Learning from Strategic Success and Failure

Learning from Strategic Success and Failure

By Theresa K. Lant, David Bruce Montgomery
1987Working Paper No. 928

Organizations facing complex, ambiguous, and dynamic environments find adaptive learning a key to survival and success. This study proposes three models of organization repsonse in such environments. 1) A model of how aspiration levels or goals adapt over time, 2) A model of the riskiness of strategic choices made, and 3) A model of the innovativeness of search activities (R&D). In each model, the difference between performance and aspiration level is posited to be an important explanatory variable. Using the MARKSTRAT game as a research environment, the data are consistent with all three models.