@article{1527273fd1974468879bd6bd8f77664e,
title = "Capability Building in Sluggish Organizations",
abstract = "In order to thrive, organizations need to build and maintain an ability to meet unexpected external challenges. Yet many organizations are sluggish: their capabilities can only undergo incremental changes over time. What are the stochastic processes governing “routinely occurring” challenges that best prepare a sluggish organization for unexpected challenges? We address this question with a stylized principal-agent model. The “agent” represents a sluggish organization that can only change its capability by one unit at a time, and the “principal” represents the organization{\textquoteright}s head or its competitive environment. The principal commits ex ante to a Markov process over challenge levels. We characterize the process that maximizes long-run capability for both myopic and arbitrarily patient agents. We show how stochastic, time-varying challenges dramatically improve a sluggish organization{\textquoteright}s preparedness for sudden challenges.",
keywords = "dynamic capabilities, organizational preparedness, periodization, sluggish adaptation, training programs",
author = "Kfir Eliaz and Ran Spiegler",
note = "Publisher Copyright: {\textcopyright} 2022 INFORMS.",
year = "2023",
month = mar,
doi = "10.1287/mnsc.2022.4445",
language = "אנגלית",
volume = "69",
pages = "1703--1713",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Institute for Operations Research and the Management Sciences",
number = "3",
}