The Aggregation–Learning Trade-off

Abstract

Organizational decision making that leverages the collective wisdom and knowledge of multiple individuals is ubiquitous in management practice, occurring in settings such as top management teams, corporate boards, and the teams and groups that pervade modern organizations. Decision-making structures employed by organizations shape the effectiveness of knowledge aggregation. We argue that decision-making structures play a second crucial role in that they shape the learning of individuals that participate in organizational decision making. In organizational decision making, individuals do not engage in learning by doing but, rather, in what we call learning by participating, which is distinct in that individuals learn by receiving feedback not on their own choices but, rather, on the choice made by the organization. We examine how learning by participating influences the efficacy of aggregation and learning across alternative decision-making structures and group sizes. Our central insight is that learning by participating leads to an aggregation–learning trade-off in which structures that are effective in aggregating information can be ineffective in fostering individual learning. We discuss implications for research on organizations in the areas of learning, microfoundations, teams, and crowds.

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