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Learning without experience: strategic implications of deregulation and competition in the electricity industry

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  • Lomi, Alessandro
  • Larsen, Erik

Abstract

As deregulation of the electricity industry continues to gain momentum around the world, electricity companies face unprecedented challenges. Competitive complexity and intensity will increase substantially as deregulated companies find themselves competing in new industries, with new rules, against unfamiliar competitors -- and without any history to learn from. We describe the different kinds of strategic issues that newly deregulated utility companies are facing, and the risks that these strategic issues implicate. We identify a number of problems induced by experiential learning under conditions of competence-destroying changes, and we illustrate ways in which companies can activate history-independent learning processes. We suggest that Microworlds -- a new generation of computer-based learning environments made possible by conceptual and technological progress in the fields of system dynamics and systems thinking -- are particularly appropriate tools to accelerate and enhance organizational and managerial learning under conditions of increased competitive complexity.

Suggested Citation

  • Lomi, Alessandro & Larsen, Erik, 1999. "Learning without experience: strategic implications of deregulation and competition in the electricity industry," European Management Journal, Elsevier, vol. 17(2), pages 151-163, April.
    • Handle: RePEc:eee:eurman:v:17:y:1999:i:2:p:151-163
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    Cited by:

    1. Jochen Markard & Bernhard Truffer & Dieter M. Imboden, 2004. "The Impacts of Market Liberalization on Innovation Processes in the Electricity Sector," Energy & Environment, , vol. 15(2), pages 201-214, March.
    2. Ford, Andrew, 1999. "Cycles in competitive electricity markets: a simulation study of the western United States," Energy Policy, Elsevier, vol. 27(11), pages 637-658, October.
    3. Arango, Santiago & Larsen, Erik, 2011. "Cycles in deregulated electricity markets: Empirical evidence from two decades," Energy Policy, Elsevier, vol. 39(5), pages 2457-2466, May.
    4. Arango, Santiago & Castañeda, Jaime A. & Larsen, Erik R., 2013. "Mothballing in power markets: An experimental study," Energy Economics, Elsevier, vol. 36(C), pages 125-134.
    5. Dyner, Isaac & Larsen, Erik & Franco, Carlos Jaime, 2009. "Games for electricity traders: Understanding risk in a deregulated industry," Energy Policy, Elsevier, vol. 37(2), pages 465-471, February.
    6. Tooraj Jamasb & Michael Pollitt, 2005. "Deregulation and R&D in network industries: the case of the electricity industry," Working Papers EPRG 0502, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Jamasb, Tooraj & Pollitt, Michael, 2008. "Liberalisation and R&D in network industries: The case of the electricity industry," Research Policy, Elsevier, vol. 37(6-7), pages 995-1008, July.
    8. Álvarez-Uribe, Karla C. & Arango-Aramburo, Santiago & Larsen, Erik R., 2018. "Forward contracts in electricity markets and capacity investment: A simulation study," Utilities Policy, Elsevier, vol. 54(C), pages 1-10.
    9. Eva Jansson, 0. "Deregulation, property rights, and legal system," European Journal of Law and Economics, Springer, vol. 0, pages 1-25.

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