This paper proposes a theory of experimental learning in early-stage ventures. I develop a stylized formal model to illustrate three channels through which experimentation drives performance: information, adaptation, and appropriability. The model represents a nascent venture seeking to develop...

While the literature on organizational learning has mostly emphasized its “behavioral costs”, the strategic management literature suggests that learning processes may also have “strategic costs”. A form of learning that is particularly relevant for nascent firms is experimental learning....