An agent-based market simulation for enriching innovation management education
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An agent-based market simulation for enriching innovation management education Christian Stummer1
· Elmar Kiesling2
Accepted: 3 November 2020 © The Author(s) 2020
Abstract It is not easy for students or junior managers to obtain first-hand experience in innovation and technology management. Business gaming simulations can remedy this, as they provide an opportunity to acquire practical skills. We developed such a business gaming simulation that enables teams of participants—each managing a virtual company that competes with other companies in several markets—to implement technology strategies, make resource allocation decisions, and test marketing strategies for introducing its new products. The salient feature of this simulation is its agent-based market model, which accounts for consumers’ heterogeneity and social factors like word-of-mouth communication. In this paper, we describe the elements and dynamics of the market model, outline the didactic framework, and synthesize our experiences from using the simulation in classroom settings for several years. Overall, we find that using an agent-based model as the core of a business gaming simulation can facilitate experiential learning in management, particularly in fields that involve complex social system dynamics, as is the case in the diffusion of innovations. Keywords Agent-based modeling · Business gaming simulation · Innovation management · Product diffusion · Pricing and timing strategies · Education
We thank Markus Günther for his valuable feedback when we discussed the model and its implementation.
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Christian Stummer [email protected] Elmar Kiesling [email protected]
1
Department of Business Administration and Economics, Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
2
Department of Information Systems and Operations, Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria
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C. Stummer, E. Kiesling
“I hear and I forget. I see and I remember. I do and I understand.” Confucius
1 Introduction Traditional management education can explain theoretical concepts and introduce students to management approaches, practices, and tools. However, it is very difficult to provide students and junior managers with first-hand experience in making critical (strategic) decisions because such decisions are typically only made by senior managers. Furthermore, consequences of strategic management decisions usually play out over an extended time frame, which implies that by the time the impact of a prior decision becomes apparent, managers may have transferred to a new post or even to a different company. Finally, outcomes are often influenced by other decisions or by general economic developments, which makes it difficult, if not impossible, to trace market behavior back to specific decisions made in the past. Business gaming simulations can provide a solution to this dilemma, as they compress learning cycles of (management) action and (market) reaction—which may take months or years in
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