Effects of Organizational Learning and Knowledge Transfer on Investment Decisions Under Uncertainty.

Author List: Geng, Xianjun; Lin, Lihui; Whinston, Andrew B.;
Journal of Management Information Systems, 2009, Volume 26, Issue 2, Page 123-145.
Because uncertainties around innovative technologies resolve over time, investments in such technologies are often made in stages so that organizations can use the knowledge gained from earlier stages to decide the next step. Previous studies usually assume that once some uncertainty is resolved, it becomes common knowledge within the investing organization. We develop a game-theoretical model to study how different parties within an organization gain and transfer knowledge about new technologies while investing in these technologies, and how the learning process may affect the investment decisions. We show that managers with incentives misaligned with the organization may transfer their knowledge untruthfully and distort the learning process of decision makers. Such behavior may lead to inefficient investment decisions. We also study the effect of uncertainty on the misreporting problem and the investment decisions. Mechanisms to mitigate or prevent untruthful knowledge transfer are also proposed. In particular, powerful incentive schemes may alleviate, but not prevent, the misreporting problem; punishing managers who are caught misreporting may deter the misreporting behavior, but in practice such mechanisms are difficult to implement.
Keywords: economic analysis; game theory; investment under uncertainty; knowledge transfer; organizational learning; signal jamming
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#144 0.245 knowledge transfer management technology creation organizational process tacit research study organization processes work organizations implications practice explicit models consultants transfers
#147 0.163 process problem method technique experts using formation identification implicit analysis common proactive input improvements identify traditional stages identifying explicit setting
#8 0.114 decision making decisions decision-making makers use quality improve performance managers process better results time managerial task significantly help indicate maker
#267 0.107 options real investment option investments model valuation technology value analysis uncertainty portfolio models using context intuitive managerial regret uncertain case
#179 0.088 technologies technology new findings efficiency deployed common implications engineers conversion change transformational opportunity deployment make making improve powerful choosing enhance
#208 0.052 feedback mechanisms mechanism ratings efficiency role effective study economic design potential economics discuss profile recent component granularity turn compared using
#70 0.051 contract contracts incentives incentive outsourcing hazard moral contracting agency contractual asymmetry incomplete set cost client parties examine effort structures double