Date of Award

2010

Degree Type

Thesis

Degree Name

Doctor of Philosophy

Program

Business

Supervisor

Dr. Oana Branzei

Second Advisor

Dr. Claus Rerup

Third Advisor

Dr. Mark Zbaracki

Abstract

Much research examines the causes of product failures such as the Ford Pinto gas tank design. Research also examines the consequences of product failures such as new product introductions resulting from the need to improve failed products. However, little is known about how the causes and consequences of product failures interact across different firms, and generate inter-organizational learning, within the same industry. Specifically, limited research has examined if a firm learns to reduce its own annual rate of product failures (e.g., experiences fewer product-related adverse events) by attending to the product failures and new product introductions of its competitors. In addition, we also do not know (1) how delayed reporting of product failure influences interorganizational learning, and (2) how the introduction of new products by one company impacts another firm’s effort to learn from this competitor’s product failures. To address these gaps, this dissertation develops and tests relationships between (1) inter-organizational learning from product failures, (2) product failure reporting delays, and (3) new product introductions. Regression analysis of 98,576 manufacturing firm-year observations from the medical device industry over a ten-year period (1998 to 2008) supports the proposed model. Specifically, the analysis supported two insights: (1) As expected, a competitor’s reporting delays can inhibit learning from others’ failures by increasing the chance of making poor inferences about the failure. Unexpectedly, however, delays can also improve inter-organizational learning because in reports that have taken longer to file, a clearer understanding of the failure’s cause-effect relationships is developed. iii (2) As expected, a competitor's new product introductions positively impact interorganizational learning by transferring knowledge of product design between firms. Unexpectedly, a competitor’s new product introductions can also negatively impact inter-organizational learning from product failure by distracting the observing firm’s attention away from the competitor’s failures. The thesis contributes to the inter-organizational learning literature by: (1) modelling learning from others’ product failures, (2) highlighting the effects of reporting delays, and (3) showing how others’ new product introductions can distract. This thesis shows that learning from others’ product failures and new product introductions has significant benefits because it prevents serious injury and death among device users.

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