Learning from Complexity: Effects of Accident/Incident Heterogenity on Airline Learning

In this study, we investigate the role of experience diversity on learning by U.S. airlines. Do firms learn more from diverse of homogeneous accident experiences? Existing literature provides conflicting answers to this question, with some theories suggesting that heterogeneous experiences are best because variance in outcomes is necessary to learn. Other theories suggest that homogeneity is best for learning, because homogeneous experience increase problem salience and thus attention and attempts to solve the problem. Using data on all accidents and incidents experienced by U.S. commercial airline from 1983-1997, we measure learning by a reduction in airline accident/incident rates, controlling for many factors related to accidents and incidents. Our results show whether heterogeneous or homogeneous experience facilitates learning varies according to whether the airline in a specialist or generalist. Only specialists learn from their own heterogeneous accident experience, and prior error heterogeneity decreases their subsequent accident rate. Generalists learn from outside factors such as the experience of others and general improvements in technology. These results suggest a theory of learning across organizations forms: complex forms benefit from simple information, and simple forms benefit from complex information. The implications of our study for learning theories and work on organization errors are discussed.