Learning-by-failing. An empirical exercise on CIS data

مقاله سال ۲۰۱۶

Since the seminal work by Cyert and March (1963), theoretical and empirical contributions have converged in the conviction that firms’ learning patterns are crucial to their innovativeness. The organisational literature has emphasised that organisational learning is a key element in generating differences in firms’ performance (Levitt and March, 1988; March, 1991) due to changes in the patterns of knowledge accumulation through experience (Argote et al., 1990; Pisano and Bohmer, 2001). For firms seeking to adopt an innovative behaviour it is essential to generate, maintain and develop their ability to build and/or recognise internal knowledge. Learning is the main means for redefining existing processes, by analysing, refining, modifying and restructuring routines and operating procedures (Stalk et al., 1992). This reduces the likelihood of failure by improving a firm’s efficiency, as well as enhancing the organisation’s resiliency. This improves its chances of survival by increasing its ability to recover from a poor performance (Baum and Dahlin, 2007).

As innovative activity is inherently uncertain, it often results in failure. Failure is seen as a problem in a firm’s economic activity. The early literature made the point that, in the wake of a failure, organisations typically pursue strategies aimed at survival. They engage in activities that focus, for instance, on containing costs, risky investments, organisational burdens (for a survey, see van der Panne et al. (2003)).

The aim of this paper is to see whether failure in innovative projects can strengthen or hamper a firm’s innovative activity. To do so, a set of empirical estimates will be performed on a large dataset of innovative firms from sixteen countries, drawn from the 2008 Community Innovation Survey.Atwo-step model will be used to analyse the patterns of failure in innovation, and then examine whether failures have a positive impact on the production of innovation.