Projecting dynamic behaviour in the absence of a model: An experiment

One of the advantages commonly put forward in support of the system dynamics method is that managers find it difficult to trace the dynamic consequences of cause and effect relationships even in simple systems. While this may be intuitively appealing as one of the justifications for the existence of system dynamics, there is a need to accumulate a body of evidence which results from putting this assertion to the test. The paper reports the findings from a questionnaire which has been administered to over one hundred undergraduates and postgraduates covering a range of business management specialisms. Respondents were asked to decide between two manufacturing technologies, exhibiting quite dissimilar cost structures, with a view as to their future profitability under four different demand scenarios. The questionnaires were administered twice with a three month gap between during which the answers to the first one were revealed, and on the second occasion the rubric was altered to incorporate feedback into the situation described. The competing technologies and their associated cost structures reflect very real policy choices and so the outcome of the exercise has a message for manufacturing industry as well as the system dynamics community.