Delays Impair Learning and Can Drive Convergence to Inefficient Strategies

Hazhir Rahmandad, Michael Shayne Gary (2020) Delays Impair Learning and Can Drive Convergence to Inefficient Strategies. Organization Science

UNSW Business School Research Paper Forthcoming

76 Pages Posted: 12 Dec 2018 Last revised: 20 Jan 2021

See all articles by Hazhir Rahmandad

Hazhir Rahmandad

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Michael Shayne Gary

UNSW Business School

Date Written: October 7, 2019

Abstract

With so many possible choices, why do managers adopt the strategies they do? We identify delays between adopting a strategy and observing the full implications of that choice as a critical factor influencing strategic choices. Using a simulation of a service firm, we conduct two behavioral experiments to investigate how delays interact with outcome uncertainty to shape learning, strategy adaptation, and performance outcomes. When multiple viable strategies exist, longer delays lead both general participants and experienced managers towards alternatives that have rapid returns. When those alternatives are suboptimal, delays may strengthen convergence to inefficient strategies. Delays and uncertainty may also induce learners to persist with their a priori strategies. Both mechanisms can undermine performance and also reduce heterogeneity in strategies and performance in dynamic, complex decision environments.

Keywords: time delays, uncertainty, strategy adoption, learning, capability development, heterogeneity

Suggested Citation

Rahmandad, Hazhir and Gary, Michael Shayne, Delays Impair Learning and Can Drive Convergence to Inefficient Strategies (October 7, 2019). Hazhir Rahmandad, Michael Shayne Gary (2020) Delays Impair Learning and Can Drive Convergence to Inefficient Strategies. Organization Science, UNSW Business School Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3288129 or http://dx.doi.org/10.2139/ssrn.3288129

Hazhir Rahmandad (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main st.
E62-442
Cambridge, MA 02142
United States

Michael Shayne Gary

UNSW Business School ( email )

Management - Level 5 Building E12
Sydney, NSW 2052
Australia

HOME PAGE: http://https://www.business.unsw.edu.au/our-people/shaynegary

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