‘Fail fast and learn fast’ is a common principle advanced to quickly grow and scale startups and SMEs. However, the literature is lacking detailed insights into how such learning processes are organized. The paper aims to investigate how knowledge-intensive SMEs learn from failures through organizational learning processes. Case studies of three high-tech SMEs that operate in a highly dynamic context are presented. The findings are summarized in the learning from failure process, which includes three phases, each with underlying sub-activities and principles: 1) failure recognition, 2) interactive sensemaking, and 3) organizational adaptation. We summarize our insights into a framework disentangling how SMEs succeed and fail in learning from failures. We contribute to prior literature on organizational learning in an SME context by explicitly focusing on knowledge-intense SMEs and practices that enable effective learning from failures.
Koporčić et al. (Sun,) studied this question.