Optimal Time Allocation for Process Improvement for Growth-Focused Entrepreneurs

Onesun Steve Yoo (), Charles J. Corbett () and Guillaume Roels ()
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Onesun Steve Yoo: UCL School of Management, University College London, London E14 5AB, United Kingdom
Charles J. Corbett: UCLA Anderson School of Management, Los Angeles, California 90095
Guillaume Roels: UCLA Anderson School of Management, Los Angeles, California 90095

Manufacturing & Service Operations Management, 2016, vol. 18, issue 3, 361-375

Abstract: For many entrepreneurs, time is a key constraint. They need to invest time to achieve growth, but also lose time because of recurring crises. We develop a simple stochastic dynamic program to model how an entrepreneur should prioritize between improving processes to reduce crises versus harvesting revenue or ensuring future growth. We show that it is initially optimal to prioritize process improvement: an entrepreneur should strive for high process quality early in the venture’s growth process. We numerically analyze a simple heuristic derived from this optimal policy and identify the conditions under which it is (or is not) effective. It performs near optimally except when process quality or revenue rate may deteriorate too fast or when the cost of process improvement or revenue enhancement is too high. Our work provides a theoretical foundation for the advice found in the popular entrepreneurship and time management literature to invest time now to save time later.

Keywords: entrepreneurship; process improvement; time allocation; dynamic programming (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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