Aspiration Performance and Railroads' Patterns of Experiential Learning from Train Wrecks and Crashes

Abstract

We link two influential organizational learning models - performance feedback and experiential learning - to advance hypotheses that help explain how organizations' learning from their own and others' experience is conditioned by their aspiration-performance feedback. Our focus is on learning from failure, which is essential to organizational learning and adaptation, and a necessary complement to studies of learning from success. Our analysis of U.S. freight railroads' accident costs from 1975 to 2001 shows that when a railroad's accident rate deviates from aspiration levels, the railroad benefits less from its own accident and operating experience and more from other railroads' accident and operating experience. These findings, which support the idea that performance near aspirations fosters exploitative learning, while performance away from aspirations stimulates exploration, provide a foundation for constructing more integrated models of organizational learning and change.

Keywords: Organizational Learning, Learning Curves, Performance Feedback, Learning from Failure, Accident Reduction, Railroads

JEL Classification: D83, L92