The Complexity of Rule Systems, Experience and Organizational Learning

Abstract

In this article, we analyse organizational learning that is based on formal organizational rules. Organizational rules provide procedures for problem solving. However, whether rules are useful as media of organizational learning is dependent on properties of the rule system and on the organizational members' experience in dealing with rules and the rule system. For example, a voluminous rule system is usually assumed to impede rule changes that contribute to organizational learning. With regard to experience one can assume that organizational members who have learned how to deal effectively with a rule system should be able to design rules in such a way that, for some time, they do not require further changes. In an empirical analysis of all changes in the rules for personnel policy in a German bank from 1970 to 1989, we show that experience increases the stability of individual rules and the rule system. However, we cannot support the assumption that the volume of the rule system impedes organizational learning. Moreover, we found that the volume of individual rules increases the probability of rule change.