Seminar  |  05/28/2019 | 12:00 PM  –  01:15 PM

Brown Bag Seminar: Learning-by-Participating: The Dynamics of Information Aggregation in Organizations

Henning Piezunka (INSEAD)

Max Planck Institute for Innovation and Competition, Munich, Room 313

A central tenet of research in the Carnegie School tradition is that organizations learn from performance feedback. Yet an organizational learning-by-doing perspective can overlook the intra-organizational process of information aggregation whereby individuals' beliefs aggregate to an organizational decision. In organizations, individuals receive feedback not on their own choices, but on the choice made by the organization. We call this “learning-by-participating” in organizational decision-making. We examine the implications of learning-by-participating for the efficacy of alternative decision-making structures (e.g., voting, random delegation). Using a computational model, we find that the efficacy of alternative decision-making structures is shaped by learning-by-participating—e.g., structures that are superior in the absence of individual learning may be inferior in situations where individuals learn-by-participating. Learning-by-participating, which occurs at the intersection of individual learning and organizational information aggregation, exposes a key dimension of heterogeneity among decision-making structures not yet considered in prior literature. In particular, whereas some structures generate higher performance primarily through information aggregation, others do so by improving the accuracy of individuals' beliefs. This occurs because learning-by-participating creates substantial heterogeneity across decision-making structures with respect to organizations' ability to: (a) eliminate individuals' false positive beliefs on poor alternatives, (b) generate a more refined understanding of higher value alternatives, and (c) enable the inclusion of individuals in the decision-making process. Our articulation of learning-by-participating has important implications, and identifies critical boundary conditions, for the wisdom-of-crowds when applied to organizations, and speaks to literatures on the myopia of learning and the value of belief diversity in organizational decision-making.

Contact person: Fabian Gaessler