Does experience imply learning?

Abstract

Research summary: Research traditionally uses experiential learning arguments to explain the existence of a positive relationship between repetition of an activity and performance. We propose an additional interpretation of this relationship in the context of discrete corporate development activities. We argue that firms choose to repeat successful activities, thereby accumulating high experience with them. Data on 437 aircraft projects introduced through three governance modes show that the positive performance effect of the firm's experience with the focal mode becomes insignificant after accounting for experience endogeneity. We suggest that in a general case, experience with corporate development activities may be tinged with both learning and selection effects. Therefore, omitting to account for experience endogeneity may lead to incorrect conclusions from an “empirically observed” positive experience–performance relationship. Managerial summary: This paper emphasizes that firms generally choose to undertake the corporate development activities (new product introductions, diversification moves, international expansions, alliances, acquisitions, etc.) with which they have been the most successful in the past and that they expect to be the most successful in the future. Hence, if a firm possesses certain capabilities, it will repeatedly engage in certain activities corresponding to those capabilities, thereby simultaneously achieving high levels of activity experience as well as superior activity performance. This view suggests that an “empirically observed” positive experience–performance relationship may not be due solely to learning‐based enhanced capabilities but may also be driven by astute self‐selection. Overall, we provide a new interpretation of the relationship between experience and performance in the context of infrequent, heterogeneous, and causally‐ambiguous corporate development activities. Copyright © 2015 John Wiley & Sons, Ltd.

Fragmenting global business processes: A protection for proprietary information

“…The lack of significant effect might be explained by the fact that, over time, firms may re-select the same service providers with whom they have developed trustful relationships that compensate for the lack of direct control (e.g., Levina & Su, 2008;Manning, Lewin, & Schuerch, 2011). Or it may reflect that past experience and learning are two related but different things, and the former does not necessarily imply the latter (e.g., Anand, Mulotte, & Ren, 2015).…”

Iterative lagged asymmetric responses in strategic management and long-range planning

“…The actors initiate particular moves to improve their standing and because in the short run those moves often generate desired effects, they prematurely ''learn'' through immediate positive reinforcement that those moves were successful. This myopic bracketing of reality, however, cordons off causes from their delayed effects, and thereby fosters pseudo-learning or superstitious learning from experience (Anand et al, 2016). Instead, elongated time horizons and patience are needed before being able to judge a competitive move as successful: whether it is indeed successful depends on the success or failure of the iterative lagged asymmetric response it triggers, as reminded by the vernacular expression ''it's not over until it's over.''…”

The impact of competition on vertical integration: The role of technological niche width

“…market for a given year. Our measurement of Competition-I is arguably supported in prior literature (Anand, Mulotte, & Ren, 2016;Barroso & Giarratana, 2013;Danzon & Sousa Pereira, 2011;Federico, Langus, & Valletti, 2018;Gil & Ruzzier, 2018;Mulotte, 2014;Mulotte, Dussauge, & Mitchell, 2013;Tripsas, 1997). Competition-II has been computed based on the entropy measure that takes into account the number of models and firms (Frenken, Hekkert, & Godfroij, 2004;Wesseling, Faber, & Hekkert, 2014).…”

“…We have measured R&D intensity as the ratio of the firm's R&D expenditures to total sales in the given year (Eberhart, Maxwell, & Siddique, 2008;Manikandan & Ramachandran, 2015). Like R&D intensity, innovation experience may also influence firm capabilities and ultimately the vertical integration decision (Anand et al, 2016;Eggers, 2012;King & Tucci, 2002;Klepper, 2004). Before the introduction of HEV, some automakers experimented with different green vehicle technologies such as ethanol (E85), compressed natural gas (dedicated and bi-fuel), propane (dedicated and bi-fuel), hydrogen, methanol (M85), and electric vehicle.…”