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Optimal Time Allocation Process for Growth-Focused Entrepreneurs

Yoo, O; Corbett, C; Roels, G; (2016) Optimal Time Allocation Process for Growth-Focused Entrepreneurs. Manufacturing & Service Operations Management , 18 (3) pp. 361-375. 10.1287/msom.2015.0568. Green open access

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Abstract

For many entrepreneurs, time is a key constraint. They need to invest time to achieve growth, but also lose time because of recurring crises. We develop a simple stochastic dynamic program to model how an entrepreneur should prioritize between improving processes to reduce crises versus harvesting revenue or ensuring future growth. We show that it is initially optimal to prioritize process improvement: an entrepreneur should strive for high process quality early in the venture’s growth process. We numerically analyze a simple heuristic derived from this optimal policy and identify the conditions under which it is (or is not) effective. It performs near optimally except when process quality or revenue rate may deteriorate too fast or when the cost of process improvement or revenue enhancement is too high. Our work provides a theoretical foundation for the advice found in the popular entrepreneurship and time management literature to invest time now to save time later.

Type: Article
Title: Optimal Time Allocation Process for Growth-Focused Entrepreneurs
Open access status: An open access version is available from UCL Discovery
DOI: 10.1287/msom.2015.0568
Publisher version: http://dx.doi.org/10.1287/msom.2015.0568
Language: English
Additional information: Copyright © 2017 INFORMS. All rights reserved.
Keywords: Entrepreneurship; process improvement; time allocation; dynamic programming
UCL classification: UCL > School of BEAMS
UCL > School of BEAMS > Faculty of Engineering Science
UCL > School of BEAMS > Faculty of Engineering Science > Management Science and Innovation
URI: http://discovery.ucl.ac.uk/id/eprint/1341075
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