A dynamic model of intra- and interorganizational learning

Abstract

Two themes characterize the organizational learning literature: one focuses on intraorganizational learning processes, and another focuses on interorganizational learning processes. This article stresses the need to cross-fertilize these themes of organizational learning by proposing a dynamic model of organizational learning within and between organizations. This cross-fertilization is important in order to understand how organizations may cope with the fundamental organizational learning problem of addressing exploitation and exploration, i.e., to create both reliability and variety in experience. In this article it is proposed that exploitation and exploration occur both within and between organizations and that they are deeply interlaced through intra- and interorganizational learning processes.

Keywords: exploitation, exploration, intraorganizational learning, interorganizational learning, dynamics

Introduction

Intraorganizational learning theories (e.g. Argote and Ophir 2002; Schultz 2002) and interorganizational learning theories (e.g. Child 2001; Ingram 2002) live in partly separate worlds and it is commonly assumed that intraorganizational learning processes and interorganizational learning processes can be analysed independently of each other (Huber 1991; Larsson et al. 1998). This is not surprising in that organization theory traditionally has separated intraorganizational interaction from interorganizational interaction (e.g. Litwak and Rothman 1970; March and Simon 1958; Pfeffer and Salancik 1978) and that interorganizational learning theory has been regarded as a way of developing the organizational learning literature by conceptualizing another unit of analysis, an effort that has taken place largely during the last 10 years (e.g. Dodgson 1993; Hagedoorn 1993; Holmqvist 1999; Lane and Lubatkin 1998).

This article, however, stresses the need to cross-fertilize these two themes of organizational learning by proposing that the two processes of intra- and interorganizational learning are deeply interlaced. This cross-fertilization is important in order to understand how organizations may cope with the fundamental organizational learning problem of addressing exploitation and exploration. In short, organizations need to learn from experience in two interrelated, yet disparate ways. They must create variety in experience. This is exploration. They must create reliability in experience. This is exploitation. Despite them appearing as opposite extremes, exploitation and exploration must be considered together in order to accomplish a balanced attention to experience (Levinthal and March 1993; Marengo 1993; Olsen and Peters 1996).

In this article, it will be maintained that exploitation within an organization is the prerequisite for exploration between organizations. The explorative character of much interorganizational learning does not occur by itself; it occurs as a result of a confrontation and a combination of single organizations' experiences. And conversely, interorganizational exploration is the requirement for single organizations' exploitation. Organizations internalize what has jointly been learnt with other organizations and that eventually may be reproduced as part of the organizations' experience. The two levels of aggregations are closely tied together in mutual learning-loops: thus, one cannot understand intraorganizational learning without understanding interorganizational learning, and vice versa.

The aim of this article is to outline a dynamic theory of organizational learning within and between organizations, by proposing a framework that integrates intraorganizational learning processes of exploitation and exploration with interorganizational learning processes of exploitation and exploration. This framework should be a major contribution to existing organizational learning theory that still lacks a conceptualization of both intra- and interorganizational learning processes.

The article is organized into three parts. First, an account is given of organizational learning theories, by focusing on four basic assumptions as found in the literature. Then attention will be given to the two experiential learning processes: exploitation and exploration, which will be followed by a discussion of the two dominating units of analysis in the literature: intra-and interorganizational processes. The section will be synthesized by relating exploitation and exploration to intra- and interorganizational learning processes.

Second, the main contribution of this article is outlined, by proposing a dynamic model of intra- and interorganizational learning processes that stresses the intimate relationship between exploitation, exploration, intra-and interorganizational learning.

Third, the article is concluded by speculating on some implications for the organizational learning literature, seen in the light of the proposed framework.

Organizational Learning

Some Basic Definitions

A first central idea in the organizational learning literature is that organizations' learning is experiential (Herriott et al. 1985; Levitt and March 1988; Schultz 2002), which is a basic assumption of most individually based approaches to learning as well (Kolb 1984; Lave and Wenger 1991; Maier et al. 2001). Learning is in this regard seen as a relatively permanent change in organizational knowledge that is produced by experience (Cyert and March 1992). The organization's experience is retrieved in both explicit and tacit routines (Nelson and Winter 1982), programs (March and Simon 1958), standard operating procedures (Cyert and March 1992) and other 'organizational rules' (March et al. 2000; Zhou 1993) and these rules are assumed to change over time as a result of the organization's experiential learning (Weick 1996). The focus is on the adaptation of organizational rules to environmental changes as experienced by the organization.