Opportunity and Constraint: Organizations’ Learning From the Operating and Competitive Experience of Industries

Abstract

Organizational learning is central to a number of strategic theories. Recent arguments, however, identify risks associated with learning from own experience in the form of overattention to the short term and local conditions. The experience of the industry may offer opportunities for organizational learning that the experience of the organization does not, because industry experience is more varied, and not tied to the path‐dependent history of any one organization. We investigate the influence of own experience and of two types of industry experience on the failure rates of U.S. hotel chains. The two types of industry experience are operating experience, which is a discounted sum of the units operated by U.S. hotel chains in the history of the industry, and competitive experience, which is a discounted sum of the number of failures of U.S. hotel chains in the history of the industry. We find that (a) organizations initially benefit from their own experience, but are harmed in the long run, (b) generalist organizations are more weakly affected by their own experience than specialists, (c) organizations benefit from their industry’s operating experience, accumulated both before and after the organization’s entry, and (d) organizations benefit from their industry’s competitive experience, but only after the organization’s entry. © 1997 by John Wiley & Sons, Ltd.

Learning from My Success and from Others' Failure: Evidence from Minimally Invasive Cardiac Surgery

“…However, more recently, empirical work on learning from failure finds that organizations do engage in it (Haunschild and Sullivan 2002;Chuang and Baum 2003;Haunschild and Rhee 2004). At the organizational level, research has shown that organizations learn from both the failures and near-failures of other firms (Kim and Miner 2007) and that such learning positively impacts their survival rates (Ingram and Baum 1997;Chuang and Baum 2003). Previous studies also compared the learning gained from success to the learning gained from failure at the organizational level and found mixed results (Lapré and Nembhard 2010).…”

The Paradox of Stretch Goals: Organizations in Pursuit of the Seemingly Impossible.

“…When compared with other conditions, the extreme demands of stretch goals could stimulate broader and more active search for ideas and solutions (e.g., Baum & Dahlin, 2007;Fang & Levinthal, 2009;Mezias, 1988). Stretch goals could also propel the search for more radical, discontinuous advances (Cyert & March, 1963;Raisch & Birkinshaw, 2008), involving actions such as making contacts with unfamiliar sources of ideas, imitating innovative techniques (e.g., Sitkin et al, 1994), or undertaking trial-and-error learning (see Ingram &Baum, 1997, andLevitt &March, 1988). Moreover, by loosening old restraints and providing focus and energy, stretch goals may allow for trialand-error learning to be undertaken with faster cycle times (Argote, 1999;Argyris, 1985;March, 1991).…”

Developing Alliance Capabilities

“…Consequently, how firms learn is a central question for organization learning theory, which is referred to as a field of descriptive research describing the process of change (Vera and Crossan, 2003). Building on the 'learning curve notion', various scholars have posed that it is precisely these routines that allow firms to improve their ability to perform certain tasks as experience accumulates (Amburgey and Miner, 1992;Ingram and Baum, 1997), because knowledge gained from experience becomes embedded in a firm's routines (Coriat and Dosi, 1999;Argote and Darr, 2000). This is highly related to the argument of 'absorptive capacity' put forward by Levinthal (1989, 1990), who suggest that a firm's ability to learn is itself a capability and which is related to its ability to assimilate new knowledge.…”

“…Ingram and Baum, 1997;Simonin, 1997;King and Tucci, 2002). Borrowing mainly from evolutionary economics and organizational learning theory, various studies have linked experience and learning curves to productivity gains and rent generation (Dutton and Thomas, 1984).…”

“…These results mark an important finding as they extend current insight into how firms learn. Whereas often experience was proposed as a critical antecedent (Kleiner and Roth, 1987;Ingram and Baum, 1997;Carroll et al, 2003), this study embarks on the role intra-firm mechanisms play in this respect and finds convincing evidence that these mechanisms contribute to our understanding of how firms learn to manage alliances.…”