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Aspiration Performance and Railroads’ Patterns of Learning from Train Wrecks and Crashes

Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada
Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada
baum{at}rotman.utoronto.ca
dahlin{at}rotman.utoronto.ca

We link two influential organizational learning models—performance feedback and experiential learning—to advance hypotheses that help explain how organizations’ learning from their own and others’ experience is conditioned by their aspiration-performance feedback. Our focus is on learning from failure; this kind of learning is essential to organizational learning and adaptation, and a necessary complement to studies of learning from success. Our analysis of U.S. Class 1 freight railroads’ accident costs from 1975 to 2001 shows that when a railroad’s accident rate deviates from aspiration levels, the railroad benefits less from its own operating and accident experience and more from other railroads’ operating and accident experiences. These findings support the idea that performance near aspirations fosters local search and exploitive learning, while performance away from aspirations stimulates nonlocal search and exploration, providing a foundation for constructing more-integrated models of organizational learning and change.

Key Words: organizational learning; aspiration performance; accident reduction

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