Payoffs and pitfalls of strategic learning

William H. Starbuck, Michael L. Barnett and Philippe Baumard

Journal of Economic Behavior & Organization, 2008, vol. 66, issue 1, 7-21

Abstract: Managers and management researchers tend to assume that learning from strategic events yields benefits. Although some firms have gained competitive advantages from learning, instances are infrequent, and firms that have gained persistent advantages through learning are probably quite unusual. Learning from successes has short-run benefits but eventually makes firms less capable of surviving, whereas learning from failures disappears in clouds of rationalization and defensive behavior. Noisy feedback about results causes people to develop very heterogeneous and often highly erroneous perceptions of firms and their environments, so it should not be surprising that strategizing is harmful as often as it is helpful.

Date: 2008
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