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臺大管理論叢
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5.4 Impact of Process Improvement and Innovation Effectiveness
The trade-offs are influenced by the effectiveness of improvement and innovation
capability development. As the two parameters are exogenous in our model, a sensitivity
analysis is conducted to further understand the impact of capability development trade-offs
on competitive tension.
The attractiveness of short-termism trade-off increases in the effectiveness of process
improvement capability development. Then the investment in innovation capabilities is
expected to decrease over time. Our simulation result is consistent with intuitive expectations
as illustrated in Figure 5a. Even though the follower eventually recognizes the importance of
developing firm-specific capabilities through process innovation, it significantly delays
committing to such investments due to the high improvement effectiveness. Consequently,
we expect that firm resources become more similar to each other as shown in Figure 5b. The
innovation differentiation (Figure 5c) and competitive tension (Figure 5d) both decrease in
terms of process improvement effectiveness.
Figure 5 Operational Performance for Various Improvement Effectiveness