Handbook of Organizational Learning and Knowledge Management, Second Edition

Learning Curves and Knowledge Decay

Organizational learning is commonly defined as modifications in the knowledge base of an organization induced primarily, but not exclusively, by the organization’s experience (Huber, 1991). It is perceived as essential for sustained competitive advantage (Aldrich, 1999; Argote and Ingram, 2000; Eisenhardt and Martin, 2000; Kogut and Zander, 1992; Prahalad and Hamel, 1990; Rumelt, Schendel, and Teece, 1994; Teece, Pisano, and Shuen, 1997), as well as for strategic renewal (Crossan and Bedrow, 2003). Unsurprisingly, the concept of organizational learning has been of enduring interest to researchers and practitioners alike, and the chapters of this volume are a testament to the progress that has been made in understanding organizational learning.

At a practical level, organizational learning is the ability of an organization to create answers to problems that need to be solved, or to create a better answer to existing problems (Argote, 1999; Miner and Anderson, 1999; Miner and Mezias, 1996). It refers to the different processes by which organizations add to their stock of knowledge and to their repertoire of capabilities. Learning occurs most obviously when an organization encounters unusual events for which it has no solution in its collection of standard operating procedures (e.g. Cyert and March, 1963) and is therefore forced to do things in novel ways. More specifically, learning happens when the solution that has been found to that particular ...