Aspiration Performance and Railroads' Patterns of Experiential Learning from Train Wrecks and Crashes

We link two influential organizational learning models - performance feedback and experiential learning - to advance hypotheses that help explain how organizations' learning from their own and others' experience is conditioned by their aspiration-performance feedback. Our focus is on learning from failure, which is essential to organizational learning and adaptation, and a necessary complement to studies of learning from success. Our analysis of U.S. freight railroads' accident costs from 1975 to 2001 shows that when a railroad's accident rate deviates from aspiration levels, the railroad benefits less from its own accident and operating experience and more from other railroads' accident and operating experience. These findings, which support the idea that performance near aspirations fosters exploitative learning, while performance away from aspirations stimulates exploration, provide a foundation for constructing more integrated models of organizational learning and change.

[1]  Daniel A. Levinthal,et al.  A model of adaptive organizational search , 1981 .

[2]  Jan Kmenta,et al.  Elements of econometrics , 1988 .

[3]  L. Argote Group and organizational learning curves: Individual, system and environmental components , 1993 .

[4]  P. Thompson,et al.  Learning from Experience and Learning from Others: An Exploration of Learning and Spillovers in Wartime Shipbuilding , 2001 .

[5]  P. Ingram,et al.  THE EXCHANGE OF EXPERIENCE IN A MORAL ECONOMY: EMBEDDED TIES AND VICARIOUS LEARNING IN KIBBUTZ AGRICULTURE. , 1999 .

[6]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .

[7]  P. Thompson How Much Did the Liberty Shipbuilders Learn? New Evidence for an Old Case Study , 2001, Journal of Political Economy.

[8]  Andrew W. Evans Fatal train accidents on Britain's mainline railways , 2000 .

[9]  A. Huff,et al.  STRATEGIC GROUPS: A COGNITIVE PERSPECTIVE , 1993 .

[10]  Joel A. C. Baum,et al.  Dancing with Strangers: Aspiration Performance and the Search for Underwriting Syndicate Partners , 2005 .

[11]  Jitendra V. Singh Performance, Slack, and Risk Taking in Organizational Decision Making , 1986 .

[12]  Joel A. C. Baum,et al.  OPPORTUNITY AND CONSTRAINT: ORGANIZATIONS’ LEARNING FROM THE OPERATING AND COMPETITIVE EXPERIENCE OF INDUSTRIES , 1997 .

[13]  H. Thomas,et al.  Strategic Groups as Reference Groups: Theory, Modeling and Empirical Examination of Industry and Competitive Strategy , 1995 .

[14]  Louis E. Yelle THE LEARNING CURVE: HISTORICAL REVIEW AND COMPREHENSIVE SURVEY , 1979 .

[15]  Mooweon Rhee,et al.  The Role of Volition in Organizational Learning: The Case of Automotive Product Recalls , 2004, Manag. Sci..

[16]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[17]  Eric D. Darr,et al.  An Investigation of Partner Similarity Dimensions on Knowledge Transfer , 2000 .

[18]  D. L. Simms,et al.  Normal Accidents: Living with High-Risk Technologies , 1986 .

[19]  Daniel A. Levinthal,et al.  The myopia of learning , 1993 .

[20]  Joel A. C. Baum,et al.  It's All in the Name: Failure-Induced Learning by Multiunit Chains , 2003 .

[21]  James G. March,et al.  Variable risk preferences and adaptive aspirations , 1988 .

[22]  H. Greve Performance, Aspirations, and Risky Organizational Change , 1998 .

[23]  Theresa K. Lant,et al.  Aspiration Level Adaptation: An Empirical Exploration , 1992 .

[24]  Edwin A. Locke,et al.  The Paradox of Success: An Archival and a Laboratory Study of Strategic Persistence Following Radical Environmental Change , 2000 .

[25]  Henrich R. Greve,et al.  Organizational Learning from Performance Feedback: A Behavioral Perspective on Innovation and Change , 2003 .

[26]  Frances J. Milliken,et al.  The role of managerial learning and interpretation in strategic persistence and reorientation: An empirical exploration , 1992 .

[27]  Danny Miller,et al.  SOURCES AND CONSEQUENCES OF COMPETITIVE INERTIA: A STUDY OF THE U.S. AIRLINE INDUSTRY. , 1994 .

[28]  Kent D. Miller,et al.  Variable Organizational Risk Preferences: Tests of the March-Shapira Model , 2004 .

[29]  J. Jaccard,et al.  Interaction effects in multiple regression , 1992 .

[30]  J. March,et al.  A Behavioral Theory of the Firm , 1964 .

[31]  Pamela R. Haunschild,et al.  Learning from Complexity: Effects of Accident/Incident Heterogenity on Airline Learning , 2000 .

[32]  M. Rosenzweig,et al.  Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture , 1995, Journal of Political Economy.

[33]  Howard E. Aldrich,et al.  Even Dwarfs Started Small: Liabilities of Age and Size and Their Strategic Implications , 1986 .

[34]  Ya-Ru Chen,et al.  Aspiration-Level Adaptation in an American Financial Services Organization: A Field Study , 2002, Manag. Sci..

[35]  A. Tversky,et al.  Rational choice and the framing of decisions , 1990 .

[36]  S. Sitkin Learning Through Failure : The Strategy of Small Losses , 1992 .

[37]  L. Argote,et al.  The persistence and transfer of learning in industrial settings , 1990 .

[38]  C. Lindblom THE SCIENCE OF MUDDLING THROUGH , 1959 .

[39]  H. Thomas,et al.  Rivalry and the Industry Model of Scottish Knitwear Producers , 1995 .

[40]  P. Bromiley Testing a Causal Model of Corporate Risk Taking and Performance , 1991 .

[41]  W. Starbuck,et al.  Organization at the Limit , 2005 .

[42]  Gary P. Pisano,et al.  Organizational Differences in Rates of Learning: Evidence from the Adoption of Minimally Invasive Cardiac Surgery , 2001, Manag. Sci..

[43]  G. Huber Organizational Learning: The Contributing Processes and the Literatures , 1991 .

[44]  L. Argote Organizational Learning: Creating, Retaining and Transferring Knowledge , 1999 .

[45]  Peter J. Klenow,et al.  Learning-by-Doing Spillovers in the Semiconductor Industry , 1994, Journal of Political Economy.

[46]  W. Ocasio The enactment of economic adversity: A reconciliation of theories of failure-induced change and threat-rigidity , 1993 .

[47]  Eric D. Darr,et al.  The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises , 1995 .