Modeling Relationship between R&D Activities and Organization Knowledge Stock Using System Dynamics Approach

Abstract

Knowledge is identified as a critical factor for innovation. On the other side, knowledge creation takes place through investing on R&D activities and developing new products. Furthermore, not all types of R&D activities result in similar types of innovation. Indeed, investing on research activities result in radical innovation and investing on development activities concludein incremental innovation. Keeping a balance between these two kinds of innovation in products is critical to acquire competitive advantages. To investigate the dynamic-nature and complex relationship between knowledge creation and investing on R&D activities, presenting paper tried to study impacts of different investing policies on knowledge stockusing a systematic view. Hence, “system dynamics” which is an approach to study the complex system is used to model and simulate the presenting system. Beside, a case study was also presented to test applicable capability of the model. The simulation results showed that investing policies on R&D activities must be based on comparing the real performance and the goal performance.

Keywords

• Radical innovation
• incremental innovation
• system dynamics approach
• diagram of cause and effect loops
• stock and flow diagram