Week 1,2,3 Flashcards
(38 cards)
Transaction cost theory
To reduce transaction costs
Bounded rationality
Agents constrained by cognitive limits on their capacities to process information
Forms of governance
- Hierarchy (make)
- Market (buy)
- Hybrid (contractual relation)
Criticism to transaction cost theory
- too much emphasis on opportunism
- trust is neglected
- all actors are homogeneous
- no learning curves
- path dependency ignored
Innovation radar
Offerings (what)
Platform
Solutions
Customers (who)
Customer experience
Value capture
Processes (how)
Organization
Supply chain
Presence (where)
Networking
Brand
Why do incumbents sleep
Niche market is small and unappealing
No incentives to enter
Organization routines
Fear of cannibalism
Screen out information
Theory of inertia
Too much bureaucracy that tends to slow down the company
Disruption innovation process
Origination in low-end foothold, less demanding customers
Late addition of mainstream customers
Disrupted or be disrupted
Incumbents should not overreact by destroying a profitable business but strengthen relationships with core customers through sustaining innovation and/or create a new division focusing on disruptive growth
Behavioral theory of the firm
Understand how complex organization actually make decision not how they should do it
Satisficing
Individuals do not maximize but will go for the first solution that satisfies their minimum standard
Quasi resolution of conflicts
Firms are coalitions of people addressing different goals
Uncertainty avoidance
Emphasis on short run responses
Problematic search
Overcoming performance shortfall depending on aspirations and adaptions
Organization learning
Cycle of search and change leads to adaptation of goals
Organizational slack
Difference between total resources and costs, having more resources come from projects where they can do more innovation with
Criticism BTOF
Top complex
No explanation of firm interaction
Prediction but no explanation
Environment is ignored
Heuristics
Cognitive mechanisms
Rules of thumb
Lead to biases
Common biases
- availability
- adjustment & anchoring
- overconfidence
- representativeness
- overestimation
Thefrequency of use of biases depends on
Decision uncertainty
Decision complexity
Stage gate
Quality control checkpoint with deliverables, criteria, outputs
Stage gate problems
- no pain, no gain
- gates with no teeth
- hollow decision at gate
- who are the gatekeepers
- gatekeepers behaving badly
- only cost reduction No quality improvements
- too much bureaucracy
- reliance on technology
Organization learning based on
Routines
History dependent
Target
Competency trap
Wrong specialization: firma specialize in an inferior action
