The Complexity of Rule Systems, Experience, and Organizational Learning

We analyze organizational learning that is based on formal organizational rules. Organizational rules contain problem-solving procedures. Their usefulness as media of organizational learning is, however, dependent on certain properties of the rule system and on the organizational members' experience in dealing with the whole rule system and its elements, the individual rules. For example, a voluminous rule system can be assumed to impede rule changes that are a precondition for rule-based organizational learning. On the other hand, organizational members who have learned to master a rule system should not have great difficulties in constructingstable rules. In an empirical analysis of all changes of rules concerning personnel policy in a German bank from 1970 to 1989 it is shown that experience increases the stability of the rule system and of individual rules. However, contrary to our assumptions, the volume of the rule system does not seem to impede organizational learning. Moreover, the volume of individual rules increases the probability of rule change. Our results that are, in contrast to most other studies in this field, based on a discrete hazard rate model with fixed effects, question some results on organizational change that have been presented by other authors.