Time Based Competition and Innovation∗ Philippe Askenazy (CEPREMAP and CNRS)

By choosing their organizations, firms tradeoff productive efficiency and time spent at implementing innovation. We embed such a productivity/reactivity tradeoff in a growth model with creative destruction. We first highlight the specific impact of time in firm competition: in addition to weighing costs and benefits of late adoption, firms use time as a strategic variable through the possibility of overtaking their competitors. Due to this very specificity of time competition, multiple equilibria may emerge. Moreover we show that Information Technologies and Organisational Changes are complement via a general equilibrium feedback. Finally we succesfully bring some predictions of our theory to the test by using industry level data. Most of the managerial challenges at Dell Computer have to with what we call velocity- speeding the pace of every element of our business. Life cycles in our business are measured in month, not years, and if you don’t move fast, you’re out of the game. Kevin Rollins, Vice Chairman of Dell Computer Corporation (Harvard Business Review [1998]) 1