Consider a client who has a problem she cannot solve by a given due date, and a consultant engaged to help. The consultant sets the price for knowledge outsourcing to maximize his profit. The client sets the quantity of knowledge outsourcing and the portion of the problem she solves in-house to minimize her cost. The client benefits from knowledge outsourcing only to the extent that she has absorptive capacity to understand and utilize that knowledge. In this context, absorptive capacity is driven by the client's relevant knowledge and the working relationship between the client and the consultant. We examine how absorptive capacity impacts the key operational decisions of both the client and the consultant. Motivated by the experience of one of the co-authors, we introduce a deterministic model and two stochastic extensions that are critical in industries including semiconductor manufacturing. While we find that more absorptive capacity always reduces the client's total cost; under certain conditions, the consultant's profit may deteriorate. If project scope uncertainty exists, we find that, in some competitive environments, the availability of an outsourcing option can indirectly incentivize a client to take on more risk. If project completion time uncertainty exists, we show that a client employs a more experienced consultant and forgoes control of the project to lower her expected total cost. Surprisingly, in a time-based competitive environment, the more experienced consultant increases his price; whereas if time-based competition is limited, the consultant's price is lower. Lastly, extensive numerical experiments are developed based on the synthesis of the deterministic and the two stochastic models. The numerical experiments demonstrate the robustness of the analytical results. Additionally, numerical results are obtained whereby, prior to the start of the game: (i) the client may invest to increase her initial knowledge or (ii) the client and the consultant may invest to improve their working relationship.

This paper focuses on the critical roles of knowledge workers when a firm pursues a major innovation project. In this context, we consider knowledge workers as those who contribute to a firm's performance at the executive, management, and technical specialist levels. Technical specialists include persons with advanced skills in engineering, analytics, statistics, science, and economics. By analyzing a series of case studies and personal interviews, we demonstrate that alignment (i.e., coordination, integration, and collaboration) among these knowledge workers is critical for the success of an innovation project. The paper concludes with a discussion of the responsibilities of knowledge workers at the executive, management, and technical specialist levels to ensure the necessary alignment occurs for successful innovation.

The successful launch of an innovative product or service is driven by an unexplored market opportunity or a technological breakthrough. Oftentimes, however, firms lack the necessary resource capabilities to exploit new market opportunities; alternately, markets may not exist for firms to successfully profit from technological breakthroughs. In other words, firms suffer from performance gaps between their market opportunities and their resource capabilities. In this study, we organize the growing literature on knowledge management to develop the concept of a knowledge value chain, which we characterize as the transformative engine by which a firm can close such performance gaps. In addition to motivating the framework through case studies and placing the existing research literature in knowledge management within this framework, we also identify several directions of future research.

We analyze a firm's investment in environmental process improvement (EPI) to reduce the environmental impact (EI) of its manufacturing processes in relation to various internal firm characteristics and in response to different external regulatory drivers. We provide a deep understanding of how these internal and external forces cause the firm to pursue EPI earlier or later in the planning horizon and at an increasing or a decreasing rate over time. In particular, we show how a regulator can drive different patterns of EPI over time through subsidies for EPI or penalties for EI. We also explore the impacts of two key operational capabilities of the firm—the production‐cost efficiency of EPI and the effectiveness of EPI in reducing EI—on the rate of EPI over time. We demonstrate that improvements in these operational capabilities contrastingly alter the timing of investments in EPI. Lastly, we demonstrate that a firm capable of leveraging EPI to enhance product functionality or command a reputational premium in the marketplace pursues a remarkably different pattern of EPI over time compared to a cost‐focused firm that only responds to regulatory forces.

Management of technology (MOT) concerns the processes by which innovations in technology are transformed to ultimately diffuse into the marketplace. As such, operations management contributes to the multidisciplinary realm of MOT through its study of a firm's resource capabilities. This special issue offers a broad and deep discussion on the interface between MOT and POM. The contributions of the MOT special issue are fourfold. First, we invited scholars from a variety of disciplines to write papers that highlight a broad perspective of emerging problems in MOT that can be addressed by POM researchers. Second, a set of contributed papers is included in the special issue spanning several themes at the intersection of POM and MOT. Third, much of this article is devoted to a deep discussion of an emerging theme that represents a fundamental challenge to the modern, knowledge‐intensive firm. Specifically, we explore how firms develop and leverage internal and external knowledge‐based resource capabilities to respond to the dynamic opportunities and threats created by innovations in technology. Lastly, we provide a comprehensive discussion of future research opportunities that relate to the challenges in managing the knowledge‐intensive firm.

Production and Operations ManagementVolume 24, Issue 2 p. 357-357 Call for Papers Call for Papers: Special Issue of Production and Operations Management on Management of Technology Guest Editor Cheryl Gaimon, Guest Editor Cheryl Gaimon Scheller College of Business, Georgia Institute of TechnologySearch for more papers by this author Guest Editor Cheryl Gaimon, Guest Editor Cheryl Gaimon Scheller College of Business, Georgia Institute of TechnologySearch for more papers by this author First published: 16 February 2015 https://doi.org/10.1111/poms.12342Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume24, Issue2February 2015Pages 357-357 RelatedInformation

This paper contributes to a more nuanced understanding of the paradox of ambidexterity. Specifically, we consider the role of prior success experience and prior failure experience on the effectiveness of future exploration and exploitation. Using a sample of 13,464 patents from the biomedical industry we demonstrate several features salient to understanding the paradox of ambidexterity. First, we demonstrate that exploration and exploitation have opposing impacts on innovation performance, while we also demonstrate a negative interaction effect between exploration and exploitation, which highlights the challenge of ambidexterity. We also show that prior success experience increases the likelihood of breakthroughs. On the other hand, we do not find support for a direct benefit of learning from failure. Interestingly, however, we demonstrate that prior failure experience and exploitation are both necessary, but not independently sufficient, for learning from failure to occur. Furthermore, we find that when pursuing exploration, accumulated prior failure experience can lead to an “exploration failure trap”. Collectively, our results illustrate that pursuing ambidexterity necessitates a delicate balancing act, in order to manage the short-term and long-term benefits, and perils, of exploration, exploitation, and learning from failure.

We consider managerial decision-making regarding the evolution of knowledge in a three-stage new product development project. The manager invests in knowledge development activities (such as prototyping, pilot line testing, ramp-up experiments) at each stage throughout the project. The links between development activities at different stages are captured by recognizing that, as a result of knowledge transfer, the ability of the recipient team to generate new knowledge is enhanced. Over time as the levels of knowledge increase, product features and process characteristics improve. The performance of the new product in the marketplace, which drives net revenue, reflects the levels of knowledge attained at each stage of the project at the product launch time. The objective is to maximize the net revenue earned when the product is released to the marketplace less development costs. We show that the rate of each development activity follows an entirely different dynamic strategy during the project. In the first stage, development activities follow a front-loading strategy; in the second stage, development activities follow a moderate delay strategy, and in the third stage development activities follow an extreme delay strategy.

This publication contains reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles.

We introduce a two-period Stackelberg game of a supplier and buyer. We recognize that learning based on manufacturing experience has many advantages. Consistent with much of the literature, we assume both the buyer and supplier realize reductions in their respective production costs in period 2 due to volume-based learning from period 1 production. Additionally, we introduce another learning concept, the future value, to capture the benefits of transferring current manufacturing experience for the design and development of future products and technologies. In contrast to the literature, we allow the supplier two mechanisms to impact the buyer’s outsourcing decision: price and the investment in integration process improvement that reduces the buyer’s unit cost of integration. Integration process improvement may include the investment in new materials, specialized technology, or the re-design of the integration process. Conditions are given whereby the buyer partially outsources component demand as opposed to fully outsourcing or fully producing in-house. We explore when the supplier’s price and investment in integration technology are substitute strategies versus complements. We analyze the effect on the buyer and supplier’s decisions due to: the buyer’s base integration cost, the supplier’s cost of integration process improvement, the rates of learning for both the buyer and supplier, and dynamic demand.

In various industries end-product manufacturers acquire core subsystems from upstream technology provider firms and focus primarily on efficient end-product integration. We examine the strategic interactions between a technology firm that introduces a new subsystem and the respective end-product manufacturers (“integrators”). We analyze how the fraction of end-product functionalities prepackaged into the subsystem impacts the optimal introduction strategy and the relative value appropriation power across the industries. Offering a subsystem that performs many end-product functions has a dual effect on the provider's profits. On the positive side, the provider extracts a higher ease-of-use rent from the integrators because of the easier/cheaper integration. On the negative side, such subsystems may curtail the adopters' ability for competitive differentiation and render adoption less valuable. We discuss the role of subsystem functionality in value appropriation in technology markets, and we highlight the perils of subsystem overintegration. This paper was accepted by Kamalini Ramdas, entrepreneurship and innovation.

Although managers invest in new technology to improve performance, often the benefits sought are elusive while the costs incurred far exceed expectations. The literature offers insights to help explain this phenomenon. Evidence suggests that, while carefully considering the purchase cost, managers often underestimate the costs and planning necessary for proper implementation. Consequently, short-term problems arise and long-term benefits are not realized. A model is introduced that integrates workforce knowledge management with the technology upgrade decision. The manager upgrades technology or pursues general training of the workforce in response to depreciation in the ability of each resource to drive net income over time. Depreciation occurs because of changes in consumer preferences and competition. Although adding to technology capability, an upgrade makes a portion of workforce knowledge obsolete. The manager invests in preparatory training prior to the upgrade to reduce obsolescence. Whereas general training is pursued to respond to depreciation by enhancing the ability of the workforce to improve existing products or create new products, preparatory training is technology-specific and focused on preparing for a technology upgrade. 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. We show how workforce learning phenomena impact the technology upgrade decision.

We consider a manager who invests in knowledge development of a product and a process design team as well as knowledge transfer between teams throughout a new product development (NPD) project. Knowledge development at a particular time (e.g., prototyping and experimentation) increases a team’s level of knowledge at that time. In contrast, the recipient’s benefits from knowledge transfer may be lagged because of the difficulties in articulating and documenting knowledge as well as the challenges regarding its interpretation and application. Over time, as each team embeds knowledge in the NPD project, the levels of product and process performance increase, thereby increasing the net revenue earned at the product launch time. In a key contribution to the literature, analytic conditions are given that characterize the dynamic rates at which knowledge development and knowledge transfer occur throughout the project. We show that the investment in knowledge development for each team and knowledge transfer between teams may be constant, front-loaded, back-loaded, U-shaped, or the peak rate may be delayed over time. As such, we show how concurrent engineering is optimally pursued throughout the NPD project.

The first step in transforming strategy from a hopeful statement about the future into an operational reality is to allocate resources to innovation and new product development (NPD) programs in a portfolio. Resource allocation and NPD portfolio decisions often span multiple levels of the organization's hierarchy, leading to questions about how much authority to bestow on managers and how to structure incentives for NPD. In this study, we explore how funding authority and incentives affect a manager's allocation of resources between existing product improvement (relatively incremental projects) and new product development (more radical projects). Funding may be either fixed or variable depending on the extent to which the manager has the authority to use revenue derived from existing product sales to fund NPD efforts. We find that the use of variable funding drives higher effort toward improving existing products and developing new products. However, variable funding has a subtle side effect: it induces the manager to focus on existing product improvement to a greater degree than new product development, and the relative balance in the NPD portfolio shifts toward incremental innovation. In addition, we highlight a substitution effect between explicit incentives (compensation parameters) and implicit incentives (career concerns). Explicit incentives are reduced as career concerns become more salient.

The need for rapid product development has led end-product manufacturers in a variety of industries to license even core technologies from upstream technology provider firms while focusing primarily on efficient integration and/or assembly. In this paper we analyze the introduction strategies of a technology provider firm who licenses new subsystem technologies to such end-product manufacturers (henceforth called integrators). We identify two distinct characteristics of a subsystem architecture-the fraction of integration activities pre-packaged into the subsystem and the technology underlying the subsystem-and we examine their impact on the optimal introduction strategy.We develop a game theoretic model to account for the strategic interaction among the technology provider and the integrators, and we characterize the provider’s optimal introduction strategy (ie, the number of licensees and the mode of licensing …

We highlight many of the traditional research themes in the management of technology as well as research themes on emerging topics such as those that appear in this focused issue. The discussion demonstrates the breadth and multidisciplinary nature of management of technology as well as the variety of methods employed in management of technology research. We conclude by offering a list of research themes that are of particular interest to the Management of Technology Department of Production and Operations Management.