No abstract

The benefits of strategically balancing exploitation and exploration are well documented in the literature. Nonetheless, many firms tend to overemphasize exploitation efforts, a situation commonly referred to as the 'success trap'. Previous studies have attributed this behaviour to managerial incompetence or myopia. However, some management teams appear to adequately recognize the exploration need, while not being able to bring about the required strategic change. We draw on system dynamics modelling to investigate this phenomenon. A simulation model is developed and then the behaviour of a selected firm is replicated to uncover the underlying processes. As such, we develop a process theory of the success trap at the managerial level, coined the 'suppression process'. This process theory describes and explains how the interplay between top managers, board members, and exploitation-exploration activities can trap the firm in the suppression of exploration.

Human body energy storage operates as a stock-and-flow system with inflow (food intake) and outflow (energy expenditure). In spite of the ubiquity of stock-and-flow structures, evidence suggests that human beings fail to understand stock accumulation and rates of change, a difficulty called the stock–flow failure. This study examines the influence of health care training and cultural background in overcoming stock–flow failure. A standardized protocol assessed lay people’s and health care professionals’ ability to apply stock-and-flow reasoning to infer the dynamics of weight gain/loss during the holiday season (621 subjects from seven countries). Our results indicate that both types of subjects exhibited systematic errors indicative of use of erroneous heuristics. Stock–flow failure was found across cultures and was not improved by professional health training. The problem of stock–flow failure as a transcultural global issue with education and policy implications is discussed.

No abstract

Prior literature stresses the importance for manufacturers to use formal and informal controls to coordinate collaborative new product development activities with suppliers. In doing so, the existence of trust between manufacturers and suppliers is believed to play a key role because it enables manufacturers to reduce investments in formal controls and rely more on less costly informal controls. Manufacturers and suppliers don't suddenly trust each other though: trust typically grows over time as the partners get to know each other. Trust may also decrease if manufacturers overuse formal controls or if suppliers underperform. These fluctuations in trust over the course of supplier–manufacturer relationships complicate the so‐called trust–control nexus and raise important questions about the impact of trust on the efficiency and effectiveness of formal and informal controls as coordination mechanisms. Therefore, this study examines how manufacturers should balance formal and informal controls over time to reap the full benefits of collaborative product development with suppliers. For that purpose, a conceptual and system dynamics model are developed, which incorporate the links among formal and informal controls, trust, and the supplier's development performance. In an empirical validation in the context of the shipbuilding industry, the results reject the notion that manufacturers must lessen formal controls and increase informal controls with trust. Instead, it is most efficient and effective to invest always in formal controls, particularly process control, to coordinate supplier involvement in new product development. These results have important theoretical and managerial implications: Informal controls are not as profitable as expected.