Innovation Learning: Evidence from the U.S. Biotechnology Industry

Abstract

Learning curve is a conceptual framework to organizational learning that as organizations product more of a product, the unit cost decreases at a decreasing rate. This framework has been found in various industries such as manufacturing and service industry. However, all of these organizations improve performance based on repetitive operations and innovation learning is largely ignored. In this study we use data of biotechnology industry to explore innovation learning and find that product innovation also follows learning curve framework. In addition, we identify that two categories of innovation, incremental innovation and radical innovation, is a moderator of innovation learning process and radical innovation is more favourable with organizations to learn from aggregated experience but not from prior failure experience.