E Pluribus Unum: Organizational Size and the Efficacy of Learning
Learning from experience is a central theme in the management literature. While in general experiential learning is viewed as efficacious, the literature increasingly points to the difficulties inherent in the learning process — many of which stem from a deficit of information about the merits of alternative solutions. It seems plausible that larger organizations, with their capacity to simultaneously pursue a variety of potential solutions to a given challenge, may overcome this deficit. Such a perspective suggests that the efficacy of an organization's learning process should be an increasing function of organizational size. While this logic is intuitively appealing, we find that it does not fully capture the nuances of the organizational learning process. We employ a computational model and find that larger organizations, as characterized by their scale in pursuing parallel initiatives: (a) explore less than smaller organizations, (b) are less likely to discover the very best alternative, and yet (c) on average identify better alternatives. Increasing the number of parallel initiatives guides the search process towards viable alternatives, but it does so at the cost of inhibiting search breadth. Thus, in our model, the characteristics of learning by larger organizations do not result from differences in inertia or incentives that may impede learning and innovation, but rather from the properties of the organizational learning process itself.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.druid.dk/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dirk Bergemann & Juuso Vaimaki, 1999.
"Stationary Multi Choice Bandit Problems,"
Cowles Foundation Discussion Papers
1240, Cowles Foundation for Research in Economics, Yale University.
- Todd R. Zenger & Sergio G. Lazzarini, 2004. "Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(6-7), pages 329-345.
- Daniel A. Levinthal, 1997. "Adaptation on Rugged Landscapes," Management Science, INFORMS, vol. 43(7), pages 934-950, July.
- Noah Gans & George Knox & Rachel Croson, 2007. "Simple Models of Discrete Choice and Their Performance in Bandit Experiments," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 383-408, December.
- Reinganum, Jennifer R., 1982.
"Uncertain Innovation and the Persistence of Monopoly,"
431, California Institute of Technology, Division of the Humanities and Social Sciences.
- Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-48, September.
- Michael J. Lenox & Scott F. Rockart & Arie Y. Lewin, 2006. "Interdependency, Competition, and the Distribution of Firm and Industry Profits," Management Science, INFORMS, vol. 52(5), pages 757-772, May.
- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
- Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
- Burton, Richard M. & Minton, John W. & Obel, Børge, 1991. "Organizational size and efficiency: An information processing view," Scandinavian Journal of Management, Elsevier, vol. 7(2), pages 79-93.
- Sendil K. Ethiraj & Daniel Levinthal & Rishi R. Roy, 2008. "The Dual Role of Modularity: Innovation and Imitation," Management Science, INFORMS, vol. 54(5), pages 939-955, May.
When requesting a correction, please mention this item's handle: RePEc:aal:abbswp:13-09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen)
If references are entirely missing, you can add them using this form.