When Experience Hurts: Proximal vs. Distal Experience and Product Innovation Success​

Charlotte Ren, Fox School of Business; Jaideep Anand,Ohio State University Fisher College of Business; and Louis Mulotte, Tilburg School of Economics and Management

Abstract: Most previous research on the learning curve focuses on improvements in manufacturing efficiency; this article instead studies the role of learning in product innovation, a vital component of sustainable competitive advantage in high-tech industries. Drawing on organizational learning literature, this study examines how product innovation experience affects firms’ technological performance (i.e. performance in designing and developing high-quality products). Data from the worldwide hard disk drive industry indicate that learning from proximal technological experience (i.e., own and competitors’ product innovation experiences in a focal submarket) enhances a firm’s technological performance in the focal submarket, which suggests the existence of a “product innovation experience curve”. In contrast, learning from distal technological experience (i.e., own product innovation experience in previous submarkets) has a negative effect on a firm’s technological performance in the focal submarket. Thus, experience in previous submarkets may create a “technology burden” that prevents firms from expanding their technological capabilities in more advanced submarkets.