Capability Building and Learning: An Emergent Behavior Approach

31 Pages Posted: 7 Jun 2012

See all articles by Rafael Andreu

Rafael Andreu

University of Navarra - IESE Business School

Josep Riverola

University of Navarra

Josep M. Rosanas

University of Navarra - IESE Business School

Rafael De Santiago

University of Navarra - IESE Business School

Date Written: June 6, 2012

Abstract

Economics-based models typically overlook management decisions and firms' capabilities. We develop a model that puts firms at center stage by simulating the aggregate behavior of a population of firms resulting from specific management decisions. The model features a learning process that produces changes in companies' capabilities. Decisions are made under imperfect information and bounded rationality, and managers may sacrifice short-term performance in exchange for qualitative variables that affect their firm's future potential. The model provides a structured setting in which these issues - which are often discussed only in an informal way - can be more rigorously analyzed. The simulations produce a variety of hard-to-anticipate emergent behaviors. Economic performance appears to be quite sensitive to managers' estimates of the true capabilities of their own firms. Also, companies that are willing to accept sacrifices in the short run in order to increase future potential appear to be more stable than the rest.

Keywords: Capability building vs. economic performance, imperfect information, learning, bounded rationality

Suggested Citation

Andreu, Rafael and Riverola, Josep and Rosanas, Josep M. and De Santiago, Rafael, Capability Building and Learning: An Emergent Behavior Approach (June 6, 2012). IESE Business School Working Paper No. 952, Available at SSRN: https://ssrn.com/abstract=2079029 or http://dx.doi.org/10.2139/ssrn.2079029

Rafael Andreu (Contact Author)

University of Navarra - IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Josep Riverola

University of Navarra ( email )

Camino del Cerro del Aguila, 3
Pamplona, Navarra 31080
Spain
34 1 357 0809 (Phone)
34 1 357 2913 (Fax)

Josep M. Rosanas

University of Navarra - IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain
34 932534200 (Phone)
34 932534343 (Fax)

Rafael De Santiago

University of Navarra - IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
556
PlumX Metrics