ABSTRACT
The learning curve phenomenon is well known. As organizations gain operating experience, organizational performance improves, although at a decreasing rate. Scholars have frequently used the power curve to model this relationship in manufacturing contexts. In these models, the logarithm of unit cost decreases linearly as a function of the logarithm of cumulative number of units produced (Yelle 1979). The decrease in cost (i.e., improvement) is attributed to organizational learning, hence the name “learning curve.” Scholars have extended the power curve by incorporating forgetting (recent experience matters more than older experience) and learning from others (transfer of experience). For an overview of forgetting and learning from others, see Argote (1999). This chapter focuses on learning from own experience.
