Festina lente: learning and inertia among Italian automobile producers, 1896-1981

Abstract

Based on the premise that learning and inertia develop and operate in organizations simultaneously, this paper examines under what conditions adaptation or selection will take place. We have analyzed the process of technological scope expansion among Italian automobile firms, and found that firms prone to expanding their technological competencies tend to be either specifically organized to benefit from variation‐based learning or do so in response to pressures from competitive intensity in their environment. But these effects hinge on the structure of the market that evolves as the industry consolidates. We also examine the failure rates of Italian auto firms and find that implementing a core change generates negative repercussions for survival but this effect can be countered by properties of the organizational design that facilitate variation‐based learning. Our results suggest that organization theory will benefit if ecological and learning theories are further integrated in future research.