Modelling innovation dynamics by using system dynamics methodology

Official URL: http://risc01.sabanciuniv.edu/record=b1276338 (Table of Contents)

The topic of this study is the investigation of the innovation strategies from the perspective of a durable household goods manufacturer. Although the durable household goods industry is designated as a mature industry, still there is extreme competitive pressure on the firms in this industry to introduce new products and services so as not to loose their market share and continue to grow. A generally accepted strategy to achieve this challenging task is to be able to introduce a continuous sequence of successful innovations. Specifically, our study presents the causal structure of the innovation process and the resulting behaviour. For that purpose, system dynamics methodology is employed. System Dynamics is a computer modelling technique to simulate the behaviours of systems with many feedback loops. It is a suitable method for investigating the dynamics of innovation, since it allows for the modelling of interactions and for the observation of resulting dynamic patterns through simulation. The main performance indicator used in our model is the innovativeness level. As part of this research, the behaviour of the system is analyzed employing parametric analysis.