Evaluation Heterogeneity and Loss of Good Ideas in Organizational Learning

Abstract

The literature on innovation and learning has emphasized the importance of diversity of ideas or knowledge. To boost or maintain diversity, an organization can establish subunits for specialization of different activities, while rotating a few individuals across subunits for cross-fertilization of ideas. Thus far, the literature has taken it for granted that organizations will benefit from boosting diversity. We argue that this received view may not always hold true. By developing computational models, we show that cross-fertilization of ideas to boost diversity will hamper organizational learning if subunits have substantially different evaluation criteria. One trivial reason is that evaluation heterogeneity affects group members to ignore ideas coming from the other group simply because what is good in one group is not good in the other. A more complicated reason is that even when new ideas brought to the focal group by transferred individuals are good based on the focal group’s evaluation criteria, these ideas tend to be ignored in the group learning process because the substantial difference in evaluation criteria makes the transferred individuals look unappealing learning targets for the other group members.