Jumping to Hasty Experience Curves

Abstract

The "experience curve" used to be treated as a rule of thumb in strategic management theory. However, it would be hasty to conclude that an approximately 80% log-linear experience curve is a rule of thumb regardless of the industry, company, or product. According to the fundamental research on learning curves, generally, the new model of a product is partly composed of old model parts and we cannot observe the progress of these parts from the beginning of the processes. Therefore, in the first product of the new model, the learning rates of old model parts cannot be identical logically, even if the parts' learning rates are identical at the beginning. In fact, empirical data repeatedly deny identical learning rates for all products. Applying search theory, we obtain an approximate log-linear learning curve and show the curve's initial concavity, that is, if we started observing the progress midstream, and not from the beginning of the process. Thus, both varied learning rate proper to each product and initial concavity of the learning curve are phenomena induced by observing the progress midstream.

Spurious Correlation between Economies and Scale

“…The mass production of the Model T Ford and the improvement in productivity was not simply because of expansion of production facilities and increased production. In addition, an increase in cumulative number of units produced due to the so-called experience effect does not necessarily imply that there will be an automatic improvement in production efficiency (Abernathy & Wayne, 1974;Akiike, 2013;Takahashi, 2013bTakahashi, , 2013c. Increases in productivity and production volumes were due to appropriate control of the entire production process, that is, the management of flows through standardization.…”

Performance Measurement in Product Development Research

“…Concerning product costs, the relationship between learning (or experience) curves and dynamic changes in cost has been analyzed. During and after the 1980s, however, business administrative studies re-interpreted learning curves as no longer being functions of the amount of experience gained (e.g., cumulative production volumes), but that technological and organizational decision making are capable of influencing these curves (Hayes & Clark, 1985;Hayes & Wheelwright, 1984;Takahashi, 2013aTakahashi, , 2013b. Regarding product quality, since the end of the 1980s, multiple indicators including subjective judgment are being used for products that are difficult to evaluate with objective performance indicator 1 (Clark & Fujimoto, 1991;Fujimoto, 1989).…”

A Missing Piece of Mutual Learning Model of March (1991)

“…In model (B), a reference organization having the normal performance distribution with mean m and variance v 2 competes with N organizations having a standard normal performance distribution with mean 0 and variance 1. Let u be a value with an upper probability of 1(N  1) in the standard 1 Computer simulations are not only used in organizational learning but also have various uses in the garbage can model (Cohen, March, & Olsen, 1972;Inamizu, 2012;Takahashi, 1997), the communication competition model (Kuwashima, Takahashi, & Tamada, 2005;Takahashi, Kuwashima, & Tamada, 2006), or theoretical shaping of learning curves (Takahashi, 2013).…”