The dynamics of abandoned innovation activities: Learning from failure or learning to prevent failure?

Contribution to the literature on abandonment and innovation involves illustrating the dynamic nature of the linkage between abandoned innovation activities and subsequent innovation outcomes at the firm level. Using a balanced panel of Spanish manufacturing firms spanning from 2008 to 2016, it is demonstrated that the act of abandoning innovation not only results in more successful innovation but also exhibits an explicit temporal dimension. Firms with prior abandonment experience show stronger positive impacts of recent abandoned innovation activities on their innovation output. Nevertheless, these effects predominantly pertain to prior experience acquired during the early (conception) stages of the innovation process. While firms systematically cultivate capabilities to avoid failure, there is scant evidence of learning from failure in the context of innovation abandonment.

The University of tartu School of Economics and Business Administartion professor Priit Vahter recently published the results of a study in collaboration with co-authors from the University of Leeds and the University of Warwick in the top-tier innovation research journal, Research Policy.