Abstract for:Innovation opportunities emerging from responsiveness and co-located manufacturing

Co-locating manufacturing with either the market or with R&D encourages innovation: Customer

ideas are more easily communicated, and product and process innovations are more rapidly tested.

We develop a system dynamics model of the interaction between responsiveness and innovation. We

demonstrate that the real options created when responsiveness makes it possible to postpone the

decision about what will be produced until demand information is available also generate follow-on

options through innovation.