to Page 210 and 211 in the 2002 Edition of Competitive Strategy Dynamics)

Thanks for the tip with the website, I ll try to find the equations behind the structure. But besides that I m not fixed on the way he does it, I m open to different approaches.

Thanks,

chris

[LAUJJL]

Hi Chris

The web site is relative to the latest 2007 edition.

I will have a look at the 2002 book. I have both.

Regards.

JJ

[LAUJJL]

Hi Chris

I have presently not much time. The best solution for you is to go to the following web site, register and download the mystrategy model reader and the accompanying pdf and models from the last book. The last book deals with the same subject than the first one, and browsing a little you will find the model you are dealing with, that you will be able to explore and run. It is much better for you than any explanation from me.
If you still cannot make it, ask back and I hope that I will have more time to help you.
The site is:
http://www.strategydynamics.com/smdresources
Regards.
JJ

[cweitert]

Hey JJ,

thanks. I tried to find any model, or a least a link to model, but I couldnt find it. Downloaded the Reader though...
But I dont want to focus to much on this. If anyones has got another idea about how to formulate this, please tell me.

Are there any other suggestions, as well concerning the inflow to capabilities problem I described above?

Thanks in advance,

Chris

[LAUJJL]

You have not looked well enough. there are models downloadable for each chapters if you have registered freely. The models have an extension .msf.
Regards.
JJ

[cweitert]

Hey JJ,

you are absolutely right - there are models available. But not for the chapters dealing with capabilities, especially chapter 10. But thanks for your help. I just looked for some external creative input into the problems I listed above. Maybe this is the wrong place to discuss more academic an theory-building issues? If there is a better place and you know of it, please let me know.
Sorry to take your time!

Kind regards,

Chris

[LAUJJL]

Hi

I am not sure that you have correctly looked at all the models. Capability is one of Kim's pet word, and I am sure that there are models that deal with this notion.

To look for other inputs, you should consult the SD bibliography available on
http://www.systemdynamics.org

You can too post a mail on the system dynamics discussion section available on this forum or at the SD forum

http://www.systemdynamics.org/forum/

It is too better to join a simple model describing your problematic. The simpler the better if you want answers. People are lazy and they will not spend the time necessary to understand something even slightly difficult to understand.

Regards.

JJ

[kim warren]

Hi Chris - you need the later book 'Strategic Management Dynamics' which is much more explicit about how capabilities actually function, and examples of how they relate to the business system they link to. Bear in mind that 'dynamic capabilities' in the strategy literature does not mean what we in SD might think it means [how capabilities develop] .. it refers to how well organisations are able to switch capabilities in fast-changing strategic situations, such as hi-tech.
Kim

[cweitert]

Hi Kim,

thanks for your answer. I just received the new book from our library, its true, its much more specific about how capabilities work.
A lot of the descriptions of dynamic capabilities in the strategic management literature are actually pretty close to the SD view of things (as DC being stocks, as DC being higher order capabilities that govern the rate of change of (lower level) operational capabilities and resources.) Therefore I want to integrate the verbal descriptions from the literature into a model to test their behavior. A reviewer from the SD conference gave me the tip to take a closer look at your work on capabilities. I actually liked it, and wanted to refer to you in my work. Therefore I am interested in technical side of things, mainly your thoughts on how to keep capabilities in between 0 and 1 (since they are a stock). This important for me, because your arguments, why capabilities are in this range (1 is the highest possible capability...) are very reasonable.
Hazir Rahmandad has already done some interesting work on dynamic capabilities, but he takes a slightly different approach.

Thanks for your insights,

best regards,

Christian