A comparative analysis between different resource allocation and operating strategy implementation mechanisms using a system dynamics approach

Abstract

Because of the rapid changes in the market environment and the increasing complexity of companies’ organisational and operational structures, managers should rethink their company’s driving and operations strategies while considering the causal relationships between variables in the feedback loop, resource accumulation, and information delay. This study used a system dynamic approach to examine and compare four different business models to discover how variations in resource accumulation (i.e. market-oriented versus service target–oriented) and operating strategy implementation (i.e. independent versus coordinated operations) affect a firm’s long-term performance. We used managers’ behaviour and policy factors to optimise the system dynamic models. In addition, we used theoretical system dynamics models and the simulation to examine the system profitability, stability, and sensitivity of each model. This study reveals the dynamic influence of managers’ decisions on system performance and provides a roadmap for managers to adjust resource allocation and their corresponding decisions to optimise the system dynamically.

Keywords:

• system dynamics
• systematic approach
• resource allocation
• operating strategy
• simulation

Acknowledgements

The authors sincerely thank the four anonymous reviewers and associate editor for their constructive comments and suggestions to improve the quality of the paper. The first author acknowledges the support from the National Natural Science Foundation of China (NSFC, grant No. 71471042).

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The first author acknowledges the support from the National Natural Science Foundation of China (NSFC, grant No. 71471042).