Adaptive Learning in Organizations: A System Dynamics-Based Exploration

This paper employs a system dynamics-based framework to examine the limitations of experiential learning as a guide for decisionmaking in organizations. This framework departs from the more traditional approach to modelling experiential learning processes in organizations by emphasizing the systematic interaction between decisionmaking agents and their environments, rather than the effects of varying degrees of noise on perjormance. We present the results of a series of computer simulations that examined the consequences of adaptive learning in organizations by concentrating explicitly on the link between individual decisions and the system-level consequences generated by the interaction of individual choices. The results show that experience is a poor basis for learning primarily because the understanding of structural relations between individual actions and their aggregate consequences is confounded by nonlinear dynamics, time delays, and misperception of feedback.