The idea of organizational learning may be identified as the process through which a firm makes, with an increasing degree of certainty, choices about which strategies to follow. A discrete choice setup is considered and applied to a dynamic process of knowledge accumulation within the firm. The most important results relate to: (i) the determination of a steady state point in which probabilities of choice take constant values; and (ii) the fact that the steady state is not necessarily a stable one. If learning is subject to decreasing returns, stability holds; when knowledge accumulation exhibits increasing returns there is a divergence to a certainty strategy selection result, that is attained, at least asymptotically, in the long run.

--

Organizational learning,Discrete choice,Memory loss,Knowledge,Bounded rationality