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