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Product and process flexibility in an innovative environment


Athey, Susan; Schmutzler, Armin (1995). Product and process flexibility in an innovative environment. RAND Journal of Economics, 26(4):557-574.

Abstract

This article studies several attributes of a firm's long-run decisions about organizational structure, attributes that affect the firm's short-run innovative activity. We focus on flexibility, which lowers the future costs of implementing innovations, and research capabilities, which improve the future opportunities for innovation. We consider two dimensions of innovation: demand-enhancing (product) and cost-reducing (process). These two types of innovation are complementary in terms of increasing the firm's net revenue in the short run. The complementarities between the firm's short-run decision variables then lead to complementarities between its long-run decisions about product and process flexibility and research capabilities.

Abstract

This article studies several attributes of a firm's long-run decisions about organizational structure, attributes that affect the firm's short-run innovative activity. We focus on flexibility, which lowers the future costs of implementing innovations, and research capabilities, which improve the future opportunities for innovation. We consider two dimensions of innovation: demand-enhancing (product) and cost-reducing (process). These two types of innovation are complementary in terms of increasing the firm's net revenue in the short run. The complementarities between the firm's short-run decision variables then lead to complementarities between its long-run decisions about product and process flexibility and research capabilities.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:1995
Deposited On:15 Feb 2012 12:59
Last Modified:05 Apr 2016 15:37
Publisher:RAND Corp.
ISSN:0741-6261
Free access at:Related URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.2307/2556006
Related URLs:http://www.jstor.org/stable/2556006
Other Identification Number:merlin-id:6145

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