Learning from Strategic Success and Failure

Organizations facing complex, ambiguous, and dynamic environments find adaptive learning a key to survival and success. This study proposes three models of organization response in such environments. 1) A model of how aspiration levels or goals adapt over time, 2) A model of the riskiness of strategic choices made, and 3) A model of the innovativeness of search activities (R&D). In each model, the difference between performance and aspiration level is posited to be an important explanatory variable. Using the MARKSTRAT game as a research environment, the data are consistent with all three models.