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Rubik's dilemma: partial knowledge and the efficacy of learning


Posen, Hart E; Martignoni, Dirk; Lang, Markus (2013). Rubik's dilemma: partial knowledge and the efficacy of learning. Academy of Management. Proceedings, 2013(1):1-25.

Abstract

Does superior knowledge today engender enhanced learning and superior performance in the future? While popular managerial wisdom might typically answer in the affirmative, the strategy literature is circumspect, pointing to the benefits of knowledge for future performance, but also to costs such as competency traps and cognitive rigidities. We argue that opposing views on the implications of knowledge derive from the fact that knowledge has not one, but two mechanisms by which it alters future firm performance: an endowment effect because it enhances the efficacy with which new knowledge is accumulated, and a behavioral effect because it alters the search strategy a firm employs in seeking to build upon and supplement its prior knowledge. Consider a firm endowed with partial knowledge good answers to a subset of problems within a larger multi-dimensional problem. The firm naturally focuses its search on the dimensions of the problem for which it does not have solutions. Using a computational model, we examine the efficacy of this focus heuristic and implications of initial knowledge for future performance. By considering the dual consequences of knowledge, our theory is able to reconcile opposing accounts of the benefits of initial knowledge. Specifically, we identify conditions under which initial knowledge is negatively or positively correlated with future performance.

Abstract

Does superior knowledge today engender enhanced learning and superior performance in the future? While popular managerial wisdom might typically answer in the affirmative, the strategy literature is circumspect, pointing to the benefits of knowledge for future performance, but also to costs such as competency traps and cognitive rigidities. We argue that opposing views on the implications of knowledge derive from the fact that knowledge has not one, but two mechanisms by which it alters future firm performance: an endowment effect because it enhances the efficacy with which new knowledge is accumulated, and a behavioral effect because it alters the search strategy a firm employs in seeking to build upon and supplement its prior knowledge. Consider a firm endowed with partial knowledge good answers to a subset of problems within a larger multi-dimensional problem. The firm naturally focuses its search on the dimensions of the problem for which it does not have solutions. Using a computational model, we examine the efficacy of this focus heuristic and implications of initial knowledge for future performance. By considering the dual consequences of knowledge, our theory is able to reconcile opposing accounts of the benefits of initial knowledge. Specifically, we identify conditions under which initial knowledge is negatively or positively correlated with future performance.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Management Information Systems
Social Sciences & Humanities > Management of Technology and Innovation
Social Sciences & Humanities > Industrial Relations
Language:English
Date:1 November 2013
Deposited On:23 Aug 2019 12:40
Last Modified:31 Jul 2020 03:34
Publisher:Academy of Management
ISSN:2151-6561
OA Status:Closed
Publisher DOI:https://doi.org/10.5465/AMBPP.2013.216
Other Identification Number:merlin-id:8987

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