1 Department of Operations Management, Copenhagen Business School2 York University [Toronto]
The Role of Investment in Routine Adaptation
We propose a formal model of firm growth through replication that considers the extent of the investment to adapt routines as replication unfolds and the portion of this investment that goes toward innovation in the routines. The use of these two investment constructs brings about four types of growth policies. We use a utility function that considers proxies for both growth and failure potential to uncover the role played in selecting these policies by the economic environment of the targeted market for expansion. Our analysis further reveals the importance of the innovation-relative-to-imitation investment efficiency in adapting the routines to be replicated while selecting a growth policy. The refinement of a replication theory through our analysis of growth policies result in two testable hypotheses.
Poms 2012: 23rd Annual Conference of the Production and Operations Management Society, 2012