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Experience as Dr. Jekyll and Mr. Hyde: Performance Outcome Delays in the Private Equity Context

Author

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  • Francesco Castellaneta

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur, SKEMA Business School - SKEMA Business School)

  • Oliver Gottschalg
  • Aleksandra Kacperczyk
  • Mike Wright

Abstract

A large body of work argues that the accumulation of organizational experience fosters learning because firms can correctly modify their understandings on the basis of past actions and their outcomes. But although performance information on past decisions can often be delayed, little research considered how firms respond to experience without complete performance information. In this study, we propose that experience is a double‐edged sword: whereas experience with performance feedback can foster learning, experience without complete performance feedback impedes learning. Using a sample of 7,223 private equity buyout investments, we find that experience with (in)complete performance information increases (decreases) the performance of a subsequent investment. The positive impact of experience with complete performance information is amplified when firms engage in search, following a shortfall in their performance. Moreover, we find that experience with (in)complete performance information decreases (increases) excessive risk taking. Overall, we advance the experiential learning literature by unpacking the positive and negative impact of experiential learning.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Francesco Castellaneta & Oliver Gottschalg & Aleksandra Kacperczyk & Mike Wright, 2022. "Experience as Dr. Jekyll and Mr. Hyde: Performance Outcome Delays in the Private Equity Context," Post-Print halshs-03902424, HAL.
    • Handle: RePEc:hal:journl:halshs-03902424
    DOI: 10.1111/joms.12791
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    2. Pittnauer, Sabine & Hohnisch, Martin, 2023. "Observing the creation of new knowledge in the economics laboratory—Do participants discover how to learn from outcome feedback in a dynamic decision problem?," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 382-405.

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