Value-enhancing learning from industry-wide diversification experience

Thang Nguyen, Charlie X. Cai

Research output: Contribution to journalArticle

6 Citations (Scopus)
10 Downloads (Pure)

Abstract

Diversification is an important strategic decision and a rare event. By definition, when undertaking a new diversification, a firm will not have direct internal experience of the venture. In this regard, external experience of similar diversifications provides a valuable lesson pool for the focal manager. While there are many studies of internal learning in organizational learning literature, research on external learning is still scarce. This paper proposes a theoretical framework for external experiential learning and applies it to study the effect of industry experience on diversification value. We report the novel finding of a cubic relationship between external learning from industry experience and diversification value. This indicates that industry experience matters to the outcomes of strategic decisions, but that the effect of this external experience on learning is conditional upon certain characteristics of the experience: namely specificity and heterogeneity.
Original languageEnglish
Pages (from-to)323-337
Number of pages15
JournalBritish Journal of Management
Volume27
Issue number2
Early online date10 Dec 2015
DOIs
Publication statusPublished - 3 Apr 2016

Bibliographical note

This is the peer reviewed version of the following article: Nguyen, T & Cai, CX 2016, 'Value-enhancing learning from industry-wide diversification experience' British Journal of Management, vol. 27, no. 2, pp. 323-337. which has been published in final form at 10.1111/1467-8551.12151. This article may be used for noncommercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

  • Experience
  • Organizational learning
  • Diversification value

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