Organizational Design and Resource Evaluation

Michael Christensen and Thorbjørn Knudsen

No 06-05, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: A crucial problem of evaluating, discovering, and creating the value of resources remains at the center of the subject of business strategy. The present article draws on reliability theory to advance an analytical platform that can address part of this problem, the evaluation of resource value. Reliability theory offers a way to model managerial ability and to derive the evaluation properties of organizations, boards, teams and committees. It is shown how the problem of resource evaluation can be remedied by proper evaluation structures. An evaluation structure that is build out of a very few agents can achieve significant improvements. A simulation of the classical n-armed bandit problem shows how evaluation structures can help managers select innovations of better economic value.

Keywords: Reliability theory; resource value (search for similar items in EconPapers)
JEL-codes: D46 O31 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:aal:abbswp:06-05

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