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When does experience hurt? The confidence-competence paradox

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Experience is a principal source of knowledge and an important antecedent to organizational capabilities. At the same time, however, the accumulation of experience increases an organization's confidence in its own abilities. The authors identify this paradox of experiential learning in the extent to which experience leads to the asymmetric development of confidence and competence over time. When this happens, they argue, the magnitude of the stock of accumulated experience is likely to correlate negatively with performance. They then develop a contingency model in which perceived task characteristics, in particular task homogeneity, act as important determinants of how confidence evolves relative to competence and thus as moderators of the experience-performance relationship. They empirically test the corresponding theoretical argument in the context of a sample of 1,134 leveraged buyouts and find strong evidence that perceived task homogeneity does determine whether experience helps or hurts the performance of these types of acquisitions.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2004/2004-83.pdf

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Copyright INSEAD. All rights reserved