Simulating the Impacts of Innovation Investment Policies on Organizational Knowledge Stock Using System Dynamics Approach

Knowledge is always recognized as an important factor in innovation. However, the needed knowledge for innovation is not always available to organizations readily and it requires that the organization generates a major part of the knowledge. Such knowledge creation can happen through investing on innovation and developing new products. This study aims at investigating the complicated and dynamic nature of relationship between knowledge creation and investment decision on innovation. Therefore, present paper uses a systematic view and system dynamics approach, as well as its tools such as casual diagrams, flow diagram and simulation. The tools are used to study the impacts of different investing policies on organizational knowledge stock. A case study is provided to test the applicability of represented model in real world. The findings show that the most appropriate policy is allocating resource based on the gap between real knowledge stock and goal knowledge stock.