Organizational Learning and the Transfer of Knowledge: An Investigation of Quality Improvement

Whereas most prior research on the learning curve has focused on improvements in efficiency, this paper deals with the impact of learning on product quality. The key data are measures of automobile reliability published in Consumer Reports. Analysis yields three findings: (1) Quality improves over the production life of a car model with the same kind of regularity as an efficiency learning curve. Thus, there is a quality learning curve. (2) Unlike in the efficiency domain, however, learning in the domain of product reliability is primarily a function of time, and not of how many cars have gone down the assembly line. Thus, quality depends not on the accumulation of production experience per se, but on the intensity of “off-line”quality improvement activities and on the transfer of knowledge from the general environment over time. (3) In contrast to the traditional injunction, “do not buy a new car in its first year of production,”the opposite advice actually seems to apply: In any given year, the newest car models have the best quality. That is, new car-model designs typically include significant quality improvements that are more than enough to outweigh any disruption created in manufacturing by the new model's introduction and that even surpass the incremental improvements made to older, existing car models.