Failing to Learn from Failure: An Exploratory Study of Corporate Entrepreneurship Outcomes‪.‬

ABSTRACT Firms that are able to react and respond to today's dynamic environment through market, process and product innovations--also called Corporate Entrepreneurship (CE)--are better able to gain and sustain a competitive advantage. In fact, business strategy can be described as a firm's "theory of competitive advantage" or a set of hypotheses about the firm's competencies and their relationship to external factors. This implies that CE initiatives can be thought of as "tests" of the firm's strategic "theory-in-use." Thus an innovation that is aligned with a firm's strategy and is successful confirms the existing strategy; an unsuccessful innovation indicates a change in strategy may be needed. In this paper we examine 54 new product development projects and assessed whether they were successful, whether they aligned with the business strategy, and whether the strategy was subsequently modified. We found that successful projects aligned with strategy did indeed confirm the strategy, but unsuccessful projects resulted in strategy modifications only 38% of the time. The lack of strategy modification when projects are unsuccessful indicates that firms are not learning as much as they might from their failures.