Dynamic Resource Capabilities: Managing Workforce Knowledge with a Technology Upgrade

Abstract

A model is introduced that integrates workforce knowledge management with the technology upgrade decision to provide a holistic view of how to manage dynamic knowledge-based resource capabilities. The levels of workforce knowledge and technology capability are measured in relation to their ability to generate net revenue. Due to changes in consumer preferences and competition, the ability of workforce knowledge and technology capability to drive net revenue depreciates over time. The manager pursues several strategies to reduce or reverse the effects of depreciation. The manager may invest in a technology upgrade. However, while adding to technology capability, an upgrade makes a portion of workforce knowledge obsolete reflecting skills that are no longer useful. The manager invests in preparatory training (learning-before-doing) prior to the upgrade to reduce obsolescence. The manager invests in general training to directly increase the workforce knowledge over time. Thus while preparatory training is narrowly focused on preparing for a technology upgrade, general training responds to depreciation by enhancing the ability of the workforce to improve existing or create new products. We find that the rates of preparatory and general training follow entirely different paths over time. Conditions are given where a manager uses one training strategy as a substitute for or complement to the other. We show that training strategies are not only impacted by learning phenomena such as the rate of forgetting, but also by the rates of technology depreciation and advancement. Conversely, we show how workforce learning phenomena impact the technology upgrade decision.