English, Article, Journal or magazine article edition: Organizational capabilities and industry dynamics: a computational model. Marco Corsino; Roberto Gabriele; Enrico Zaninotto

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Bookmark: http://trove.nla.gov.au/version/157819
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Organizational capabilities and industry dynamics: a computational model.
Author
  • Marco Corsino
  • Roberto Gabriele
  • Enrico Zaninotto
Physical Description
  • preprint
Notes
  • RePEc:trt:rockwp:050
  • In this paper we propose a model of bounded rational organizations that addresses the role of organizational capabilities in shaping firm size, growth rates and profitability. Our approach aims at reconciling the logic behind stochastic models of firm growth with the notion of organizational capabilities as drivers of economic performance. We extend the stochastic framework by incorporating behavioural assumptions on: (a) the interactions between the firm and the business environment; and (b) the mechanism by which firms sense and seize business opportunities. In our perspective, the degree of concurrence between the substance and organization of the firm and the context in which it operates will directly influence its profitability and indirectly (through costly mutations of the organizational structure) drive its growth. Despite its simple nature the model is able to capture well known regularities about industry dynamics. It generates firm size distributions that are skewed and heterogeneous across different scenarios. Moreover, our results suggest that the higher the selective power of the firm's organizational capabilities, the more the steady state distribution deviates from a log normal. Besides, the distribution of growth rates has a tent-shaped form which is consistent with the pattern described in empirical studies. The distribution of opportunities per firm is also skewed suggesting that a very few entities account for a large fraction of business opportunities arising throughout the simulation period. Finally, the interaction between the external environment and the internal structure of the firms also influences the heterogeneity in the value of the opportunities they capture.
  • organizational capabilities; firm size distribution; growth rates; simulation model
  • RePEc:trt:disawp:0809
Language
  • English
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