We take a microfoundational approach to understanding the origin of heterogeneity in firms’ capacity to adapt to technological change. We develop a computational model of individual-level learning in an organizational setting characterized by interdependence and ambiguity. The model leads to...

Approximately 80-90 percent of new firms ultimately fail. The tendency is to think of this failure as wasteful. We, however, examine whether there are economic benefits to offset the waste. We characterize three potential mechanisms through which excess entry affects market structure, firm...

Entrants are often viewed as suffering from a “liability of newness” — at founding they rarely possess the knowledge and capabilities necessary to compete and survive. They can overcome this liability by learning vicariously from the knowledge of incumbent firms. But how can entrants learn...

We examine the power and limitations of imitation. Naive intuition may hold that the efficacy of imitation would be diminished by imperfections in copying high-performing firms. Employing a computational model, we find that imperfect imitation can generate unexpectedly good outcomes for follower...

A common justification for organizational change is that the circumstances in which the organization finds itself have changed, thereby eroding the value of utilizing existing knowledge. On the surface, the claim that organizations should adapt by generating new knowledge seems obvious and...

While pre-entry experience is widely regarded as a critical asset that positively relates to new entrant performance, empirical support is mixed. To address this inconsistency, we meta-analyze the empirical findings in 272 papers that examine the performance implications of pre-entry experience....

The existence of a learning curve in which a firm’s costs decline with cumulative experience suggests that early entry provides learning opportunities that create advantage by reducing future costs relative to later entrants. While prior strategy research often assumes that learning curves are...